Bad Liquidator
In case you’ve missed it in the media, liquidators are bad (apparently). I’ve provided details in a previous blog about ASIC’s supervision of liquidators. I’ll disagree with the general proposition that liquidators are bad but there is a bad liquidator who has been brought down by ASIC and the Courts. Check out below the details on that guy and some other ASIC actions against liquidators. Click Here To Read More
December 2011 Corporate Insolvency Statistics Released
You may have got our early call last month that 2011 would be the worst year ever for insolvency numbers – well ASIC has just released the corporate insolvency statistics for December 2011 and they confirm our earlier prediction. They show that although December 2011 is down from November 2011, overall 2011 was the highest year on record for corporate insolvencies with 10,481 companies entering some form of liquidation, administration or receivership. This represents a 9.2% increase over the previous highest which was 9, 601 in 2010.
Insolvency and Restructuring Solutions – Handy Tools for Self Diagnosis
Sometimes, well… nearly always, directors don’t like to talk about their company’s problems. So we have developed two handy tools on our website where directors can do a bit of self diagnosis:
Tool 1 – Is my Company Insolvent? has nine tick-a-box questions on the topics of Cash Flow, Financial Statements and Creditor Relationships. I strongly recommend any director, or adviser, pondering the solvency of a company use the list. It’ll take about 1 minute and is done on a “best guess” basis. The case law on this topic is huge, confusing and very much open to opinion. So, believe it or not, I spent about a week distilling the contents of the many legal cases on the topic and in the end concluded it aint that hard – hence the tick-a-boxes.
Click Here To Read More
2011 Worst Year on Record for Corporate Insolvencies – Business Stress Report
Every quarter here at Dissolve we break down the most telling corporate insolvency, liquidation and restructuring statistics into our Business Stress Report. Our latest report reveals that 2011 was the worst year on record for corporate insolvencies. You can download the full Report here and I’ve given a summary below.
ASIC recently released statistics for insolvencies for November 2011 and the 9,718 corporate insolvencies in the 11 months to November 2011 is 10% higher than for the same period in 2010. The 11 months to November 2011 has already exceeded the full calendar year of 2010 which was the previous highest full year.
Interestingly, November 2011 itself, with 983 insolvencies, was up 17% on November 2010 but short of the highest ever November which was in 2008.
Proposed new laws – Personal Liability for Phoenix Companies
The move by regulators towards more personal liability for company directors continues. Again the focus is on Phoenix Companies and Personal Liability. Directors received a reprieve on other proposed new laws but Treasury recently released an Exposure Draft for proposed new laws for “Phoenix and Other Measures”. They’re interesting amendments. They won’t catch all Phoenix activity, and won’t be too difficult to avoid for the slightly tricky Phoenix operator, but it is a further move to personal liability for some directors. Click Here To Read More
Insolvent Trading – Go to Jail – Do Not Pass Go – Do Not Collect $873,997
It can happen – recently a director was sentenced to 12 months prison for Insolvent Trading. A director, Ms Kuaye, received that sentence for Trading While Insolvent and incurring debts of $112,000. It was part of an overall sentence of three years – she also misappropriated $873,997. There are a few extra facts that put the sentence into context and suggest she might have gotten off lightly. Click Here To Read More
The typical company insolvency – size, sector, creditors, offences and outcomes
Let me dramatically overgeneralise. If your company went into liquidation in the year to June 2011 then, most likely, it will have been in the construction game, had fewer than 5 employees, assets of less than $10,000, you will have committed an offence by trading while insolvent, will owe creditors less than $250,000, including the tax man, your liquidator will pay no dividend to unsecured creditors and ASIC will not pursue you for the offences you committed. Well, actually that’s a description of the most common statistical categories for companies entering liquidation. Click Here To Read More
Extra Director Personal Liability – a reprieve as new laws delayed
I’ve banged on about the proposed new Director Personal liability laws in numerous blogs in the past few months and how Treasury was pushing them through based on a few furphies. The legislation was before Parliament this month. Well directors can breathe a little easier … for a while. It was announced this week that the legislation had been withdrawn but will be reintroduced in early 2012.
You’ll recall that the laws would have dramatically increased the prospect of automatic director personal liability for tax debts – don’t lodge your Quarterly BASs for three months then a director would have been automatically personally liable for PAYG and Super contributions.
I’ve expressed some firm views on this topic. Click Here To Read More
Insolvent Trading Laws – broken, yes, but changes shelved
In 2010, it was announced that the Government would review Australia’s insolvent trading laws, which are amongst the toughest in the world. In brief, the law currently says that if a company is insolvent and the directors allow the company to incur new debts, then the directors can be personally liable for those new debts. It was recently announced that the proposed changes, which would have put Australia on a similar footing to other countries, have been shelved.
Let me make my view clear – Australia’s insolvent trading laws are completely flawed. Let me explain. Click Here To Read More
More records set – September insolvency statistics released
ASIC have recently released the insolvency statistics for September 2011. They reveal the number of corporate insolvencies in September 2011 is down slightly from August 2011 but it has still set a number of “highest ever” records for 2011. Liquidators in Tasmania and Western Australia are busy with further large increases in the number of appointments in those states.
The key statistics are:
- The number of companies entering some form of insolvency administration in the month of September 2011 was 991. That figure is down slightly from August 2011 which was 1,049. And here is an interesting comparison – the insolvency number for September 2007 (so pre-GFC) was 557.
- The September insolvencies are the highest on record for a September and continues the trend for the calendar year with six of the nine months of 2011 being the highest ever for each of those months.
- The rolling year to September 2011 has seen 10,228 insolvencies which is the highest yearly total since records have been kept.
- Geographically, the bad news continues in Tasmania and WA this calendar year – Tasmanian insolvencies have increased 94% when compared to the average of the same period over the previous 5 years and WA insolvencies are up 71%.
