Statistics released last week by the Australian Securities and Investments Commission (ASIC) indicate:
- the number of failed businesses exceeded 2500 for the third consecutive quarter during the first
three months of 2012.
- the number of external administration (EXAD) appointments in the first quarter of 2012 increased
by 16.7 per cent compared with the 2011 March quarter.
- Companies entering EXAD rose from 2598 in the December 2011 quarter to 2655 during the March quarter.
- There has also been a significant rise in the number of businesses
being wound up through the courts:
- a record 449 businesses were wound up through the courts in February, compared with 79 in January.
- Queensland showed a significant spike in external administrations during the March quarter, with an increase of 54.2 per cent from 404 (March quarter 2011) to 623 (March quarter 2012).
Zeke Bentley, Principal of Irish Bentley Lawyers and head of the Firm’s insolvency and restructuring section, observed:
“The first wave of post GFC insolvencies came in form of large, complex and highly leveraged businesses.
We are now seeing the middle market slow down. The failure of these middle-market businesses is quite significant, due to the flow on to their suppliers, contractors and employees.
Queensland is suffering more than most States, despite their strong mining industry, as Queensland businesses are still recovering from the 2011 floods, and the decline in tourism.
In my view, the next interesting area for insolvencies, with many speculating that businesses will have difficulty adjusting to the Government’s carbon pricing.”
We are likely to see how this will effect the economy later this year.”