The corporate regulator this morning published its yearly review of corporate insolvencies, which based on statutory reports lodged by external administrators last financial year.
The reports show a “material decline” in reports received during the 2016/17 financial year, down almost 18 per cent. This is largely in line with the overall downward trend of 18.4 per cent in external administration appointments last financial year.
Small to medium sized corporate insolvencies dominated external administrators’ reports. About 84 per cent had assets of $100,000 or less, 79 per cent had fewer than 20 employees and about 43 per cent had liabilities of $250,000 or less.
ASIC found 96 per cent of creditors in this group received between 0–11 cents in the dollar, reflecting the asset/liability profile of small to medium sized corporate insolvencies.
Further, over the last three years, less than 20 per cent of supplementary reports on average received resulted in ASIC taking further action. ASIC said this was generally due to the lack of sufficient evidence, or because no further action was required.
Practitioners told ASIC they had either commenced or were contemplating initiating recovery actions for insolvent trading for 1,516 reports, compared to 4,878 reports alleging a civil breach for insolvent training.