ASIC report: Mining insolvencies have lowered nearly 18% since 2016

The Australian Securities and Investments Commission (ASIC) has released a report showing a reduction in mining sector insolvencies compared to last year’s figures.

In September and October 2017, 19 mining companies registered for insolvency, a far cry from the 47 companies who registered in September and October 2016. For point of comparison, the most recent peak was 106 insolvencies in April 2016.

The report collated the statutory reports of external administrators lodged in the 2016–17 financial year, and showed an overall reduction of 17.9 per cent in reports for the year, indicative of a downward trend in corporate insolvencies, with SMEs dominating the report — 84 per cent of insolvent companies had assets less than $100,000 and 79 per cent had fewer than 20 employees. A total of 8425 reports were lodged, compared to 10,078 reports for the 2015–16 financial year.

Inadequate cash flow or high cash use and poor strategic management were the two biggest causes of insolvencies, mentioned in 47 and 46 per cent of reports.

The full report, entitled REP 558: Insolvency statistics: External administrators’ reports (July 2016 to June 2017), is available here.

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