For some Australian business, 2016 has no doubt been a celebration of success. But for 9,465 Australian businesses, the last years has been a nightmare.

ASIC has published its Corporate Insolvency Year in Review based on reports from 9,465 Corporate Insolvencies.

Here is a snapshot of the most interesting points.

• 86% of Corporate Insolvencies involve companies with assets of $100,000 or less
• 79% of failed companies have 20 employees or less
• 46% had total liabilities of $250,000 or less
• 97% of Liquidations result in a return to creditors of between 0 – 11 cents in the dollar

Of the 9,465 reported cases:

• 60.6% involved insolvent trading
• 80.5% of those cases involved the incurence of debt after the date of insolvency of less than $1 million
• 1.44% involved more than $5 million of debts being incurred after the date of insolvency

The Top 3 causes of Corporate Insolvency are:

1. Non-payment of Statutory Debts (PAYG, Super, GST)
2. Shortage of Working Capital
3. Inability to pay debt when they fell due

Of the 9,465 reported cases

• Liquidators reported misconduct in 82.4% of cases
• Only 10.7% of these reports resulted in ASIC seeking further details
• Of the 831 supplementary reports sought by ASIC, only 16% were referred for compliance, surveillance or enforcement action.

In selecting which companies should be considered for further action, ASIC is guided by:

1. The nature of the possible misconduct
2. Total liabilities (and number of creditors affected)
3. The overall deficiency suffered
4. The availability of evidence
5. Prior misconduct/history of the directors
6. The external administrators advice on the misconduct