Figures released this week by the Australian Securities and Investments Commission (ASIC) show that 4703 companies entered external administration over the first half of 2010, which is comparable to the 4859 companies that entered administration over the first half of 2009.
May and June 2010 were actually worse than their 2009 counterparts with 914 and 848 administrations respectively, compared to 829 and 814 administrations in May and June 2009.
Lindsay Aitken from Lindsay R. Aitken Business Reconstruction told ProPrint that he has witnessed the statistical trend play out in the printing industry.
“It seems that a lot of small businesses are struggling at the moment. Much of that is due to a restriction of credit from the banks, as the rules required by banks to lend funds have become much stricter,” he said.
“2010 has been much worse [than 2009]”, he added.
In brighter news for the industry, the Australian Industry Group said that ‘paper, printing and publishing’ was the “fastest expanding sub sector” in the manufacturing sector in July.
The AIG’s Performance of Manufacturing Index rose 1.5 points to 54.4, representing the manufacturing sector’s seventh straight month in the black.
Meanwhile, ASIC has released a guide for company directors to help understand their responsibilities under the Corporations Act and prevent insolvent trading.
ASIC commissioner Michael Dwyer said the guide was developed in consultation with industry and accounting bodies, including the Australian Institute of Credit Management and the Insolvency Practitioners Association.
“It is important that directors focus on their obligations to prevent insolvent trading and we expect this guidance will assist directors of small-to-medium enterprises, in particular, to fulfil this fundamental responsibility,” he said.
Aitken, however, was sceptical that ASIC or the government could do much to pre-empt insolvent trading.
“It’s pretty difficult for ASIC to be the catalyst for avoiding these things. Really, it’s up to the market conditions and the ethics of the business operators,” he said.
The ‘Duty to prevent insolvent trading: Guide for directors’ is available for download here.
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