ASIC reports on corporate insolvencies 2018–19December 19, 2019

attached is some interesting stats on the cause of companies insolvency refer here >> Report REP 645 Insolvency statistics_ External administrators’ reports (July 2018 to June 2019)

The attached is from ASIC’s Report 645 Insolvency statistics: External administrators’ reports (July 2018 to June 2019) (REP 645) and provides an overview of the nature of corporate insolvencies, supplementing the monthly insolvency statistics that ASIC publishes on its website, and is compiled from reporting by external administrators.

Some key observations from the report are:

Small to medium size corporate insolvencies continue to dominate external administrators’ reports. 85% had assets of $100,000 or less, 76% had fewer than 20 employees and 38% had liabilities of $250,000 or less;

96 per cent of creditors in this group received between 0–11 cents in the dollar, reflecting the asset/liability profile of small to medium size corporate insolvencies;

ASIC requested 875 supplementary reports from external administrators where the initial report meets certain thresholds in assessing if further action was warranted(refer annexure 2);

Generally, due to a lack of evidence or because ASIC considered no further action was required given the circumstances, over the last three years on average, fewer than 20% of these supplementary reports resulted in further regulatory action;

External administrators advised that in nearly 50% of reports where they alleged a civil breach for insolvent trading, they had either commenced or were contemplating initiating recovery actions for insolvent trading. External administrators’ are best placed to assess the available information and determine whether it’s in the best interest of creditors to pursue compensation for insolvent trading from directors.

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