Following another OCR drop (50 points) we are now heading into the Christmas break with no new announcements till February, 3 months does seem a long time to wait for any further changes. Once again this will take some time to flow through to the rest of the economy, but it will have an earlier benefit for those borrowers rolling 6 monthly mortgage periods or on the floating rate. There continue to be a number of interesting insolvent businesses covered by the media, particularly the regional publications from pie makers to solar providers. The expectation continues that there will still be further larger businesses to fail as the recovery continues and the IRD keeps pressure on businesses with arrears to…

The end of one year and the start of the next year can be a challenging time for many business owners, especially with extended breaks over the Christmas and New Year period taken by staff. The pressure is compounded by the need to settle various financial obligations, from employee holiday pay to tax payments. Many businesses face the strain from having to pay employees holiday pay entitlements, a period where income is not being generated due to closure and then to face IRD obligations such as November GST due 15 January, Paye due on 20 January, Oct to Dec FBT due on 20 January, provisional tax due on 15 January and for the larger employers more PAYE due on 5th…

Winding Up Applications Another big month with the 3rd month in a row posting new highs in winding up applications. This high was in large part driven by the IRD pushing through application before the Christmas closedown making up 87 of the 125 applications. All other creditor applications has remained constant when compared to the last three months in the high 30’s. We expect this drive from IRD to continue into November in a race to collect funds and apply pressure to derelict debtors before the courts close. It is important to keep in mind however that while this is a high when compared to the last five years it is off a very low base. The year-to-date applications (972)…

We are due for the October OCR announcement to come out this week with pundits predicting that we may see a 50pt drop given the current state of the economy. However, we won’t have the CPI and inflation figures available for public release for another few weeks/months so at this stage the OCR decision could conceivable go either way (hold or drop) In insolvency news, I understand we saw the first Licenced Insolvency Practitioner lose their license following a CAANZ disciplinary tribunal hearing for a number of breaches including misconduct, conduct unbecoming, Rules and Code breaches in insolvency engagements and non-response to NZICA. The full decision can be found here. Winding Up Applications September came in just behind the August…

When you pay a deposit for a service or product and the company fails to communicate, it's a frustrating and concerning situation. This article explores how/when to use a statutory demand to recover your funds if you suspect the company may be insolvent. We also discuss steps for smaller disputed debts within the Disputes tribunal, recovery of larger deposits, and specific considerations for building agreements in New Zealand. Additionally, we will cover the possible costs and time involved in pursuing legal action, and why such cases are often not pursued due to economic reasons. Scenario: Unresponsive Company Holding Your Deposit Imagine you paid a significant deposit to a company for a building project. The company has since ceased all communication,…

In our 44th Insolvency by the Numbers, we look at the July 2024 data set and we review how the month has tracked compared to prior months and years. Unsurprisingly the Reserve Banks made no change to the OCR at their July 2024 announcement. Banks and independent economists now expect the first drop may come in November 2024. June quarter inflation figures came in at 0.4, bringing the annual inflation rate to 3.3. This was driven largely by tradable inflation coming down, non-tradeable (“domestic”) inflation appears to be a bit stickier however. No doubt the next quarter inflation figures may not show as much of a drop with the recent rates rises pushing through and the adjustment to tax bands…

Insolvency by the Numbers: NZ Insolvency Statistics June 2024 In our 43rd Insolvency by the Numbers, we look at our data set for June 2024. We review how the month has tracked compared to prior months and years. We once again await the Reserve Banks latest announcement around the OCR in July 2024 to see if there will be any signal of change in when the rates may drop. The consensus appears to be that there will be no change till 2025 and no signalling otherwise. There are however murmurs that when the rates begin to drop they will be dropping quickly, time will tell how this plays out. Business confidence is reaching new lows, this includes the expectation to…

Companies that have been through a formal liquidation process are difficult to restore to the Companies Register. This can often make liquidation a more attractive option for company closure than the short form removal. It provides more certainty that the company has been brought to an end. Any company restoration requires a formal application and good reason. Restoring a company to the Companies Register in New Zealand can be necessary when a company has been struck off for various reasons, such as failure to file annual returns, short form removal under section 318(1)(d) of the Companies Act 1993, or following formal liquidation. The process and requirements for restoration depend on the reason for removal. 1. Struck Off Due to Failure…

In our 42nd Insolvency by the Numbers, we look at our data set for May 2024. We review how the month has tracked compared to prior months and years. In the last month the Reserve Bank has continued with no change to the OCR and indicated not to expect any reductions until 2025. We are now beginning to see a further tightening being covered in certain sectors particularly construction where new work has become scarce and those that are not busy finishing off existing projects are beginning to look to the renovation space. The government has released their latest budget showing cuts to a number of ministry’s and projects that are not deemed essential, there has also been some tax…

In our 41st Insolvency by the Numbers, we look at our data set for April 2024. We review how the month has tracked compared to prior months and years. In the last month we have seen the latest release of unemployment data showing a rise to 4.3% for the March 2024 quarter, with expectation that it may continue to increase. We have seen a decrease in inflation driven largely by tradeable inflation, meanwhile the non-tradeable inflation continues to remain high, showing we still have some work to do to get over inflation in NZ. The Reserve Bank has continued with no change to the OCR during the month with the next announcement due in May 2024 hoping to shed some…

Company liquidation can have significant ramifications not only for the business itself but also for its directors, particularly concerning their credit ratings and overall financial standing. When a company faces insolvency and enters into liquidation, directors may find themselves confronted with various challenges and consequences that extend beyond the dissolution of the company. In this article, we explore the impact of company liquidation on directors' credit ratings, the broader implications of association with an insolvent company, and strategies directors can employ to mitigate the effects. Impact on Directors' Credit Ratings: One of the immediate concerns for directors following company liquidation is the potential impact on their personal credit ratings. While company liquidation itself does not directly affect directors' credit scores…

In our 40th Insolvency by the Numbers, we look at our data set for March 2024. We review at how the month has tracked compared to prior months and years. Company Insolvencies – Liquidations, Receiverships, and Voluntary Administrations March 2024 insolvency appointments continue the trend seen last month being notably up in March 2023. Total appointments for the month were 291, this is 26% higher than 2023 and almost double each of the years back to 2019. March 2024 is 144 appointments above the long-term average of 147 monthly appointments. 2024 continues showing strong appointment figures exceeding the last 7 years for the cumulative total of the 3 months to date. As predicted March figures were up and we expect…