Insolvency Insights - Analysis of ASIC's June 2014 External Administration Appointments

Corporate Finance & Restructuring

August 29, 2014

The latest ASIC figures show that 811 companies entered external administration in Australia during the month of June 2014, the same as May and equal highest for a month this year. However, total insolvencies in 2014 have remained at their lowest level since 2008. 4,322 companies entered external administration in the first half of 2014, almost 20% less than the first six months of 2013.

On balance economic indicators in June were negative, although signs of improvement started to appear. Australian Industry Group (AIG) data indicated the manufacturing and services sectors both remained below the 50 point mark that separates growth from contraction in June and had slipped from May. However, the construction index jumped strongly, climbing from 46.7 points in May to 51.8 points in June.

This month we examine foreign investment, which has continued to be a key source of capital for the Australian economy, with a total of A$2.462 trillion invested in Australia in calendar year 2013, according to data from the Australian Bureau of Statistics. Separate data showed the People’s Republic of China became the biggest investor in Australian real estate in the 2013 financial year, having been given approval for A$5.9 billion in proposed real estate investment by the PRC.

Since the June insolvency statistics, leading indicators are suggesting that the economy is improving, but there continues to be signs of distress. The weakest major economic statistic is unemployment, which grew to 6.4% in July, its highest level in more than 10 years and above the U.S. unemployment rate for the first time since 2007.

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