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Corporate Insolvency numbers hit record high

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ASIC have recently released their monthly corporate insolvency statistics. They reveal that February 2012 was the worst month ever for corporate insolvencies, and that last years floods in Queensland are now showing their effect on small business with record numbers of liquidations.

The key statistics are:

  • The number of companies entering some form of insolvency administration in the month of February 2012 was 1,123. This is the highest monthly number ever recorded for Australia. The previous highest ever was at the height of the GFC in March 2009 with 1,095.
  • An increase in insolvency appointments is usual in February as the courts start up again after the break, but the 2012 number is a 32% increase over February 2011 and a 47% increase over the average of the past five Februaries.
  • The rolling year to February 2012 has seen 10,815 insolvencies which is also the highest yearly total since records have been kept. The previous highest was 2011 with 9,608 which is a 12.6% increase.
  • Court wind ups were a major contributor to the jump in insolvencies with 449 in the month of February 2012. This makes up 40% of total insolvencies, when they made up only 28% last February and 34% on average over the last five Februaries.
  • State by state, there was a large increase in corporate insolvency appointments in Queensland. For the month of February 2012 there were 273 appointments in Queensland being a record high month for them.  This calendar year Queensland insolvencies are up 80% when comparing to the average of the same period over the previous five years.

2012 is following the trend set in 2011 of record insolvency numbers. In February 2012 alone the overall total, the Queensland total, the New South Wales total and the number of court wind ups are all at their respective highest ever recorded. The large increase in insolvencies in Queensland show that the tough conditions in 2011 are only now taking effect on small to medium business.

Interestingly, unsecured creditors are the big initiators of insolvency appointments this month. The recent trend has been Banks have been appointing receivers more and more often, but Secured creditor appointments are at a relatively low 10% of the monthly total whereas unsecured creditors, by applying to court, initiated 40% of the insolvency appointments in February.

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