ASIC 2017/2018 Report on Insolvencies Just Released

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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

Source: https://asic.gov.au/about-asic/news-centre/find-a-media-release/2018-releases/18-342mr-asic-reports-on-corporate-insolvencies-2017-18/