Insolvency Statistics – Page 2 – ░░░ INSOLVENCY INTERFACE

Are Official Liquidators funding the Court Liquidation scheme?

Assetless companies, Corporate Insolvency, Insolvency practices, Insolvency Statistics, Regulation Comments Off

May 142013

According to a recent study, the cost of being an official liquidator can be a bit rich.

“In respect of official liquidations generally, the survey showed that on an annual basis, insolvency practitioners are required to personally fund disbursements of $1.4 million and remuneration of $47.3 million in the conduct of their roles as Official Liquidators.”

This is one of findings in a research paper titled “An Analysis of Official Liquidations In Australia”, written by Amanda Phillips of Ferrier Hodgson, Sydney, and published on 13 May 2013 via the website of the Insolvency Practitioners Association of Australia (IPAA).

More detail of the estimates on annual remuneration and disbursements for official liquidations generally is shown in this table:

	Charge made/cost incurred (million dollars)	Recovered from company assets (million dollars)	Funded by Official Liquidators (million dollars)
Remuneration	55.6	8.3	47.3
Disbursements	1.9	.5	1.4

Another finding is that “based on the data provided by survey respondents, the average cost to administer an official liquidation is $17,475 over an average period of 7 to 12 months.”

Ms Phillips surveyed members of the IPAA. The survey covered official liquidations which commenced during the period 1 July 2011 to 30 September 2011. The paper says that “Sixteen Official Liquidators provided data in relation to 90 matters, which represented 10% of the total national official liquidations that commenced during the period 1 July 2011 to 30 September 2011.”

In addition to remuneration the paper reports on aspects of official liquidation including the nature of a typical official liquidation, the duration of appointments, an industry analysis, the turnover & size, the dividends to unsecured creditors and funding for Official Liquidators.

Ms Phillips was the 2012 winner of a scholarship from the Terry Taylor Scholarship fund administered by the IPAA. Her 33 page paper is available in pdf format from the IPAA site by clicking HERE.

Large majority of insolvency administrators comply

ASIC, Forms, Insolvency Laws, Insolvency practices, Insolvency Statistics, Practitioners Association (IPAA), Regulation Comments Off

Jun 162011

The Australian Securities and Investments Commission (ASIC) has found that “the large majority” of registered liquidators are complying with their statutory duty to lodge six-monthly accounts of receipts and payments (Companies Form 524) (“financial statements”) in respect of external administrations they are conducting.

In a special compliance program the ASIC analysed its database of approximately 24,800 companies in external administration at March 2010. It identified 517 external administrations where a Form 524/financial statement had been outstanding for a period of more than six months; and 171 registered liquidators who appeared to be at fault.

Preliminary results of the program were published in the December 2010 issue of “ASIC Insolvency Update – an update for registered liquidators”.

Final results have just been published in an article by the ASIC in the June 2011 edition of “Australian Insolvency Journal”, the journal for members of the Insolvency Practitioners Association of Australia (IPA). The article and the chart accompanying it show that:

In only 2.1% of external administrations were financial statements by the administrator overdue (517 out of 24,800).
In the 517 identified external administrations:
- there were an estimated 2,472 financial statements outstanding;
- one registered liquidator had more than 800 outstanding financial statements;
- another registered liquidator had 135 outstanding financial statements;
- 612 financial statements were lodged as a result of the ASIC project; and
- 469 financial statements would be lodged as a result of the project because the external administrators had acknowledged that they had not been lodged.
The ASIC wrote to 171 registered liquidators regarding outstanding financial statements. 63% of the liquidators were from small to medium size firms (of 1 to 9 practitioners). 7 registered liquidators “did not respond (to the ASIC) within the project timeframe”.
The most common reasons for not lodging financial statements were:
- “inadequate monitoring of internal control systems (including lack of staff supervision);
- inadequate internal control systems;
- staff turnover combined with heavy workloads; and
- incorrect use or delayed implementation of insolvency-based software.”

There are some other findings and explanations reported in the article. ASIC Commissioner, Michael Dwyer, says: “It was pleasing to see that the large majority of practitioners complied with their obligation to lodge accounts”.

[Undoubtedly the ASIC’s final report will appear in a form available to non-members of the IPA shortly. As soon as a link becomes available I will insert it in this blog.]

