Bankruptcies jump above GFC

ASIC released September quarter bankruptcy data today and despite what Fairfax’s cheerleader in chief would have think, company bust number surged past GFC levels:

Mr Adrian Brown, ASIC’s Senior Executive Leader of Insolvency Practitioners, said that each month of the September quarter saw a consistently high number of appointments, notwithstanding a decrease from August (1049) to September (991), resulting in a higher quarterly total compared with both the June 2011 quarter and the same period last year.

For the quarter to 30 September 2011, there were 2,961 EXADs compared with 2,656 EXADs in the previous quarter (+11.5%) and 2,502 EXADs for the same quarter last financial year (+18.3%).

‘We have now seen two consecutive quarters where appointments exceeded 2,600 with the quarter ended December 2008 being the only other occasion this occurred in recent times. For the calendar year to date, companies entering EXAD increased 9.6 per cent compared to the same period last year’, Mr Brown said.

ASIC statistics show that creditor-initiated court liquidations (+33.7%) and receivership appointments (+12.7%) drove the quarterly increase of 11.5% in EXAD appointments over the previous quarter. Court liquidations rose strongly in the two largest states of NSW (+42.6%) and Victoria (+34.4%).

‘The trend towards creditor-initiated court liquidations supports feedback from insolvency practitioners that they’re seeing more activity as creditors, including the Australian Taxation Office, and various workers compensation insurers, continue to tighten up on debt recovery’, Mr Brown said.

Mr Brown also noted that appointments of receivers/controllers by secured lenders increased in NSW (+ 21.5%) and remained at high levels in Queensland where the raw number of appointments (305 over the calendar year to date) were only marginally below those of NSW (310), the largest state, and above that of Victoria (282). Receivership/controller appointments were also up in Western Australia (52.3%) for the calendar year to date compared to the same period last year.

‘Feedback from the market suggests that activity in Queensland, and to a lesser extent, in Western Australia, is largely driven by property-related appointments. We understand that certain secured lenders are crystallising long-standing problem loan positions or taking control of an underlying security where other creditors initiated an external administration’, Mr Brown said.

Here are the charts. Nationally:

And by state:

David Llewellyn-Smith
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  1. Speaking of insolvencies, Michael West had a great article on ASIC and the insolvency managers:
    Can investors trust ASIC?
    ASIC officers may have become too cosy with the people in the insolvency business they are supposed to be regulating.
    Are these companies really going to the wall or is it a nice lil scheme for the promoters to defraud shareholders?

  2. The financial settings in Australia are severely deflationary for assets as M1 has been held very low and at times at zero now for 2.5 years. The only comparable period recently was the time from 1989 to the middle of 1992 when the commercial property crash ensued. The Australian dollar is at nose bleed levels and at least 30% overvalued on a PPP basis. (The Swiss National Bank would be panicking at such levels and they did panic and forced the euro up from 1.00 to 1.24). Interest rates for borrowers are at very high levels compared to other western countries. This is all severely deflationary and do the RBA and Treasury really understand how deflationary this constructed financial conditions index as outlined above really is? A further shock to the economy of a ridiculous carbon tax which gives a free kick to exporters to Australia together with a slide in commodity prices could open the economy up to the English disease where once the financial crash occurred the emperor had no clothes. Substitute commodities in Australia for finance in the UK.