Economic recap
International and domestic market factors continue to affect the economy and have and effect on businesses in New Zealand. Supply shortages, increasing costs of living and inflation continue to put pressure on businesses margins, this coupled with an inability to find staff to fill empty rolls is causing a number of issues for businesses trying to retain staff or grow.
Unsurprisingly the July 2022 OCR announcement saw the Reserve Bank lift the Official Cash Rate a further 50 basis points as indicated in their earlier announcements. The OCR lifts are expected to continue for the remainder of the year and into next year as they use what tools they have available to try and tackle rising inflation.
In that vein inflation figures for the June Quarter saw inflation continue to increase bringing yearly inflation up to 7.3% slightly ahead of the economics and media prediction of 7%
Company Insolvencies – Liquidations, Receiverships, and Voluntary Administrations
June 2022 saw drop-in appointments in line with prior years. It remains the lowest June to date but starting off a lower base of total insolvencies for the year it is not unexpected.
Of note compared to prior months solvent liquidations have begun to tail off baking up only 18$ of total appointments while court appointments remain low at only 26% of total appointments. We will likely not see this rise until the winding up applications begin to peak, court appointments will follow in the coming months following this event.
Notable Mentions:
NZ Medical Association Placed into liquidation in July following an urgent liquidation recommendation from its board.
Insolvency by Industry
“Construction & Property Development” remain the largest chunk of the pie followed by “Accommodation & Food Services” makeing up over 60% of the total insolvency appointments in the month of June 2022.
Winding Up Applications
June 2022 saw a drop in winding up applications as non IRD creditors dropped off. IRD’s numbers have remained consistent, however.
We expect in the coming months IRD will likely be applying pressure to debtors to collect outstanding revenues. The reasoning behind this is IRD has 6 months remaining before we are into 2023 and an election year. Historically IRD have slowed their formal recovery proceedings in election years.
Given the large outstanding debt IRD currently has for PAYE, GST and income tax they will be wanting to get a wiggle on and bring those recoveries in.
Personal Insolvencies – Bankruptcy, No Asset Procedure and Debt Repayment Orders.
The breakdown of personal insolvency figures continues to fluctuate with the only consistent one being No Asset Procedures making up 41 of the 102 appointments. Bankruptcies see a drop from 60 last month down to 39 this month with Debt Repayment Orders rounding out the last 22 personal insolvency appointments.
Of the 39 bankruptcies only 10 were the result of court appointments. We expect this will increase over the coming months if we see more corporate insolvencies, this leads to personal guarantees being called up after the business defaults.
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