2024 was a year that got progressively busier for insolvency practitioners and it looks like it will carry on into 2025 based on the Jan figures. The economy continues to struggle on, with businesses facing shrinking margins and decreased demand. The OCR began to drop from the middle of the year, earlier than originally indicated (originally projected to be mid 2025) with the next announcement due out in a few weeks, pundits seem to be predicting another cut of 25 – 50 points. To date these drops have yet to have the desired effect due to the 12-month lag between the drop taking place and the effect being felt. Latest unemployment figures released in January showed the level of unemployed rising to 5.1%.
Winding Up Applications
January is traditionally one of the slower months for winding up applications being advertised (public holidays, Christmas break etc.) but not so in 2025. Last month there were more winding up applications than any other single month in the last 5 years (the next closest was October 2024 with 125).
What was this driven by? In a nutshell IRD. They advertised 100 of the 130 applications for the month. That's 3x what the advertised in January last year and 13 above their next highest months (August & October 2024).
If this is how the year is starting the courts will be pumping with liquidation work and the Official Assignee will be needing to hire a few new staff to deal with all the IRD work it will be seeing. Historically a fair chunk (around 70%) of the IRD applications end up in liquidation.
The 2024 total year applications were up almost 30% on 2023 and close to double the 2021 and 2022 total year figures. Definitely a sign of the times as creditors continue to get tough with debtors and pile on the pressure to recover their funds.
Of the total appointments for 2024, IRD made up 702 of the applications or 63%, the balance of the applications were made by all other creditors combined. The averages over the last 5 years for IRD applications is generally between 55% and 60% of the total (though January 25 was 77%). The IRD's activity remains up on past years as expected given the tax arrears they are trying to recover ($8 billion as at June 2024) through increased enforcement and the additional funding the government are providing them to achieve these recovery goals.
The IRD has continued with its 22-month streak of having more applications than all other creditors. The last time they made less applications was back in March 2023.
The Auckland High Court deals with more winding up applications than the rest of the country combined. That is a fair bit of creditor enforcement and a wide margin between Auckland and the rest of the country. Of interest Christchurch managed to nab the 2nd spot ahead of the capital, potentially the result of the slowdown in building work in the region following the rebuild finishing up and a general slowdown across the industry.
The top 5 were in the same order as the population cap from the Stats NZ 2024 data - Auckland, Canterbury, Wellington, Waikato & Bay of Plenty
Personal Receiverships
Personal receiverships jumped 50% in 2024 up from the 2023 numbers, comparatively personal receiverships soured 400%+ when compared to the 2022 numbers.
As a percentage those are big changes and appear to be driven by the preference of some lenders take towards obtaining a personal general security agreement from borrowers which allows them to appoint receivers upon default, rather than the traditional approach used by the bulk of lenders of relying on the, often slower to enforce, personal guarantee to recover their debts.
January 2025 has started slightly above January 2024 aligning with the winding up applications that we are likely to be in for a busy year of various insolvency appointments. This increase in personal receiverships is yet to be reflected in the formal personal insolvency appointments (bankruptcy, NAP and DRO) yet.
Because there is no public record or available reports on the result of the receiverships (unlike when a company is in receivership the report is available on the register) it is difficult to see how successful the appointment may be and if any funds are recovered along with what the costs involved were on each appointment.
Company Insolvencies – Liquidations, Receiverships, and Voluntary Administrations
December 2024 saw a jump on past years. The increase come from shareholder insolvent liquidations which have doubled on past years, while court insolvent liquidations have remained steady and solvent liquidations have seen a slight drop. January 2025 has started the year on a similar level to 2018 figures, so while not a massive start we have broken 100 appointments in January for the first time in 6 years.
Total insolvency appointments for the year continue to increase beating out all appointment figures back to 2013, so there have been more appointments in 2024 than in any of the last 10 years. With 2,784 appointments in the year. We expect the higher insolvency appointment levels will continue into 2025 at least due to a large backlog at IRD and a struggling economy affecting most industries and restricting consumer spending.
The total corporate appointments are still down 1000 odd appointments on the highs of 2009 when the levels were up to 3,797.
Solvent liquidations remained down on the long-term average (13%), while insolvent shareholder appointments in December far exceeded their long-term average of 51%. The other appointment types donated a point down on their long-term averages to see this rise. I have not provided the breakdown for January 2025 as it is largely insolvency shareholder appointments with the courts not dealing with winding up applications for most of the month.
The gap that has grown between corporate and personal insolvencies has continued to remain sizable; they are yet to return to their long-term trend of tracking each other. This has largely been caused by the rise in corporate insolvency and the continued low levels of personal insolvencies.
Personal Insolvencies – Bankruptcy, No Asset Procedure and Debt Repayment Orders.
Personal insolvency appointment figures for Bankruptcy, NAP and DRO dropped to their lowest December seen in the above graph.
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, in part due to the closure of the courts but also as people return to work in February and have to deal with the Christmas overspend, this may be when we see a lift in personal insolvency figures.
Where to from here?
As mentioned last year moving into 2025 the expectation is that there will be further large businesses to fail as the recovery continues and the IRD keeps pressure on businesses with arrears to be recovered
There will be 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.