ASIC has just released its Report on Insolvencies for 2017/2018.
84% of insolvencies involve small companies with:
- 20 or fewer employees
- Assets of $100,000 or less
- 39% with liabilities less than $250,000
- 61% with liabilities greater than $250,000
- 97% of all small company liquidations result in a return to creditors of
- Between 0 – 11 cents in the dollar
- ASIC has not provided the % of matters where no dividend whatsoever is paid to ordinary creditors
Liquidators reported Insolvent trading by directors in 69% of all cases reported.
The top 3 indicators for insolvent trading reported by liquidators are:
- 81% – the non-payment of statutory debts (PAYG, Super and GST)
- 63% – difficulties paying debts over an extended period of time
- 39% Financial Statements disclosing a serious history of shortage of working capital and unprofitable trading
Liquidators reported misconduct by directors/officers in 86.4% of cases (6,577 reports out of 7,613). The misconduct mostly complained of was:
- 69% Insolvent Trading
- 54% Failure to exercise care and diligence
- 44% Failure to keep books and records
From these reports, ASIC requested liquidators provided 897 supplementary reports (13.6% of all reports alleging misconduct).
Of these supplementary reports, ASIC referred
- 13% for compliance, investigation or surveillance
- Of these matters referred
- 25% were assessed as no further action required (for lack of evidence)
- ASIC ‘no further action’ cases are retained for intelligence purposes.
The industries with the most judgements for liquidation are
- 28% Other (business and personal services)
- 22% Construction
- 14% Accommodation and Food services