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Business Stress Report July 2012

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Each 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 our prediction last quarter was correct, 2012 is on track to be the worst year on record for corporate insolvencies.  February 2012 was a record high month for the number of corporate insolvencies with 1,123 appointments (the previous high was March 2009 with 1,095). The cost of those insolvencies remain steady at over four times pre-GFC levels. You can download the full Report here and I’ve given a summary below.

Key findings of the latest Business Stress Report are as follows:

  • The quarterly cost of All Bank New Asset Impairment Charges (or “Bad Debts”) for Australian Banks in the Quarter to March 2012 is $5.39 billion.  That is a decrease from the December quarter, which was $5.47 billion, and well above the average pre-GFC level of $1.1 billion.
  • The number of companies entering some form of insolvency administration in May 2012 was 884. That is an increase of 8.2% over the previous May and 8.8% over the average of the previous five Mays.
  • In the year to May 2012 there were 1,326 appointments by Secured Creditors, which will be predominantly Banks appointing Receivers. This is an increase of 36% over the average of the previous five years.
  • Insolvency numbers remain high in Queensland. For the month of May 2012 there were 166 appointments in Queensland making up 19% of the national total. Whilst the raw number is down from recent record months for them, the 2012 calendar year is up 60% when comparing to the average of the same period over the previous five years.

2012 is continuing the trend from 2011 of record insolvency numbers.

2011 was a record year and 6 individual months set new highs for the number of insolvency appointments for their respective months.

February 2012 set a new highest ever monthly number with 1,123 insolvency appointments toppling the previous high of 1,095 from March 2009 at the height of the Global financial Crisis. May 2012 was still high with 884 appointments being an 8.2% increase over the previous May and an 8.8% increase over the average of the last 5 Mays.

The cost of Insolvencies (All Bank New Asset Impairment Charges) remained steady this quarter after a slow decline from their peak at $11.4 billion in the June 2009 quarter. However the $5.4 billion figure for the quarter to March 2012 is still five times higher than the pre GFC average of $1.1 billion.

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