Worrells Solvency & Forensic Accountants' latest edition of "The Worrells Insolvency Report" revealed that total corporate insolvency activity dropped to 11,298 in 2016-17, down from 13,847 in the previous financial year.
The drop in corporate insolvencies mirrors the Australian Securities and Investments Commission (ASIC)’s report late last year, showing a “material decline” in statutory reports lodged by external administrators last financial year.
The relationship of a voluntary administration converting to a Deed of Company Arrangement (DOCA) over 2004-2017 shows that the 2016-17 financial year had the highest conversion — at a rate of 40 per cent, up 16 per cent from 2015-16.
Breaking down corporate insolvencies by states and territories, NSW took top spot with 32 per cent of all corporate insolvencies, with VIC coming second with 28 per cent, while QLD rounded up the top three with 21 per cent.
WA accounted for 13 per cent, SA with 4 per cent, the ACT at 2 per cent, and the NT and TAS accounting for less than 1 per cent each.
At an industry level, ‘Other (business & personal) services’ made up 35 per cent of all corporate insolvencies, with the construction industry the next highest at 19 per cent, and the accommodation and food services industry at 10 per cent.
The top three corporate insolvency activity states of NSW, VIC, and QLD all shared the same top five industry profile of other (business & personal) services: construction; accommodation & food services; retail trade; and transport, postal, & warehousing.
On the personal insolvency activity front, 30,161 people used the Bankruptcy Act 1966 to seek relief from debts, up from 29,527 in 2015-16.
Bankruptcies dropped to 16,518, with 90 per cent choosing bankruptcy by lodging a debtor’s petition while the remaining 10 per cent were made bankrupt by creditors.
The main business-related cause of personal insolvency revolved primarily around other business reasons (38 per cent), economic conditions (31 per cent), and personal reasons (8 per cent).
Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.
Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.