- ASIC figures released this week, reveal 974 companies entered external administration in Australia during May, the highest on record for the month of May since 1999.
- 941 companies entered external administration in April, which was a record for the month of April.
- The increase in voluntary administrations indicates:
- That trading businesses with cash flow issues are utilising the various restructuring options available.
- The need to guard directors against the deeming provisions of DPNs, by appointing an administrator/liquidator.
- The increase in creditor wind ups was likely to be with companies where there was no hope of resurrection.
- Business owners have been using equity in homes and money from alternative sources in light of challenging economic conditions, however these sources of funds have been drying up
- There are some positive conditions, such as low interest rates and a falling currency, which could help struggling businesses.
- The challenges facing those companies servicing the mining sector (i.e. from miners managing costs and reducing investment) are beginning to have an impact on the ongoing viability of some businesses.