Statistics released by ASIC today showed that corporate insolvencies rose over the 2011 calendar year, with external administration (EXAD) appointments increasing 9.2% from the previous year.
Mr Adrian Brown, ASIC’s Senior Executive Leader of Insolvency Practitioners, said appointments had remained relatively steady since the initial increase in activity in 2008 following the global financial crisis. However, 2011 saw a further rise in appointments, with stronger activity in the June and September quarters, although moderating in the December quarter of 2011.
The number of companies entering into external administration for the past five years follows:
Table 1— Companies entering into EXAD by calendar year
|
Year |
Number |
Annual % rise |
|---|---|---|
|
2007 |
7,521 |
-2.8% |
|
2008 |
9,113 |
21.2% |
|
2009 |
9,437 |
3.6% |
|
2010 |
9,601 |
1.7% |
|
2011 |
10,481 |
9.2% |
The December 2011 quarter shows a moderation in appointments following a strong rise in EXADs for the September 2011 quarter.
Companies entering EXAD decreased from 983 in November to 763 in December consistent with historical trends in activity leading up to the Christmas/New Year period which tends to continue into January.
‘October and November figures remained relatively high. Traditionally, we see a fall in activity in the December quarter due to the holiday period,’ Mr Brown said. The December quarter of 2011 saw a lower total compared to the previous quarter but this was still higher than for the same quarter last year. The December quarter total fell just below 2,600 seen in both the June and September quarters.
‘Our statistics show that a reduction in director-initiated voluntary liquidations drove the quarterly fall of 12.6% in external administration appointments over the previous quarter. Court liquidations and receiverships also impacted the quarterly number whilst voluntary administration appointments remained steady.
‘The fall was driven by the two largest states of New South Wales and Victoria,’ Mr Brown said.
Mr Brown also noted that appointments of receivers/controllers by secured lenders fell in New South Wales, Victoria and Queensland, but the raw number of appointments in Queensland remained well above those of New South Wales and Victoria. Receivership activity in Queensland remains strong and, according to market feedback, is largely driven by property-related appointments. Also evident was a marked increase in court liquidation appointments in Queensland. Statutory creditor recovery action is a primary driver of the increase in court appointments in Queensland for this quarter.
ASIC publishes monthly insolvency statistics detailing the number and type of corporate insolvency appointments. External administrators are obliged by law to notify ASIC of their appointments. ASIC will provide brief commentary on its statistics quarterly throughout the 2011-12 financial year.
Further analysis of data received by ASIC is included in the attachment to this advisory.