April Business Stress Report
Corporate insolvencies stay stubbornly high
Sydney, April 8, 2011 – According to Dissolve, a business specialising in low cost company liquidations, its quarterly Business Stress Report reveals that the number of corporate insolvencies for February 2011, was the highest February on record (since ASIC statistics started in 1999).
Key findings of the latest Business Stress Report are:
The number of companies entering some form of insolvency administration in the month of February 2011 was 852. That figure is the highest February number on record (since 1999). It is a 3% increase over the previous February number of 827 and a 15% increase over the average of the previous 5 years which is 740.
The number of companies entering some form of insolvency administration has been relatively stable around 750 to 850 a month since the peak of 1,095 in March 2009.
The quarterly cost of All Bank New Asset Impairment Charges or “Bad Debts” for Australian Banks in the Quarter to December 2010 was $5.6 billion. That is a drop from the peak of $11 billion for the June 2009 quarter but still well above the pre-GFC level of $1.1 million.
Cliff Sanderson, CEO of Dissolve, commented that: “The latest statistics for both the number of corporate insolvencies and the cost of those insolvencies has remained stubbornly high since the GFC. The surprising number is the number of corporate insolvencies in February 2011. Recent monthly figures have been below the corresponding months for 2009 and 2010. But the February 2011 number of 852 is the highest February on record.”
He added: “The most recent “bad debt cost” for Australian Banks has declined to $5.6 billion for the quarter to December 2010, so it is well off its peak of $11 billion, but it remains a huge cost. It should be compared to the average quarterly cost of around $1.1 billion a quarter for the 13 years prior to 2008. Put another way, the cost to Australian Bank of bad debts is still running at over 5 times the pre-GFC level.”