Australian insolvencies hit a decade-high and are expected to rise again. Beware of these ASX firms carrying high debt including Healius that could default in a year

Insolvencies rose to the highest in almost a decade, as rising borrowing costs, weaker consumer spending and a more aggressive Tax Office took its toll, with the most business failures in construction, hospitality and retail. 967 companies entered administration in February, up 40% on the same time last year, according to ASIC.

And 9700 firms have gone bust in the past 12 months.

Late last year the RBA also reported 30% of large home builders are losing money, haemorrhaging cash as the construction sector battles rising wages and rising material costs. So thier expenses are outstripping revenue. This is what fuelled a surge in insolvencies

But....what could be a concern is that Bloomberg's screener saying Healius could default in this half year.

This year HLS has seen lots of downgrades, with most investment banks and houses saying HLS shares will be either lower or around the same price in a year. 54% of investment houses say HLS is a sell. 8% of banks/fund managers say HLS is a buy with Morningstar upgrading HLS in March to a BUY with a $3.00 target.

Guess this is a timely reminder that Warren Buffett says it's worth paying a premium for a quality business. And quality meaning companies with high repeatable cashflows, with growing earnings and that are also upgrading their earnings