The number of businesses entering external administration jumped almost 6 percent in the last financial year, with insolvency practitioners reporting more activity in the SME sector as a result of tighter Australian Taxation Office debt recovery.
For the 12 months to June 2011, there were 9,829 external administration appointments (EXADs) in Australia – a rise of 5.9 percent on the 9,281 EXADs for the same period last financial year.
According to the Australian Securities and Investments Commission’s (ASIC’s) Senior Executive Leader of the Insolvency Practitioners team Adrian Brown, a strong increase in external administration appointments in June saw insolvencies increase from 4.4 percent to 5.9 percent for the 11-month period to May 2011.
“The feedback we’ve received from insolvency practitioners is that they’re seeing an increase in activity in the SME sector as the Australian Taxation Office tightens up on debt recovery. According to industry, finance availability is also negatively impacting business.”
ASIC’s latest figures show the number of court liquidations and director initiated creditors voluntary liquidations are responsible for the overall rise in appointments nationally.
“Our statistics show court liquidations in Australia rose 7.7 percent. Voluntary liquidations initiated by directors were up 10.1 percent. Receivership and voluntary administration (VA) appointments, Australia-wide, are down on last financial year.”
“…these latest figures suggest that a greater number of businesses couldn’t be resuscitated through the voluntary administration process or are being restructured outside of an external administration,” Brown added.
Insolvencies rose 3.5 percent in New South Wales, 11.9 percent in Victoria, 12.8 percent in South Australia, 17.4 percent in Western Australia and 37.5 percent in the Northern Territory.
Queensland remained stable, whilst 2.5 percent fewer Tasmanian companies entered external administration and administrations fell 10.2 percent in the ACT.