ASIC’S EXTERNAL ADMINISTRATION APPOINTMENTS FIGURES FOR MAY 2013

OVERVIEW

1. 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.
2. 941 companies entered external administration in April, which was a record for the month of April.
3. The increase in voluntary administrations indicates:
   1. That trading businesses with cash flow issues are utilising the various restructuring options available.
   2. The need to guard directors against the deeming provisions of DPNs, by appointing an administrator/liquidator.
   3. The increase in creditor wind ups was likely to be with companies where there was no hope of resurrection.
   4. 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
4. There are some positive conditions, such as low interest rates and a falling currency, which could help struggling businesses.
5. 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.