Insolvency Insights - Analysis of ASICs Latest External Administration Appointments Statistics from July 2014

Corporate Finance & Restructuring

September 25, 2014

The latest ASIC figures show that 841 companies entered external administration in Australia during July 2014, the highest number in a month this year, yet the lowest level for the month of July since 2007. External administration appointments grew the most in New South Wales, with continued increases in Victoria, Western Australia and Queensland. Western Australia recorded its highest number of insolvencies (80) for a month since November 2012.

On balance, economic indicators in July were steady with signs of improvement starting to appear. The Reserve Bank of Australia said it believes the economy would grow at a below trend pace, before improvement in 2016.

Consumer sentiment rose in August close to levels seen prior to the May budget, it fell sharply again in September, according to data from the Westpac-Melbourne Institute. Westpac Chief Economist Bill Evans said: “Most of the steady recovery we had seen in the Index over the last three months [post-budget] has been eroded.” Australia’s unemployment rate fell to 6.1% in August from the 12-year high of 6.4% recorded in July. There is an expectation the unemployment rate will stay above 6% in the short to medium term.

This month we take a closer look at the non-residential property sector where competition for assets that are well located and supported by solid income streams is intensifying and resulting in an increase in price. However, as the data indicates the market for assets without these fundamentals remains quite subdued.

We are also seeing that banks are still lending cautiously and selectively to the non-residential property sector and if this continues this will limit opportunities for operators, unless other capital solutions can be identified.

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