ob体育

ob体育 today published an annual overview of corporate insolvencies based on statutory reports lodged by external administrators for the 2011鈥�2012 financial year.

Report 297 Insolvency statistics: External administrators鈥� reports 1 July 2011鈥�30 June 2012 (REP 297) provides an insight around the 10,074 reports received over the last year and is part of ob体育鈥檚 commitment to providing the public with more information about the nature of corporate insolvencies in Australia.

Profile of Insolvent companies

REP 297 includes comprehensive information about the profile of companies placed into external administration including:

• industry types
• employee numbers
• causes of company failure
• estimated number and value of a company鈥檚 unsecured creditor debts, and
• estimated dividends to unsecured creditors.

Key data from the report is included in an attachment to this release.

Adrian Brown, Senior Executive Leader of ob体育鈥檚 Insolvency Practitioners team, said REP 297 showed that small to medium size corporate insolvencies continued to dominate reports by external administrators to ob体育. Of note, 85% had assets of $100,000 or less, 78.5% had less than 20 employees and 42% had liabilities of $250,000 (or less).

鈥楴inety-eight per cent of creditors in this group received between 0鈥�11 cents in the dollar, reflecting the asset/liability profile of small to medium size corporate insolvencies鈥�, Mr Brown said.

Reported misconduct

REP 297 also details how often external administrators report misconduct by company officers, the types of alleged misconduct most frequently reported (both criminal and civil breaches) and information about the number of cases that might warrant ob体育's enquiry.

鈥橰eports lodged by external administrators provide important intelligence and, if received in a timely manner, can alert us to possible misconduct by company officers and lead us to make further enquiries鈥�, Mr Brown said.

鈥楾o ensure timely lodgement, ob体育 conducted a compliance project in 2011 to remind registered liquidators to lodge their reports within the statutory timeframe. We will continue to monitor registered liquidator compliance with the Corporations Act 2001.鈥�

In assessing which matters to pursue further, Mr Brown said that ob体育 considers, among other things:

• the nature of the possible misconduct reported
• amount of the liabilities
• deficiency suffered
• availability of evidence, and
• the advice of the external administrator that the reported possible misconduct warrants further investigation.

鈥榃e also asked external administrators to prepare 738 supplementary reports where company officer misconduct had been alleged. This accounted for 10.2% of the 7,253 reports that were lodged (and alleged misconduct) in the 2011鈥�12 financial year. ob体育 assessed and recorded the remaining reports for future intelligence purposes鈥�, Mr Brown said.

Supplementary reports are typically detailed, free-format reports, which set out the results of the external administrator鈥檚 inquiries and the evidence to support any alleged offences. Generally, ob体育 can determine whether to commence a formal investigation on the basis of a supplementary report. In both 2010鈥�11 and 2011鈥�12, after assessment, ob体育 referred 33% and 29% of these cases respectively for investigation or surveillance.

The risk assessment approach to external administrators鈥� reports and supplementary reports is consistent with ob体育鈥檚 broader approach to assessing which matters to pursue for further regulatory action. This includes consideration of:

• evidence
• level of harm or loss, and
• cost versus regulatory benefit.

The report complements data published by ob体育 each month on the number and type of corporate insolvency appointments.

Report 297 is ob体育鈥檚 second annual report and fourth report since external administrators鈥� reports could be lodged electronically. ob体育's previous reports are:

Background

ob体育 compiled REP 297 from the estimates and opinions contained in statutory reports lodged with ob体育 by liquidators, receivers and managers, and voluntary administrators (external administrators) in the standard format of Schedule B to Regulatory Guide 16 External administrators: Reporting and lodging (RG 16) (Schedule B report). The Schedule B report is designed to gather basic statistical information about corporate insolvencies.

Under the Corporations Act 2001, external administrators must lodge statutory reports for corporate insolvencies as soon as practicable where they identify possible misconduct by company officers, and/or where unsecured creditors are likely to receive less than 50 cents in the dollar on their debts.

The statistics are based on external administrators鈥� estimates and opinions at the time they are lodged and are, therefore, not an actual account of the outcomes of external administrations. Nevertheless, the statistics provide a broad picture of corporate insolvencies in Australia for the 2011鈥�2012 year. The total number of electronic reports lodged directly by external administrators stands at 97% in 2011鈥�12.

Access to the report鈥檚 statistical data, including industry-specific data for the five largest industry classifications and eight years of data comparison from 2004 to 2012, is also available from ob体育鈥檚 website.

Attachment to ob体育 Media Release 12-218MR: ob体育 reports on corporate insolvencies 2011-2012

Profile of companies subject to external administration

Causes of company failure

Estimated dividends

Possible misconduct

Further enquiry warranted by ob体育