Economic recap
The NZ economy managed to dodge a formal recession (2 consecutive drops in GDP) in the 2nd quarter of 2022 with a lift in GDP following negative GDP in the 1st quarter. While the economy may not be in a formal recession there remain a number of challenges affecting NZ businesses from issues sourcing product to increasing inflation, interest rates and decreasing domestic spending as New Zealanders look to travel for the first time in 2 years. Businesses continue to have trouble to find the necessary staff with low unemployment levels continuing.
Of note is the speedily decreasing value of the NZD when compared with other currencies. This will make importing goods and services more expensive for businesses and squeeze margins.
The Xero SME index saw a drop back by 8 points in August 2022, however the index remains above the long term average. Businesses found that their days to be paid increased by.4 days to 23.9 days.
Company Insolvencies – Liquidations, Receiverships, and Voluntary Administrations
Company Insolvency figures have remained elevated in August 2022 and slightly exceeded the July figures (from 174 to 177 total appointments). Shareholder appointments made up 119 of the appointments with 20 of the 119 being solvent liquidations.
Court appointments remained high but were slightly down from July 2022 (45 to 42) but still well above earlier months in 2022. Other appointments were made up largely of receiverships however total receiverships for the year remain low at 41 compared to 2021 with 88 total receiverships.
As shown below in the Winding Up Applications graphs the current pressure from IRD increasing collections will likely result in continued increasing court and shareholder appointments in the months leading up to Christmas.
Appointments by Industry
“Construction & Property Development” holds onto the top spot as #1 industry for total appointments in August 2022 with “Accommodation and Food Services” making up the 2nd spot, between the 2 sectors making up close to 50% of total appointments.
“Accommodation and Food Services” is largely made up of food service businesses no doubt struggling through the quieter winter and higher inflation putting a squeeze on people spending.
Winding Up Applications
Winding up applications have continued to remain above the first half of 2022’s monthly levels but we have seen a slight drop from July. IRD made up 56 of the 70 total appointments continuing to lead the way from the uplift seen in July 2022 where IRD made up 70 of the total 94 applications.
Other non IRD creditor applications have tailed off in August down from 24 to 14 applications for the month.
With the uptick in winding up applications in July and August 22 we have seen a slight decrease in the percentage of total winding up application that have gone into liquidation from 60%+ in the first 6 months of the year we are now sitting round 57% of the total applications ending up in liquidation.
Personal Insolvencies – Bankruptcy, No Asset Procedure and Debt Repayment Orders.
Bankruptcy stats remain at a consistently low level seen throughout 2022, the make up of personal insolvency options remains consistent with 50% Bankruptcy, 40% No Asset Procedures and 10% Debt Repayment Orders.
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