10/05/2016 - 14:17

Slowdown bites as administrations up

10/05/2016 - 14:17

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More than 1,000 Western Australian companies went into external administration in the 12 months to March, an increase of nearly 36 per cent on the same period last year, according to the latest ASIC data.

Slowdown bites as administrations up
The rough economic climate is impacting the big end of town, too, according to FTI.

More than 1,000 Western Australian companies went into external administration in the 12 months to March, an increase of nearly 36 per cent on the same period last year, according to the latest ASIC data.

And the numbers appear to be worsening, with 241 companies going into external administration in the first three months of this year, up 39.3 per cent on the same period in 2015.

It was the worst March on record, with 86 companies entering appointments, making WA’s share of the national total about 10.2 per cent.

Nearly three in every four WA appointments were court wind-ups or creditor wind-ups in March, while 15 of the 86 were voluntary.

The construction industry was hit hardest, with 19 companies hitting the wall, while mining had five and accommodation and food services eight.

Nationally, the number of companies entering administration was up 18 per cent on the same time last year, according to FTI Consulting.

FTI Senior managing director (corporate finance and restructuring) Quentin Olde said there had been a marked increase in restructuring and insolvency activity among bigger corporates.

“A number of notable insolvencies at the top end, including Arrium, Dick Smith, Queensland Nickel, Laura Ashley and the widely reported Chapter 11 of coal miner Peabody have dominated the sector,” he said.

“The trend seems to indicate that mining, related services and downstream processing continues to show strain as a result of low commodity prices continuing.  

“The retail sector has shown noticeable signs of strain with a number of insolvencies and reported profit downgrades by major retailers.  

“In recent profit announcements all of the big four banks have indicated that they have increased provisions for bad debts on specific clients including Dick Smith, Arrium, Peabody and also on a portfolio basis for SME and Corporate related debt portfolios.”

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