March and April External Administrations Maintain Steady State

Low interest rates and housing price boom continue to keep insolvencies at bay

Corporate Finance & Restructuring | Real Estate & Infrastructure

June 14, 2017

FTI Consulting’s latest analysis of the ASIC insolvency statistics for March and April 2017, notes the number of companies entering external administration maintained a steady state.

In March 2017 there were 745 companies entering external administration markedly up from 576 the previous month, but levelling out for the month of April 2017 to 590.

April’s levels were well down year-on-year, with 793 appointments recorded in April 2016, whilst March levels were also down compared to 841 in March 2016.

There have been 2,307 external administration appointments for the first four months of 2017, compared with 2,899 in the first four months of 2016.

Quentin Olde, Senior Managing Director in the Corporate Finance & Restructuring segment at FTI Consulting said the level of corporate failures in 2017 was at its lowest level in four years and continued to decline. “It is likely the ongoing low interest rate environment and the buffer created by the housing price boom on the East Coast has ensured small business has maintained sufficient liquidity to avoid insolvency events,” Mr Olde said.

“This is supported by the decline in statistics in all states except WA where property prices have fallen with median housing prices falling to 2013 levels.

“As housing prices increase small business owners are afforded access to further credit via redraw facilities or refinance of the family home, and this, coupled with low interest rates and positive sentiment, results in investment in small business and lower failure rates,” he added.


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