Risk management

Business Advice to Auckland based businesses The Business Advice & Implementation Grants are now available for application. Auckland businesses can apply for up to $3000 + GST through Business Advice support. An Implementation Grant will pay for specific services to put your business advice or plan into action. If you’re looking for expert advice and support in areas such as Continuity, Financial Planning, Business Hibernation, Compromises or Exit, we can help get you there. You can access advice if you are considering hibernating or closing your business, or are looking to restructure. The advice should lead to a plan to overcome challenges and/or identify opportunities and map out the scope of the work required to achieve the plan. Implementation Grant…
The Impact of Covid-19 Delta Outbreak on Companies under Level 3 restrictions Many small and medium businesses are in serious strife, some hanging on by a thread. Businesses are seeking certainty about how and when they can get back to business. A recent MYOB survey has revealed confidence among small and medium businesses is plummeting and states SME revenue has taken its biggest hit since the 2008 global financial crisis. The drop in revenue and profits smashed from the current Covid-19 lockdowns, staff retention and skill shortages, the supply chain crisis, surging house prices, rising interest rates, closed borders, climbing inflation and general consumer confidence are all impacting business and will continue to have an impact for the foreseeable future.…
Economic Rundown Pressure and frustration continues to build for business owners and the wider economy; due to the lack of transparency, a proper plan in place as to when we may once again open up the country and what needs to be achieved to have these lockdown restrictions lifted. We have now had our first full calendar month with Auckland and the surrounding regions at Alert Levels 3 & 4; while the rest of the country remains at Alert Level 2. The lockdown effects are being felt across the country, both financially and emotionally. As we saw with the first round of lockdowns in 2020, lockdowns have a negative effect on insolvency figures, which have once again taken a sudden…
August 2021 has been a story of two halves. Between 1 and 17 August 2021, the outlook for economic growth was continuing to look positive. On 17 August 2021, the government called a press conference and, at 6:00 pm that evening, Jacinda Ardern told New Zealand that the country would be moving to alert Level 4 from 11:59 om that night. From 18 August 2021, most businesses were again forced to shut their premises as we returned to Level 4 lockdown and our home bubbles. Those of us that could, readjusted to working from home but Level 4 left many businesses unable to operate. The short notice also meant that many businesses – including those in hospitality, agriculture (who do…
When a company is placed into liquidation, one of the first actions of the liquidators is to give public notice of their appointment in the New Zealand Gazette, and an appropriate newspaper, and to invite creditors to file their claims. The vast majority of claims received will relate to specific amounts that are owed because invoices for goods or services haven’t been paid when due or loan repayment obligations haven’t been met. There is, however, the ability for claims to be filed for contingent debts. WHAT IS A CONTINGENT CLAIM? In the circumstances of a liquidation, a contingent claim relates to a debt that will be owed by the company in liquidation only if certain circumstances occur. This could include…
It’s day three of the latest Level 4 lockdown and, while we know the current lockdown is going to impact businesses, there’s still a lot we don’t know. It’s not yet clear how long we will spend in Level 4, what impact the latest lockdown will have on different business, or what overall impact on the New Zealand economy will be. Last week, most were expecting an OCR increase. On Wednesday, it was held at 0.25%, due at least in part to the lockdown. The Level 4 rules are a bit different to the last time around and can be found here. The current locations of interest are listed here. Our team is working remotely and are available to discuss…
IRD pressure on the Construction Industry It is important to keep proper books and records and ensure you meet your tax obligations. IRD say “declare it all or risk everything” in a recent announcement. Late payments and bad debts are the main triggers of insolvency in construction companies. The payment of taxes however contributes to cash flow problems. IRD’s recent release is heavily focussed on enforcement. Winding up applications by the Revenue are also on the rise generally. For more information on the Revenue’s latest release relating to “cashies” read here. Dealing with IRD We recommend communicating early and negotiating a time payment arrangement if your company falls into arrears but generally your business is viable. The IRD will likely…
The directors of a company have all the powers to decide what will be done, when it will be done and how – but with that power goes the responsibility to the company and its shareholders, to the company’s creditors and last, but not least, to themselves. The Responsibility to Others As a director, whether that be as the sole director of a small company or one of many in a large company, you have duties imposed on you under legislation, such as the Companies Act 1993 (“the Act”), and the company’s constitution. In any circumstances, you must firstly comply with the duties imposed by legislation, which are set out in sections 131 to 138A of the Act. Your first…
On 3 April 2020, the Government announced that it would be making changes to the Companies Act 1993 to provide insolvency relief for businesses affected by COVID-19. Yesterday, 5 May 2020, the first reading of the COVID-19 Response (Further Management Measures) Legislation Bill) took place. That bill introduces, amongst other measures: Reducing the voidable transaction and voidable charge period for non-related parties to six months (Schedule 2) The safe harbour provisions for directors (Schedule 3) The COVID-19 business debt hibernation (Schedule 4) Extensions to the periods mortgages and rent can be in arrears before default notices can be issued and enforcement action can be taken under the Property Law Act 2007 (Schedule 14) Both the Safe Harbour provisions and the…
A survey carried out in 2017 by Franchising New Zealand identified the fact that New Zealand had, at that time, the highest proportion of franchises per capita in the world. With around 630 franchise brands, it was estimated that they made up about 7% of the small businesses in New Zealand, employed over 124,000 people and contributed $27.6 billion to the New Zealand economy, plus an additional $11.1 billion in motor vehicle sales and $7.4 billion in fuel sales. We could not find any more recent figures, but which ever way you look at it, franchises make up a significant portion of businesses in New Zealand. As with other business models, there have been individual franchisees fail before Covid-19 came…
With the upheaval being caused to many SMEs by the Covid-19 lockdown and the potential for many of those SMEs to fail, the risk to people who have provided personal guarantees (PG’s) for company debts increases. The support packages for companies being provided by the Government and the major trading banks is good news for the employees, because of the 12-week wage subsidy package, and for those businesses that can meet bank lending requirements to access the business finance guarantee scheme or possibly can use the debt hibernation and tax packages. But the position for those companies that have other significant overheads and possibly were loss making startups or were already struggling, and for the individuals involved with those companies…
Government Resources:https://treasury.govt.nz/news-and-events/newshttps://www.beehive.govt.nz/release/further-measures-support-businesseshttps://www.beehive.govt.nz/release/business-finance-guaranteehttps://www.companiesoffice.govt.nz/news-and-notices/insolvency-relief-for-businesses-impacted-by-covid-19/An Australian perspective: Australian Covid-19 Insolvency Law changes: article here The Legal Perspective:We share general notes from Lowndes Jordan on:• Leases • The Government's Insolvency Response • Force Majeure/Frustration The following articles from Stace Hammond also provide insight on key topics:• Director duties • Implications for commercial contracts • Lease rent abatement • Enforceability of guarantees • Proposed Companies Act changes And the following article from Dentons Kensington Swan also provide insight on:• Relaxing insolvency related director duties These articles provide a summary of the tax relief measures:• Anthony Harper Tax Relief Measures: • IRD• NZ HeraldWage Subsidy:The COVID-19 Wage Subsidy is available to employers, contractors, sole traders or people who are self-employed. More information is found here• This…
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