Insolvency Insights - Analysis of ASICs latest external administration appointment

Corporate Finance & Restructuring

July 18, 2014

The latest ASIC figures show that 811 companies entered external administration in Australia during the month of May 2014, this is the most recorded for a month this year. Despite the jump, total insolvencies in 2014 have remained at their lowest level since 2008. With 3,511 companies entering external administration in the first five months of 2014, this is down more than 20% on the 4,421 that entered external administration to the same point last year.

In looking at the broader market’s impact on insolvency, indicators suggested a softening in activity across the economy in May. This included surveys that found a slump in consumer sentiment, a deterioration in business conditions, and a contraction of the construction, services, and manufacturing sectors, while statistics showed new car sales and building approvals both fell in the month.

In this edition of Insolvency Insights, the team takes a look at the manufacturing (non-automotive) sector which has experienced a sustained period of falling profits and stagnant growth. In response to higher inputs and an historically strong Australian dollar, the local manufacturing industry is moving away from traditional heavy manufacturing into niche and high-tech fields.

Additionally, while FTI Consulting does not expect the recent trade agreement with Japan to materially increase exports of manufactured items to Japan, the agreement could drive an increase in primary sector exports, possibly delivering unexpected benefits

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