Rising 2016 Insolvency Figures in Contrast to 2015 Decrease
An increase in both corporate and personal insolvency was highlighted in the 2015-2016 Insolvency Statistics released by The Australian Securities and Investments Commission (ASIC) and the Australian Financial Security Authority (AFSA). This result is in contrast to the 2014-2015 report which noted a decrease.
Total corporate insolvency appointments increased by 8.8% from 12,726 during the 2015 financial year to 13,853 for the 2016 financial year, with 31% of appointments occurring in New South Wales.
While New South Wales has almost 1/3 of Australia’s external administrations, it continued to record the lowest number of corporate insolvency appointments since the 2005 financial year, remaining relatively consistent to those in 2015.
Queensland experienced the greatest number of corporate appointments with an increase of 13.8% from 2,667 in 2015 financial year to 3,036 in the 2016 financial year.
An increase in provisional liquidations (increase of 173.33%) and Court Liquidations (37.99%) was noted, while experiencing a decrease in controller and receiverships.
Nationally, the primary causes of corporate failure for the 2016 financial year were reported as:
- Inadequate cash flow or high cash use;
- Poor strategic management;
- Poor financial control including lack of records;
- Other reasons;
- Trading losses; and
- Poor economic conditions.
The primary reported breaches of director’s civil obligations and post appointment criminal obligations nationally for the 2016 financial year were reported as:
- Section 588G(1) – Insolvent Trading
- Sections 286 & 344 – Obligation to Keep Financial Records
- Section 180 – Due Care and Diligence
- Section 181 – Good Faith
- Section 530A – Offices to help Liquidator
Although New South Wales has experienced a somewhat consistent number of appointments during the 2016 financial year, there was an increase in numbers of enquiries from businesses in both construction and service industries.
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Personal insolvency total appointments increased by 4.4% from 28,288 during the 2015 financial year to 29,527 for the 2016 financial year, with 29.6% occurring in New South Wales.
Personal insolvency totals in the 2016 financial year compared to the 2015 financial year, can be summarised by type as follows:
- Bankruptcies increased by 0.2%
- Debt Agreements increased by 11.4%
- Personal Insolvency Agreements decreased by 18.2%
The number of appointments in New South Wales remained relatively consistent between the 2015 and 2016 financial years, with the Northern Territory, Western Australian and Queensland experiencing the highest increase.
There were a total of 17,202 bankruptcies in the 2016 financial year, which is a rise of 0.2% from the previous financial year. Western Australia contributed a 22.7% increase. This is the first annual rise in bankruptcies seen since the 2009 financial year.
Debt Agreements totalled 12,150 in the 2016 financial year, a rise of 11.4% from 2015. This was the highest level of Debt Agreements on record, with the Northern Territory accounting for an increase of 17.6% and Queensland an increase of 17.6%.
Personal Insolvency Agreements decreased 18.2% in the 2016 financial year. South Australia and the Australian Capital Territory represented the highest decrease of 52.6% and 50%, respectively.
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