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 be recovered. The industry focus seeing high levels of insolvency continues to be led by construction, though anecdotally we have seen numerous appointments in retail, logging and commercial property ownership in the last few months.
Christmas/New Year Hours
The team are closing on Friday 20 December and officially returning on Monday 13 January however emails will be monitored during the closedown period and staff will be available should the need arise. If the matter is urgent we will have a skeleton staff over the break.
Winding Up Applications
November saw a drop in total applications from the rising levels seen the last 4 months. While above 2023 the figures for the month were under 2022.
The year-to-date applications (1061) is towering above all prior year full year figures 2020 (239), 2021 (562), 2022 (623) and 2023 (864).
Breaking down the winding up applications by creditor we can pinpoint the drop in application coming from IRD for November, the reason behind it may just have been how the month shook out or perhaps they are winding up early for Christmas. Of note however as at 6 December 2024 and the IRD have already advertised 12 applications for the month. On that basis it does not appear they are slowing down, when compared to prior Decembers unless they don’t advertise any other applications for the month.
The above graph does highlight the “be kind” mentality taken by IRD over Covid with numerous zero appointment months in 2020.
Personal Receiverships
November had 3 personal receiverships, a total of 46 for the past 12 months. Lenders who have taken personal general security agreements from borrowers continue to make appointments when borrowers and their companies default appointing receivers over both entities simultaneously.
The bulk of the personal receivership appointments continue to be driven by a small number of business lenders using these practises and exercising the enforcement rights the borrower granted them on signing up for the loan. From a practitioner perspective there are 3 firms showing up repeatedly for personal receivership working exclusively for certain creditors.
Company Insolvencies – Liquidations, Receiverships, and Voluntary Administrations
November 2024 has dropped back down to past years Novembers. The drop was across the board in all appointment types, the reasons behind this may have been driven by the end of year winding up or potentially the changes in business confidence as decision makers try to hold out to see how they do over the Christmas period.
Total insolvency appointments for the year continue to increase in line with 2015/2016 figures. Month on month November had 207 total appointments, still above the long-term average of 164. With 2538 appointments in the year to date we are above full year figures back to 2016. We expect the higher insolvency appointment levels will continue into 2025 at least due to a large backlog at IRD and a struggling economy in most sectors.
Solvent liquidations picked up on last month’s 3% but remain almost half their long-term average, this loss has been picked up as a percentage equally by insolvent shareholder appointments and insolvent court appointments which in the below graph make up 88% of appointments. The long-term average for the two sectors has traditionally been around 75%.
Personal Insolvencies – Bankruptcy, No Asset Procedure and Debt Repayment Orders.
Personal insolvency appointment figures for Bankruptcy, NAP and DRO remain low for the year to date in line with the very low levels seen back to mid 2021.
As outlined in the introduction the latest drop in the OCR is unlikely to make a huge difference to business with the flow through projected to take 12 – 18 months till it takes effect and will only drop certain costs, the price of goods we need day to day won’t go back down to pre-2020 levels.
While we are expecting to see corporate insolvencies continuing to grow into next year, I don’t believe we will see a lift in personal insolvencies till early 2025. There is traditionally a slow down over Christmas and January, then as people return to work and have to deal with the Christmas overspend, this may be when we see a lift in personal insolvency figures.
Where to from here?
There looks to me more pain for the NZ economy in the next 12 months as we begin the slow recovery. We foresee continued rising appointments when compared to prior years and continued busy times for insolvency practitioners for the next 2-3 years as we deal with the tail from the latest recession.
If you want to have a chat about any points raised or an issue you may have you can call on 0800 30 30 34 or email This email address is being protected from spambots. You need JavaScript enabled to view it..