NZ Credit & Finance Institute
Governance New Zealand
Associate Member
New Zealand General Member

Insolvency Update

In May of this year BizEnhanz started a weekly Insolvency newsletter called, rather imaginatively I thought, the “Insolvency Round-up”. The idea behind this is to give business owners and other interested parties a summary of the insolvencies announce in the prior week so that, if you trade with a reported insolvent business, you can try and act quickly in order to protect your position. The newsletter also contains useful legal help and practical tips and news bites.

As we near the end of the year I thought it would be interesting to summarise some of the key statistics of the period to now, covering some 7 months or so.

Key summary statistics:

• There were 487 winding-up notices lodged with the High Court.

These are generally statutory demand notices served on debtor companies where the 15 working day period to pay, or compromise, has passed and applications for winding-up orders have been made to the court. The IRD made up 313 of these, or 64% of the total.

To be fair to the IRD this is not really surprising – they do need to deal with every business in New Zealand regardless of creditworthiness, and are expected to take strong enforcement action on behalf of the tax payer.

• There were 1,139 liquidators appointed.

PricewaterhouseCoopers were appointed the most on 98 occasions, followed by KPMG on 71, Deloitte on 65 and Rodgers Reidy also on 65.

• 158 liquidations were solvent liquidations.

These are generally company restructures where it is known that there will be no shortfall to creditors. These made up 14% of the liquidations.

However, this does mean that in 86% of the liquidations there is an expected shortfall to creditors – and this usually falls to the unsecured creditors.

• 72 receivers were appointed.

Thomas Rodewald was appointed 17 times, same as McGrathNicol with Damien Grant coming in with 14.

Probably the most notable insolvency in the period is that of Ebert Construction Ltd which collapsed into receivership on 31st July with liquidators being appointed on 3rd October. This insolvency has some complex aspects to it, including the first test of retentions law in construction contracts, shareholder appointed liquidators, and the replacement of these by a consortium of creditors led by a well-known liquidator. BizEnhanz will be following developments with interest and with subcontractors owed around $34 million there will be plenty of interest in the outcome.

1,139 liquidations in the period means that there is, on average, 160 or so companies falling into liquidation every month. In around 85% of these, or about 136, there will be a shortfall to unsecured creditors. There is, therefore, a not insignificant chance that your business will face a situation where a customer with outstanding invoices is liquidated.

There are, however, practical steps you can take to protect yourself in situations like this. Please do check out our website at to find out how. You can even sign up for our free weekly newsletter.

Remember – forewarned is forearmed.