The number of companies entering external administration has risen almost 6 per cent, according to new figures released by the Australian Securites and Investments Commission. 

ASIC’s senior executive leader of the Insolvency Practitioners team, Adrian Brown, said a strong increase in external administration appointments in June saw insolvencies increase to 5.9 per cent from 4.4 per cent for the 11-month period to May 2011, the final figures for the 2010-11 financial year show. 

"The feedback we’ve received from insolvency practitioners is that they’re seeing an increase in activity in the SME sector as the Australian Taxation Office tightens up on debt recovery. According to industry, finance availability is also negatively impacting business," Brown said. 

ASIC’s latest figures show the number of court liquidations and director initiated creditors voluntary liquidations are responsible for the overall rise in appointments nationally. 

The statistics show court liquidations in Australia rose 7.7 per cent. Voluntary liquidations initiated by directors were up 10.1 per cent. Receivership and voluntary administration appointments, Australia-wide, are down on last financial year. 

"While we saw an immediate fall in VA appointments in 2008 following the streamlining of the voluntary liquidation procedures, these latest figures suggest that a greater number of businesses couldn’t be resuscitated through the voluntary administration process or are being restructured outside of an external administration," said Brown.

The 2007-08 financial year saw a 5.6 per cent increase prior to the significant jump of 26.5 per cent in the 2008-09 year, reflecting the impact of the GFC. 

In 2009-10, ASIC recorded a drop of 7.2 per cent. "It’s interesting to note, however, that as a percentage of total company registrations, insolvencies are about half of one per cent for the last two financial years," Brown said.