Both court liquidations and director initiated creditors voluntary liquidations have risen.

Court liquidations rose 8.6% and director initiated creditors voluntary liquidations rose 7.6%.

External Administrations By state have move in the last 11 months as follows;

ASIC’s Senior Executive Leader of the Insolvency Practitioners team, Adrian Brown, said that despite a decrease in external administration appointments in May compared to the same time last year, these latest figures show the number of court liquidations and director initiated creditors voluntary liquidations have risen.

‘Statistics collated by ASIC up to and including May 2011, show court liquidations in Australia rose 8.6% and director initiated creditors voluntary liquidations rose 7.6%.

Western Australia is also seeing its fair share of corporate insolvencies, despite suggestions that it’s in the fast lane of a two speed economy,’ Mr Brown said.

‘Interestingly, receivership and voluntary administration appointments, Australia-wide, have fallen,’ Mr Brown added.

ASIC publishes monthly insolvency statistics detailing the number and type of corporate insolvency appointments. External administrators, (liquidators, receivers and managers and voluntary administrators) are obliged by law to advise ASIC of their appointments.

Further analysis of data received by ASIC appears below.

More information on ASIC’s insolvency statistics

Analysis by state – Financial year to date

For the 11 month period to May 2011, there have been 8,802 external administrations (EXADs) – a rise of 4.4% on the 8,433 EXADs for the same period last financial year. The table below provides a breakdown by State:

Companies entering into external administration

NB: ASIC notes that percentage changes in smaller states can be unduly influenced by a relatively small number of appointments

Victoria (+9.8%), South Australia (+13.2%), Western Australia (+20.7%) and Northern Territory (+55.0%) have also recorded an increase over the 11 month period compared to last year.

Queensland (-.04%) and New South Wales (+.09%) have been relatively stable over the same period while Tasmania (-6.6%) and ACT (-12.4%) experienced a decline in EXADs.

Analysis by appointment type – Financial year to date*

Companies entering external administration

(1) includes Provisional liquidations

(2) includes Receivers, Receivers & Managers, Controllers and Managing Controllers

*excludes Scheme Administrator and Foreign/RAB wind-ups

*excludes Members Voluntary Liquidation appointments as these relate to solvent entities

]]> http://www.liquidationdirect.com.au/blog/general/corporate-insolvencies-on-the-rise-asic/feed/ 0 http://www.liquidationdirect.com.au/blog/general/record-number-of-liquidations/ http://www.liquidationdirect.com.au/blog/general/record-number-of-liquidations/#comments Thu, 30 Jun 2011 05:57:00 +0000 http://www.liquidationdirect.com.au/blog/?p=1381 Continue reading →]]> The number of companies entering administration in April was 812, which is up 10 per cent on the previous year and the highest April number on record (since 1999).

Banks have become far more active in taking possession of assets. The number of insolvency appointments initiated by secured creditors has more than doubled from 6 per cent of the national total in 2007 to 14 per cent in 2011.

Queensland’s proportion of the national total insolvencies has increased from 14 per cent in 2006 to 20 per cent in 2011.

WA’s proportion has increased from 4 per cent in 2007 to 7 per cent in 2011.

Dishonest financial advisers are shutting down one business and opening up a new one in an attempt to avoid defending or paying out compensation to clients who were given bad advice.

“Rogue financial operators who gave negligent advice to their clients are able to re-establish their business and continue to practice,” Briohny Coglin, a lawyer with national legal firm Maurice Blackburn said yesterday.

“In one particular case, several clients sought compensation due to negligent financial advice but the firm claimed insolvency. The same firm re-established their business under another name and continued offering financial advice.”

Adding to the problem and practice was that many financial advisers lack sufficient professional indemnity insurance to cover claims.

In one case last year a company argued it had a yearly compensation limit of $2 million and it had almost run out.

In other cases, even if the firm or adviser has enough insurance cover, their policies often exclude claims involving fraud, material non-disclosure or insolvency.

Consumer Action Law Centre chief executive Carolyn Bond said consumers were being left high and dry.

“We are aware of this problem with some advisers, particularly when they have given poor advice and their business is going into liquidation,” Ms Bond said.

“They can have all these people claiming because they’ve received very poor advice and lost money and unfortunately they are not able to get their money back because the company shuts down,” she said.

Consumer campaigner CHOICE spokesman Christopher Zinn said changes to financial advice laws should help shut down the problem of phoenix companies.

“It’s a problem, like it’s been a problem in other areas, but we certainly think that proposed government reforms will help,” he said.