Is Bureau of Statistics missing insolvency crimes?

Insolvency Statistics, Offences, Standards, White collar crime Comments Off

Jun 022011

The Australian Bureau of Statistics (ABS) has just published the latest edition of Australian and New Zealand Standard Offence Classification (ANZSOC) with the aim of improving crime and justice statistics. It is a detailed document , comprising 108 pages plus 66 pages of appendices and indexes.

Crimes listed in the huge alphabetical and numerical indexes of categories of crimes include “Killing, unlawful, with intent” (0111), “Tram fare evasion” (0829), “Skateboard riding under the influence of alcohol” (0411) and “Fail to sound audible warning of intended blasting” (1629).

I have searched in vain for any mention of bankruptcy offences or corporate insolvency offences. The nearest categories I could find that might apply to corporate insolvency offences were “Breach of company code legislation (e.g. falsification of register, false advertising)” and “Fraudulent trade or commercial practices”. Both are listed under Division 09 “Fraud, Deception and Related Offences”, in sub-division 093 “Deceptive business/government practices”.

It’s interesting to see the number of offences that warrant special mention, when none is given to, for example, a director’s breach of the law in failing to assist his or her company’s liquidator – which carries a maximum penalty of a fine of $2,750 and imprisonment for 6 months. What does this say about society’s view of what is a crime, and the thoroughness of the way in which we collect and publish crime statistics?

To see the ANZSOC document click here.

Government funding of liquidators: latest figures released

ASIC, Assetless Administrations Fund, Insolvency Laws, Insolvency Statistics, Offences, Regulation, White collar crime Comments Off

Feb 232011

Figures just released by the Australian Securities and Investments Commission (ASIC) show that 644 grants totalling over $8.6 million have been paid to liquidators out of the Federal Government’s Assetless Administration Fund (AA Fund) between 19/12/2007 (the first payment) and 21/2/2011.

Creation of the AAFund was announced in October 2005 and officially launched on 22 February 2006.

Liquidators of companies with few or no assets may apply to ASIC for grants to finance preliminary investigations by them into the failure. Where ASIC is satisfied that enforcement action may result from a liquidator’s investigation and report, it may approve a grant.

Liquidators can seek funding to carry out an investigation and report in circumstances where they believe director bannings may be appropriate; or for other matters; such as where the liquidator believes there is or may be evidence of possible offences or other misconduct in relation to the Corporations Act 2001.

The largest single payment to date is $442,000 in 2009, to a liquidator who received $739,000 in total in that year . Most payments have been $8,250.

Click here to see the latest list of grant recipients. (… to 9 May 2011)

Decline in UK in number of dodgy directors being penalised

Insolvency Laws, Insolvency Statistics, Offences, Regulation, White collar crime Comments Off

Jan 192011

The UK government’s corporate insolvency regulator (the Insolvency Service) investigates too few cases of alleged misconduct by company directors.

This is the view of the UK’s Association of Business Recovery Professionals (known as “R3”), which represents 97% of the UK’s Insolvency Practitioners.

In a media release – “Public at risk from ‘dodgy directors’” – on 10 January 2011, R3 (which stands for rescue, recovery, renewal) says its research shows that:

“The number of directors disqualified by the government for misconduct, such as fraud, has failed to keep pace with an increased number of reports of potential misconduct.”

“The percentage of reports taken forward by the Insolvency Service (i.e. disqualifications) has halved from 40% in 2003/4 to 20% in 2009/10. Fraudulent activity is known to increase during tough economic times. In 2009/10, insolvency practitioners submitted 7,030 reports on directors’ behaviour which they believed warranted further investigation. However, in that year, only 1,387 cases were concluded by the Insolvency Service.”

R3’s President Steven Law commented:

“This mechanism is in place to protect the general public and other businesses from dishonest directors. Not punishing directors who are blameworthy sends out a dangerous message to others.”

To read a copy R3’s media release, go to https://www.r3.org.uk/pressandpublic/default.asp?page=1&i=523&id=548#PressStory

R3 has published a paper headed “Directors’ Disqualification: Room for improvement”. It provides some interesting statistics, summarizes actual case studies – of “cases when directors have not been disqualified despite the insolvency practitioner reporting obvious misconduct” – and makes 5 recommendations. A copy is available HERE.

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