Company liquidations rise with more debt collections

Australian Securities and Investments Commission statistics show that after two years of stability following the global financial crisis, the number of companies entering external administration surged by 9.2 per cent to 10,481.

Adrian Brown, ASIC's senior executive leader of insolvency practitioners, said the jump in insolvencies appeared to be driven by increased debt collection, including by the ATO.

"The ATO said publicly in 2010, 'We're in debt collection mode,"' Mr Brown said. "The anecdotal evidence we're hearing over the past two quarters is that the ATO has been very aggressive."

Mr Brown said voluntary administrations, in which a company owner retains a chance of recovering something of their business, had fallen away.

"It seems to suggest these are companies without a prospect of rescuing their business," he said.

The number of liquidations last year ordered by courts on the application of a creditor rose 12.2 per cent, while the number of liquidations called by company shareholders who realise their business is insolvent rose 12.8 per cent.

Mr Brown said that changes to the law since 2007 made it easier for company directors to put their businesses directly into liquidation when confronted with a tax or other debt that they could not pay.

The ATO can issue directors penalty notices, which make company directors personally responsible for their company's tax debt.

"If the ATO goes and issues directors penalty notices one of the director's options is to put it into liquidation," Mr Brown said.

ASIC was committed to ensuring that Australia's 670 liquidators did their job properly, he said.

"When work increases it can stretch them and we're intent on keeping them focused on their responsibilities," he said.

- Administrators appointed to deal with the close of Kell & Rigby have identified a possible investor to keep the construction company in business. Kell & Rigby announced on Thursday it was closing its doors, resulting in the loss of 500 jobs at its projects in NSW, Queensland and the ACT.

Stephen Parbery and Mark Robinson of PPB Advisory were appointed as voluntary administrators. It is understood the company had been negotiating a refinancing solution for months, but this fell through on Wednesday. The administrators said wages and superannuation for all Kell & Rigby employees had been paid up to date.