The so-called Future of Financial Advice reforms being finalised by the government would make it easier for the investment watchdog “to deal with the bad apples”, Mr Zinn said.

Assistant Treasurer and Financial Services Minister Bill Shorten said yesterday new laws should help wipe out the problem.

“One of our concerns is so-called phoenix financial businesses. Companies that lose their client’s money often don’t have enough professional indemnity insurance, declare bankruptcy to escape their debts and then we see the directors starting up new businesses a couple of months later,” he said.

“I should stress that I don’t believe this is a big problem within the industry, the vast majority of financial planners are honest and competent, but it is an issue we are looking at,” Mr Shorten said.

News.com article excerpts

BUILDING industry powerbrokers are ratcheting up their campaign for the carbon tax to be abolished.

They are warning it will lumber developers with higher costs and aggravate Australia’s housing affordability crisis.

The Master Builders Association has joined industry counterparts in foreshadowing a jump in costs and says it is “deeply concerned” about the impact of the proposed tax.

The association said yesterday that the tax threatened to push up prices for building supplies.

The warning comes after the Housing Industry Association last week predicted that the tax would add at least $6000 to the cost of building a new home.

It coincides with a move by the Australian Chamber of Commerce and Industry to reaffirm its opposition to the tax, following the publication of a Climate Commission report calling for a carbon price high enough to shift investment to renewable energy.

MBA director Brian Welch called on the Government to at least widen the proposed compensation net for industries affected by the tax.

“We are deeply concerned,” he said. “We seem to be rushing down this path. There seems to be no assessment of the repercussions.”

In a letter to Climate Change Minister Greg Combet, the HIA has claimed home buyers will ultimately foot the bill for higher construction costs.

“At $20 per tonne, a carbon tax will add an extra $6000 or more to the cost of building an average new residence … adding $43 extra per month to family mortgage repayments,” HIA chief Graham Wolfe said.

Mirvac chief executive for development in Victoria and NSW, John Carfi, said it was likely there would be an additional cost but it was too early to qualify what “shape and size” it would take.

Commsec chief economist Craig James said that while the industry bodies were best placed to assess the impact, there were many elements of the carbon price still undecided.

A spokesman for Mr Combet said the HIA’s claims were contradictory.

“It claims the full carbon cost of building a new house will be passed on to consumers,” he said.

“But it also claims that the manufacturers who make the materials which go into building a new house are trade-exposed and therefore unable to pass on those costs.

“The truth is that the government is considering generous assistance to trade-exposed emissions-intensive industries which will shield them from paying the full carbon price.”

The Insolvency Experts operate the Building Contractor Advisory Service

News.com.au article

More than 2.6 million Australians would have difficulty raising $3000 in an emergency and many lack access to basic banking services, according to the CSI Financial Exclusion Indicator.

The study, conducted by the National Australia Bank and the Centre for Social Impact, said those who couldn’t raise funds were less likely to have insurance cover, leaving them exposed to large costs.

The study found that just 46.4 per cent of severely financially strapped people had home contents insurance and only 59.2 per cent of them had cover for their cars.

NAB chief executive Cameron Clyne said financial exclusion often led to a debt spiral, where people who could not access financial services from banks turned to unregulated lenders who charged prohibitive interest rates.

At the Insolvency experts we have seen numerous cases of uninsured persons declaring bankruptcy after the unexpected does occur.

Times are tough and if you need some advice or guidance, you may contact us free of charge, 24 hours, 7 days on 1300 100 285.

News.com.au article excerpts

They have held on through rising rents, digital competition online, a strong dollar and the lingering effects of the global financial crisis, which have tightened credit and driven their customers away.

While confessing it’s still an “uphill battle”, they can count themselves as the lucky ones in a neighbourhood where “for lease” signs litter the local shopping strips.

“Retail is changing and it is getting harder and harder to survive,” Mr Fergusson told news.com.au. “Retail has definitely been flat since the GFC but the last 12 months have been extremely bad.

“Consumers have changed their spending habits and have become very careful with their money.”

The family business is in Bronwyn Bishop’s Mackellar electorate where 359 others all shut up shop between 2007 and 2010.

It’s a bleak snapshot of a nation where more than 30,000 small businesses have folded in the period, taking with them up to 126,000 jobs and leaving the survivors – especially those in retail – desperately treading water.

Mr Fergusson said neighbouring shops that had been there for decades like Next Chapter Books and Treasure Island Toys – had recently closed.

