When a company is placed into liquidation, one of the first actions of the liquidators is to give public notice of their appointment in the New Zealand Gazette, and an appropriate newspaper, and to invite creditors to file their claims. The vast majority of claims received will relate to specific amounts that are owed because invoices for goods or services haven’t been paid when due or loan repayment obligations haven’t been met. There is, however, the ability for claims to be filed for contingent debts. WHAT IS A CONTINGENT CLAIM? In the circumstances of a liquidation, a contingent claim relates to a debt that will be owed by the company in liquidation only if certain circumstances occur. This could include…

Our membership with the Global Restructuring and Insolvency Professionals (GRIP) network gives our clients and their referrers access to qualified and highly experienced insolvency and business recovery practitioners in over 36 countries worldwide. The GRIP network was created in 2014 in Europe to provide a cross-border referral and marketing network for independent insolvency firms. Members are invited to join and commit to supporting each other to secure locally based work and resolve complex issues. GRIP members are based in Europe, Canada, Central and South America, Australia and the Asia-Pacific region. Whether you need professional assistance with restructuring, selling assets, or winding up a company, a fellow GRIP member who has strong local knowledge, understanding of local regulatory and legal requirements,…

Inland Revenue on Covid-19 Impact Video Link Here The IRD have advised that if taxpayers are adversely impacted by COVID-19, and they pay the outstanding core tax as soon as practicable that they will automatically write-off any penalties and interest. Taxpayers who are impacted by Covid-19 are suggested to apply for instalment arrangements. Customers who may already be in an arrangement but consider they may not be able to continue with the current terms due to being significantly affected by COVID-19 may ask to renegotiate an instalment arrangement. The key message is to get in contact with IRD. It is the Commissioner’s view that a customer has been significantly adversely affected by COVID-19 financially where the customer’s income or revenue…

Video Link Here July has mirrored the insolvency appointment figures over the last couple of months. The pressures affecting our economy have also remained fairly consistent over the last few months:- Countries are continuing to fluctuate in and out of COVID-19 lockdowns - Businesses and consumers are facing ongoing shipping delays and supply shortages- Consumer demand for goods continues to exceed supply in many areas- Labour shortages remain an issue- Inflation remains higher than RBNZ’s targets and the affordability of goods remains an issue To the end of July, the outlook for growth has continued to look positive:- Unemployment rates have now fallen to pre-COVID-19 rates. - The construction industry and the housing market continue to run hot - Consumer…

Video Link Here There is a belief held by some people that the liquidators of a company are paid by the person (or company) that appoints them and, in some cases, that is what happens – but not always. How the liquidators get paid, and by whom, will depend largely on the situation of the company being liquidated, such as solvent or insolvent, shareholder or High Court appointment, but there are two broad categories – • Payment from the assets of the company; or• Payment from a third party – such as shareholders of the company to be liquidated or the applicant creditor for the High Court proceedings to liquidate the company. The other possibility is that the liquidators will…

It’s day three of the latest Level 4 lockdown and, while we know the current lockdown is going to impact businesses, there’s still a lot we don’t know. It’s not yet clear how long we will spend in Level 4, what impact the latest lockdown will have on different business, or what overall impact on the New Zealand economy will be. Last week, most were expecting an OCR increase. On Wednesday, it was held at 0.25%, due at least in part to the lockdown. The Level 4 rules are a bit different to the last time around and can be found here. The current locations of interest are listed here. Our team is working remotely and are available to discuss…

We have passed the halfway point of 2021 and it is now less than six months until Christmas. Quite a bit has happened in the first half of the year so let’s look at how the NZ economy has tracked to June 2021. The global economy continues to face a number of challenges, which are impacting many countries to varying degrees: - Countries are fluctuating in and out of lockdowns as a result of ongoing COVID-19- Shipping delays are continuing- There are materials shortages affecting many industries- Consumer demand for goods continues to rise while international travel continues to be restricted We see the building industry as one to watch. In New Zealand, COVID-19 brought a further increase in demand…

This article was prepared for RITANZ by James McMillan, Patrick Glennie and Nicole Thompson of Dentons Kensington Swan. 2020 was a year of reform in the insolvency sector. Most of the provisions of the Insolvency Practitioners Regulation Act 2019 (IPRA) came into force on 1 September 2020, with several other significant reforms coming in at or around the same time. In this article, we look back at some of the key issues insolvency practitioners were readying themselves to grapple with, and trace developments since the IPRA came into force. Key reforms Some of the key reforms in 2020 were: • Unlicensed insolvency practitioners can no longer accept new insolvency assignments (and have until 31 August 2021 to complete existing assignments).•…

Let’s look at the NZ economy and the insolvency space in May 2021. In the media, the concerns about the current labour shortages grew. While these concerns were previously focused on the horticultural sector (a shortage of pickers during harvest) and the hospitality sector, the number of industries calling out for workers is increasing. Of late, the labour shortages in the construction sector – an issues that has been around for some time – have been noticeable, as anyone who has tried to organise a tradie or become a DIY expert thanks to YouTube can attest to. Supply shortages for building materials is also biting, which is not helping New Zealand’s ever present housing crisis. The pressure points for the…

The Income tax Act 2007 allows a company to make a tax free distribution of capital gains “on liquidation”. The IRD issued publication QB20/03 on 11 December 2020. The publication discusses the first step legally necessary to achieve “liquidation” in both the short form (s318(1)(d) Companies Act 1993) and long-form liquidation (s241(2)(a) Companies Act 1993). IRD have confirmed when “liquidation” occurs under each process. It reinforces BR Pub 14/09 that a short form liquidation commences (for tax purposes) when a valid resolution is passed, when the directors (and/or shareholders depending on the constitution) make the decision to wind up the business, pay all creditors, distribute surplus assets and request removal from the register of companies, and then carry out the…

Typically, April is a quieter month for company insolvencies than March is and April 2021 followed this pattern. April starts the new financial year for most companies and, hopefully, allows businesses to put the COVID-disrupted 2021 financial year behind them. We anticipate that the statistics for the 2021 financial year will become the outlier and that the 2020 financial year will be a better measure of insolvency trends. Let’s look at what happened in April 2021. The minimum wage increased $1.10 per hour from 1 April 2021 to $20.00 per hour ($41,600.00 per annum). While the additional cost of $44.00 per employee per week ($2,288.00 per annum) may not have a huge impact on some smaller businesses with very few…