Small businesses struggle as insolvent trading continues to rise: ASIC report

Insolvent trading continues to rise, according to the Australian Securities and Investments Commission's annual report into corporate insolvencies published on Tuesday.

ASIC's overview is based on 8425 administrators' reports lodged between July 2016 and July 2017, of which 63 per cent included evidence of alleged insolvent trading.

This compares with 61 per cent of reports in 2015-16 and 58 per cent in 2014-15.

Significant concern

Among the alleged insolvent trading cases, there were 3909 reports of alleged civil insolvent trading, of which 79.4 per cent estimated debts incurred while insolvent were below $1 million.

Administrators had evidence for 85 reports of alleged criminal insolvent trading and, of these, 59 estimated debts incurred while insolvent were below $1 million.

Three reports alleged a criminal breach involving more than 200 creditors. Each of these reports estimated debts incurred while insolvent of $1 million to $5 million.

"One thing that continues to be a concern is the matter of insolvent trading that goes on," says Professor Ian Ramsay of Melbourne Law School. "We can see that heading up to two-thirds of the reports allege a civil breach of the insolvent trading provisions. I'm not suggesting that turns into litigation, only a small percentage would, but it is still a significant concern." Read more