Corporate insolvencies at record highs

26 March 2012

The number of companies entering liquidation is continuing to break records, with 10,544 companies entering some form of insolvency administration in the year to January 2012.

The Business Stress Report is collated by Dissolve - a business that provides advice to companies under financial distress. The report collates Australian Securities and Investments Commission data on company insolvencies for the past decade.

The number of companies going into insolvency administration in the year to January 2012 is up 21 per cent on the average of the past five years, and 10 per cent on the immediately prior year, according to the report.

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There were 518 insolvency appointments in January 2012, making it the highest January on record.

The year to January 2012 also saw a record high 1,386 appointments by secured creditors (ie, banks appointing receivers), according to the report.

Insolvencies cost Australian banks $5.4 billion in bad debts for the December 2011 quarter, and $4.9 billion for the September 2011 quarter - up from an average pre-GFC (global financial crisis) level of $1.1 billion.

Dissolve chief executive Cliff Sanderson noted that banks in the UK have just written 5.1 billion pounds in the December quarter in corporate debt, which constituted a record quarter.

"While the Australian figure is all bank debt (personal and corporate) this shows Australian banks are still reporting huge levels of bad debt on an international scale," Sanderson said. 

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