Australian Securities and Investments Commission (“ASIC”) has released the following summary and observations after a review of statutory reports lodged by liquidators, receivers and voluntary administrators for the year ending 30 June 2016.
• 10,078 external administrator reports were lodged, with NSW accounting for 38.2%.
• Of those, 79% related to companies with less than 20 employees.
• The industries with the highest levels of representation were business and personal services (31%) and construction (21%).
• 86% of the failed companies were assessed at having estimated assets of $100,000 or less with 61.2% had estimated assets of $10,000 or less.
• The top three claimed causes of failure comprised inadequate cash flow (46%), poor strategic management (46%) and poor financial control (34%).
• Possible causes of misconduct leading to insolvency included insolvent trading (61%), obligation to keep financial records (42%), and failure of directors to act with care and diligence (38%).
• Most categories of potential misconduct related to
alleged breaches of civil obligations (81.1%).
• The dividends estimate to unsecured creditors in
97% of cases was less than 11 cents in the dollar.