In our 38th Insolvency by the Numbers, we look at our data set for the year end 2023 in review along with January 2024. We look at how the year has tracked compared to prior years and what to we can expect in 2024, followed by a look at how January 2024 has compared to the last few years.
The latest data release shows that inflation has fallen however the portion of it generated by non-tradeable inflation figures remains high. Economists are predicting that it is unlikely that we will see an official cash rate drop till the later part of the year with come commentators still expecting the first drop in 2025. The property market however has now stabilised in a lot of regions and in some regions begun a slow climb in prices.
Globally during January, we have seen both the S&P500 & Dow Jones hitting new highs, we have also seen the release of a number of Bitcoin ETF’s in January that have taken in large amounts of investor capital.
Company Insolvencies – Liquidations, Receiverships, and Voluntary Administrations
While December 2023 took a slight dive from the figures posted throughout the year January has started slightly above its historic levels back to 2019. As seen below however 2024’s January is still behind 2017 & 2018.
As expected with the courts closed there were no creditor appointments in Jan 2024. It did not however slow the number of winding up applications as detailed below. Of interest solvent liquidations were below the numbers seen in past January’s while receiverships were up on past years, the bulk of the appointments were insolvent shareholder appointments as shareholders began to ffel the increasing pressures and have decided to pull the pin.
Anecdotally we have seen an increase in enquiries into the new year. Interestingly this has been a combination of traditional formal appointments and informal insolvency advice and work outs.
As predicted in our November insolvency articles, 2023 beat out all years back to 2018 for total appointments. So for the first time following the Covid lockdowns and Government support payments insolvency figures have finally grown year on year.
Winding Up Applications
In January, there has been a noticeable variation in the total number of winding up applications compared to past Januarys. In January 2021, there were 28 creditor winding up applications and 22 being IRD winding up applications. January 2022 showed a decrease, with 18 total applications, including 13 company winding up applications and 5 IRD winding up applications. However, January 2023 experienced an increase, with 56 applications, consisting of 34 company winding up applications and 22 IRD winding up applications.
The big take away here being that for the first time in the last 4 years IRD has made more creditor winding up applications in January than all other creditors combined for the first time. A definite sign that they are continuing to keep the pressure on delinquent debtors.
When considering the total data for 2023 compared to previous years, the cumulative number of winding up applications has shown a continuous increase. This upward trend underscores the ongoing financial challenges faced by companies over time, leading to a rise in the number of winding up procedures initiated.
Personal Insolvencies – Bankruptcy, No Asset Procedure and Debt Repayment Orders.
In December 2023, there were 45 bankruptcy filings, 32 no asset procedures, and 17 debt repayment orders, totalling 94. This continues the low personal insolvency figures shown throughout 2023. Whether this will turn around in 2024 won’t show in the figures till February onwards. My expectation however is that the figures will continue to be low compared to past years.
Where to from here?
The signs continue to point to the NZ economy being in for continued pain for the foreseeable future with it likely to get worse before it gets better, we foresee continued rising appointments as the year progresses. The OCR is unlikely to be dropped in the next 6 months and inflation continues to be above the target of 2%.
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