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ASIC figures point to rise in corporate insolvencies

by Martha.Ware 10. August 2011 10:49

The number of companies entering external administration has risen almost 6%, according to final figures for the 2010-11 financial year released by ASIC.

ASIC’s Senior Executive Leader of the Insolvency Practitioners team, Adrian Brown, said that a strong increase in external administration appointments in June saw insolvencies increase to 5.9% from 4.4% for the 11-month period to May 2011.

‘The feedback we’ve received from insolvency practitioners is that they’re seeing an increase in activity in the SME sector as the Australian Taxation Office tightens up on debt recovery. According to industry, finance availability is also negatively impacting business.’

ASIC’s latest figures show the number of court liquidations and director initiated creditors voluntary liquidations are responsible for the overall rise in appointments nationally.

‘Our statistics show court liquidations in Australia rose 7.7%. Voluntary liquidations initiated by directors were up 10.1%. Receivership and voluntary administration (VA) appointments, Australia-wide, are down on last financial year. While we saw an immediate fall in VA appointments in 2008 following the streamlining of the voluntary liquidation procedures, these latest figures suggest that a greater number of businesses couldn’t be resuscitated through the voluntary administration process or are being restructured outside of an external administration,’ said Mr Brown.

‘By way of comparison, the 2007-08 financial year saw a 5.6% increase prior to the significant jump of 26.5% in the 2008-09 year; reflecting the impact of the GFC. In 2009-10, we recorded a drop of 7.2%. It’s interesting to note, however, that as a percentage of total company registrations, insolvencies are about half of one per cent for the last two financial years,’ Mr Brown said.

ASIC publishes monthly insolvency statistics detailing the number and type of corporate insolvency appointments. External administrators are obliged by law to advise ASIC of their appointments. ASIC will provide brief commentary on its statistics quarterly throughout the 2011-12 financial year.

For further information see the ASIC website.

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