More bad news – June Insolvency Statistics
In case you haven’t had quite enough bad news this week, the ASIC Insolvency statistics for June 2011 have just been released. At 1,027 companies entering some form of Insolvency, it was the second highest month on record and the highest June ever.
Part of the reason for the increase was a rush of Creditors Voluntary Liquidations due to fears about the new Director Penalty Notice laws that were to become effective as at 1 July 2011 (but didn’t). Certainly June was Dissolve’s biggest month ever for liquidation appointments and most were CVLs.
The key statistics are:
- The number of companies entering some form of insolvency administration in the month of June 2011 was 1,027. That figure is the highest June on record and the second highest monthly figure ever, the highest being 1,095 in March 2009. The June 2011 number is a 21% increase over the previous June of 848.
- This continues the trend of record insolvency numbers this year with March 2011 and April 2011 also being the highest March and April ever.
- The statistics show Creditors Voluntary Liquidations were a major factor in the increase with the 502 CVLs in June 2011 being the highest month on record. CVLs are a type of liquidation initiated by a company’s directors and shareholders rather than through the Courts.
- Geographically, Queensland is again over represented in line with recent months. Queensland insolvencies were 20% of the national total.
- Firstly, the main factor remains the more aggressive approach of the ATO over the last six months. Many of the appointments we are getting now are actually being triggered by a company’s inability to pay debts, particularly tax debts, from 2008 and 2009.
- Secondly, there was an unusual rush of appointments just prior to 30 June as a result of some fears about new legislation on Director Penalty Notices that was to become effective as at 1 July 2011 – we’ve since seen the draft legislation and the new laws, which are scary for a Director (read more here), won’t be effective until after they are passed by the Senate, so they won’t be backdated as feared.
- Thirdly, we are starting to see a rising number of appointments in building and construction in particular with small tradies starting to feature.
What it means is that there is unlikely to be a material drop in insolvency numbers for the rest of 2011 as the more recent economic problems are yet to filter through.