11 May 2026 In New Zealand there is a critical window following the service of a winding up (“liquidation”) application on a company’s registered office. Practitioners commonly refer to this as the “10 working day rule” a practical and strategic timeframe that can significantly affect a company’s ability to control who is appointed as its liquidator. This article explains the rule, its legal foundation, and its implications in practice. Overview of the Rule Once a winding up application is served on a company, the company has 10 working days in which it can still appoint its preferred liquidator (typically via shareholder resolution) without needing the consent of the applicant creditor. After the 10 working day period expires: The company loses…

11 May 2026 Over the past 12-18 months, many New Zealand businesses have been navigating what can best be described as a “slow squeeze.” It hasn’t been a single catastrophic event, but rather a steady accumulation of pressures, these include rising interest rates, increased input costs, tighter consumer spending, and delayed payments. For professional advisers working closely with clients, the challenge is recognising when normal trading stress crosses the line into genuine insolvency risk and knowing what to do next. From Pressure to Distress: The Warning Signs In our experience, business failure is rarely sudden. Instead, it follows a familiar pattern. Early recognition is key to preserving options and protecting outcomes. Some of the more common early indicators include: Persistent…

14 April 2026 From a liquidator’s perspective, non‑registration or defective registration on the Personal Property Securities Register (“PPSR”) remains one of the most common reasons creditors lose priority and, in many cases, recover nothing in an insolvency. In most insolvency appointments, one of our early tasks is to determine the priority of competing claims over company assets. That exercise is heavily influenced by PPSR registrations. Where a creditor has failed to register, or cannot support a registration with enforceable documentation, the outcome is often commercially severe and entirely avoidable. Security Interests Apply to More Arrangements Than Many Businesses Realise Despite the Personal Property Securities regime having been in place for well over 25 years, many businesses remain unaware that it…

1 March 2026 In situations where PAYE has been deducted from wages but not paid to Inland Revenue, directors and associated persons of close companies may face unexpected personal tax consequences. Inland Revenue has the ability under Section LB 1(3) of the Income Tax Act 2007 to reassess an individual’s tax return and limit their PAYE tax credits to the amount actually received by the Commissioner. Given the number of liquidations we manage where PAYE arrears are present, it is important that directors understand this rule. The article below explains how the section operates and why Inland Revenue may invoke it. Section LB 1(3) — Income Tax Act 2007 We want to take this opportunity to draw your attention to…

Solvent Liquidations Explained In our experience, one of the most common misconceptions directors and shareholders hold is that liquidation is only relevant when a business is failing. In reality, many New Zealand companies are wound up while fully able to meet all of their obligations. A solvent liquidation is simply a structured and legally robust way to bring a company’s affairs to an orderly close when it has served its purpose. A solvent liquidation applies where the company can pay all of its debts, including interest, within 12 months. We typically see solvent liquidations where a company has sold its business or has ceased trading, a project or investment vehicle has run its course or a group is simplifying its…

Liquidation of Charities or Not for Profit’s Many Charities and NFP organisations are facing reduced income as a result of the current economic conditions and government changes to grants making fund raising more difficult. We thought it was timely to look at the steps to take when a charity is no longer able to meet its intended purpose and mission statement. There are several critical steps and legal obligations a Charity must consider to wind up responsibly and protect its charitable status: Legal and Governance Considerations Review the charity’s rules or trust deed: Most registered charities have a wind-up clause that outlines how assets should be distributed and what procedures must be followed. Comply with the Charities Act 2005: Officers…

The Risks of Surrendering Business Assets to the Landlord Before Liquidation. It’s becoming increasingly common for business owners when they get themselves into financial trouble to close the doors and walk away. From the landlord’s perspective this can be ideal as they get left with a site that may be easier to lease due to existing fixtures and fittings for a similar type of business. They may have had to sacrifice some unpaid rent and a personal guarantee to gain control of the assets. From the director’s perspective they often see this as a solution where they can remove an ongoing obligation for the rest of the lease term and get out of a personal guarantee. The issues arises when…

What Documents Are Creditors Entitled to in a Liquidation? When a company goes into liquidation, creditors have certain legal rights to access documents for the purpose of helping stakeholders understand what’s happening, assess their chances of seeing a recovery on what they are entitled to, and to hold insolvency practitioners accountable when dealing with the assets of the company. What documents can creditors see? Creditors entitlements to documents in a liquidation are set out across a number of acts, these include the Companies Act, Liquidation Regulations, Insolvency Practitioners Regulations and Companies (Reporting by Insolvency Practitioners) Regulations. Creditors are entitled to: Notice of appointment confirmation that the company has entered liquidation including date and time, details of who made the appointment…

Employee Claims in Liquidation: How are Related Party Employee Claims Treated? When a company enters liquidation, one of the liquidator’s key responsibilities is to assess and distribute the company’s remaining assets to creditors in accordance with the Companies Act 1993. Among the creditors, employees are granted preferential status for outstanding wages, holiday pay and redundancy if they are entitled to it under their employment agreement. The situation becomes more complex when the employee is related to a director of the company. Normal Treatment of Employee Claims in Liquidation Under Schedule 7 of the Companies Act 1993, employees are entitled to preferential claims for: Wages and salaries (including commissions and piecework) earned in the four months prior to liquidation. Holiday pay…

To have a meaningful discussion and put a plan in place, it helps to have the important information ahead of time. This allows us to give you a steer on your options and advise on what will likely get the best outcome for stakeholders. So, what do we look for and why? Creditor List To understand the level of company debt and the class of each creditor. If there are secured creditors, we’ll want to know what assets they may be entitled to under a General Security Agreement (GSA) or Purchase Money Security Interest (PMSI), and whether any assets need to be returned to suppliers with valid claims. If we look to trade the business on it is important to…

In today’s volatile economic climate, companies across industries are navigating increasing financial pressure. Rising interest rates, supply chain disruptions, and margin erosion are converging to place directors and business advisors under heightened scrutiny. Now, more than ever, proactive advice from a licensed insolvency practitioner (LIP) can be the difference between a successful turnaround and a forced wind-up. Whether you’re a director, accountant, or legal advisor, understanding when and why to involve an insolvency professional is vital to protecting your client's (or your own) business, assets, and reputation. The Power of Proactive Advice Licensed insolvency practitioners are not just “last resort liquidators.” They are restructuring and risk management specialists trained to assess a business’s position, preserve value, and advise on compliant…

For many businesses, receiving a statutory demand from the Inland Revenue Department (IRD) can be an alarming and stressful experience. It signals that the company has unpaid tax obligations and that the IRD is taking formal steps to recover the debt. If left unaddressed, this can quickly escalate into a winding-up application, resulting in the company’s liquidation. This article outlines what businesses should do when served with a statutory demand by the IRD and how to respond when an instalment proposal is rejected. Understanding a Statutory Demand A statutory demand is a formal notice issued under section 289 of the Companies Act 1993, requiring a company to pay a debt within 15 working days. Failure to comply creates a presumption…