165 Aussie ICT firms entered administration in 2018

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165 Aussie ICT firms entered administration in 2018

A total of 165 ICT companies appointed administrators in the 2018 financial year, a decrease of just three from the previous year, according to a report from the Australian Securities and Investments Commission (ASIC).

The report tracked the administrators of information media and telecommunications companies that filed in statutory reports from 1 July 2017 to 30 June 2018.

While the change appears slight, 2018's ICT administrations represent a 13-year low, when ASIC counted 138 insolvent ICT companies in its report for 2005.

The IT sector at seventh among all other industries, compared to ninth place last year, accounting for 2.2 percent of all companies that called in administrators in the period.

ASIC said poor strategic management, inadequate cash flow or high cash use and trading losses had been cited as the top causes of failure of IT companies, while under-capitalisation and poor financial control and not having enough records were also seen as major drivers.

The report also stated that there were three ICT companies that owed between $5 million to $10 million to its unsecured creditors, although 107 companies owe less than $250,000. For secured creditors, three companies owed between $1 million to $5 million, while 42 companies owed between $1 to $500,000.

Only 30 companies did not owe the ATO any cash, with 97 having debts between $1 to $250,000, 29 owing between $250,001 to $1 million, and 9 owing more than $1 million.

Meanwhile some 47 companies had less than $1 in assets prior to the appointment of an administrator, while 37 had between $1-$10,000 in assets. 

ASIC also revealed that there were 11 counts of possible criminal misconduct under the Corporations Act prior to the appointment of an administrator, while there were 313 counts of possible breaches of civil obligations.

 

 

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