ASIC’s latest annual statistics of reports lodged by registered liquidators about Australian corporate insolvency, released today, has highlighted the lag of the impact of the COVID-19 pandemic on small business.

For the period 1 July 2022 to 30 June 2023, small to medium size corporate insolvencies continued to dominate external administrators’ reports. Of the reports lodged, 83% had assets of $100,000 or less, 82% had fewer than 20 employees, 32% had liabilities of less than $250,000 and 68% had liabilities of less than $1 million. In this group of creditors, 96% received between 0–11 cents in the dollar, reflecting the asset/liability profile of small to medium size corporate insolvencies.

The highest number of reports were received for insolvencies in the construction industry (28%), followed by the accommodation and food services industry (15%).

Registered liquidators reported on average three to four causes of failures for a company in each report. The most common reported causes were inadequate cash flow or high cash use (52% of reports), followed by ‘other’ (50% of reports) and trading losses (49% of reports). ASIC’s further analysis of the ‘other’ causes showed 19% of reports identified the COVID-19 pandemic as a contributing cause.

Most reports were received for insolvencies in New South Wales (41%), followed by Victoria (27%) and Queensland (18%).

Registered liquidators continue to improve the timeliness in lodging their reports, with 77% now lodged less than six months after appointment, reflecting a longer-term trend.

For more information, refer to the Series 3 statistics published today and ASIC Information Sheet 80 How to interpret ASIC's corporate insolvency statistics (INFO 80).

Background

Series 3 statistics are based on information contained in reports lodged by external administrators and receivers as soon as practicable (and, in the case of a liquidator, within six months), if it appears to the external administrator or receiver:

• that a relevant person may have committed an offence in relation to the company, been negligent, or otherwise engaged in misconduct, or
• in the case of a liquidation only, the company may be unable to pay its unsecured creditors more than 50 cents in the dollar.

You can download the following Series 3 statistics from our website as Excel workbooks:

• Series 3.1: External administrators’ and receivers’ reports for Australia—Selected data from the reports (including causes of failure, available assets, liabilities, employee entitlements, creditors, remuneration and possible misconduct) (categorised by industry and region) for each financial year commencing from 1 July 2009
• Series 3.2: External administrators’ and receivers’ reports for selected industries—Selected data showing the five industries with the highest number of external administrators’ reports lodged (by region for each financial year commencing from 1 July 2009)
• Series 3.3: External administrators’ and receivers’ reports time series—Comparison of the totals for selected data (including causes of failure, available assets, liabilities, employee entitlements, creditors, remuneration and possible misconduct) as a time series by financial year (commencing from 1 July 2004).