Minimum shortfall to creditors per insolvent construction company, Australia 2013-14

What it is. AUD per insolvent construction company: the lowest-band estimate of liabilities over assets for all its creditors (unsecured trade creditors and subcontractors among them), averaged over the 2,153 insolvencies.

Sample. All 2,153 construction-industry initial external administrators' reports in 2013-14. The committee's own total is a floor; the CFMEU's median-based estimate is $2.70 billion, or about $1.26 million per insolvency (also a division by 2,153). 1,974 of the 2,153 (91.7%) paid unsecured creditors zero cents in the dollar (Table 3.4).

What it is not. Losses of ALL creditors, including banks, the tax office and employees, not of subcontractors alone, and of insolvent companies, not of a typical job. An estimate lodged at the start of each administration (liabilities over assets), not a realised loss or a recovery outcome. A lower-bound mean from band minimums, so it understates the 67 insolvencies above $10 million, which Table 3.1 counts at their $10 million floor; and the mean is pulled up by those large cases (981 of the 2,153 reports, 45.6%, show a deficiency under $250,000), so it is not a typical company's shortfall. 2013-14 data; ASIC publishes later years that this research pass did not open. Not a share of contract value, so never multiplied by one.

Our arithmetic. Table 3.1 total estimated deficiency (minimum) $1,625 million, built by taking the lowest dollar figure in each of seven deficiency bands, divided by the 2,153 reports: 1,625,000,000 / 2,153 = 754,761, shown as 755,000 because the table is rounded to $ million.

Where it came from

• Senate Economics References Committee, Parliament of Australia (2015), Insolvency in the Australian construction industry ("I just want to be paid"), Chapter 3: The impact of insolvency
  Chapter 3, Table 3.1 and paragraph 3.4 · source record

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