He said the trend was for smaller players in shopping centres to be replaced – if at all – with national chain stores as they close. The flow-on hits landlords who are no longer able to charge as much rent with so many vacancies.

“This is where the landlords will need to change their stance,” he said. “Because the national chains will simply refuse to pay the higher rents.”

Mr Fergusson’s shop is the only remaining independent CD store in the area and he said his future remained uncertain.

On the other side of Sydney, more than 120km away in the Blue Mountains, it’s a similar story for books and antiques dealer Guy Weller.

Mr Weller owns the Mr Pickwick’s store in Katoomba and says business has been hit hard – particularly on the antiques side.

“Anything that veers into the territory of discretionary spending has taken a hammering,” he said.

“The street’s half empty. There are shops up for lease everywhere. And others have cut down on their opening hours and cut down on staff.

“Anyone who’s managing to hold the numbers they were doing two years ago generally congratulates themselves and is congratulated by me as doing pretty well.

“I don’t know of anybody saying they’re surging ahead.”

Mr Weller said the GFC was “a very strong contributor” to the downturn, along with internet competition and a drop in visitors to the picturesque tourist spot – largely driven away by the strong Australian dollar.

Two years ago he says most sales at Mr Pickwick’s were paid for on a credit card. That has since dried up, something Mr Weller says is indicative of a more cautious customer.

To survive, he has taken his business online, helping to broaden his customer base and stem the losses.

“That’s really been what’s helped get us through this period actually,” he said.

Only this week, we spoke with a butcher about the liquidation of his company caused by a collapse of his usual sales by approximately 45%. The butcher complained the spending habits of people was such that they were concerned about spending and were now choosing cheaper cuts of meat or even doing without.

If you are having financial issues, you can speak to the Insolvency Experts 24 hours a day, free of charge and totally confidential. Call 1300 100 285 for advice concerning your situation.

news.com.au article excerpts

ASIC took this action following complaints from the public and insolvency practitioners. These prosecutions resulted in fines totaling over $90,000.

ASIC also referred three briefs to the Commonwealth Director of Public Prosecutions (CDPP) who successfully prosecuted directors for managing a company while disqualified.

Of the 75 directors prosecuted, 47 were from New South Wales, 19 were from Queensland, 5 were from Western Australia, 3 were from Victoria and 1was from South Australia.

‘Without a Report as to Affairs and a company’s books and records, liquidators can’t properly investigate the underlying causes of a company’s failure. This may impact on a liquidator’s ability to establish the true financial position of a company and to realise assets to satisfy creditor demands and employee entitlements,’ said ASIC Commissioner, Dr Peter Boxall.

We are committed to holding those individuals who fail to assist external administrators of distressed companies accountable so that an orderly wind-up can be conducted,’ Dr Boxall added.

He was convicted and sentenced on 3 June 2010 to four months imprisonment which he will serve by way of intensive correction in the community.

Mr Smith’s conviction follows an ASIC investigation which found that he engaged in various acts of company management in relation to Colonial Holdings (Australia) Pty Ltd (Colonial Holdings) between 2 February 2004 and 2 May 2007. This investigation revealed that Mr Smith controlled the operation of Colonial Holdings (Australia) Pty Ltd by operating company accounts and signing caveats over land on behalf of the company while he was an undischarged bankrupt (under the Bankruptcy Act 1966, individuals are automatically disqualified from managing corporations).

If the ATO issues a Director Penalty Notice (“DPN”) – they send it to your home address as per the ASIC register.

If you don’t get it because it went to a previous address – that is no defence to the personal liability and loss of personal assets that the DPN will cause if not acted upon within 14 days from the date of the notice.

The NSW Court of Appeal recently held that a DPN was validly served by the ATO because it was sent by prepaid post to the directors address recorded on ASICs register, notwithstanding that the address was wrong.

The ATO is entitled to rely on the ASIC register and it does not have to go beyond such register to establish the correct address (Robertson v DCT).

Again, a director served with a DPN has fourteen (14) days to take corrective action in order to avoid personal liability. Such action includes

• Paying the debt
• Entering into an installment arrangement to pay the debt
• Appointing a Voluntary Administrator
• Appointing a Liquidator

If you have been served with a DPN you MUST act to avoid personal liability.

The ATO CANNOT issue a DPN once the company has been placed into Liquidation or Voluntary Administration.

Call The Insolvency Experts at Liquidation Direct for FREE confidential advice 24 hours – everday.

Call 1300 100 285 – 24 hours