In our 37th Insolvency by the Numbers, we look at our data set for November 2023 and past years to see how the month has tracked and what may be coming up in the coming months.

We now have a coalition sorted giving people an idea of what is in store for the next 3 years, the Reserve Bank has kept the OCR stable and has said that rates will not be coming down till 2025 as expected. With Christmas fast approaching businesses are rushing around trying to complete work for customers before the year end when the customer has had all year to get it sorted but left it to the last minute, so business as normal for this time of year really.

Company Insolvencies – Liquidations, Receiverships, and Voluntary Administrations

As seen in the trend from prior months the elevated appointment level continues rather than peaks and troughs seen over prior years. We did see a slight drop off in appointments from 2022.

The big change for November saw a increase above the long term average of 40 appointments all channelled into insolvent liquidations, anecdotally this could be the result of the election and shareholders realising it has not fixed all their problems and the business is no longer viable so best to deal with it prior to Christmas. All other appointment types were right on their long term average numbers.

With 1 month to go it appears unlikely that 2023 will catch 2017 & 2018 appointments.

Winding Up Applications

As detailed in past months we are seeing a continued consistent increase in figures evening out compared to the usual spike we see in June/July and November. So, a longer sustained lift rather than a spike and drop off.

In November, there has been a consistent shift in the total number of winding up applications compared to past Novembers. For example, in November 2021, there were 33 applications, with 20 being company winding up applications and 13 being IRD winding up applications. November 2022 witnessed a substantial increase, with 98 total applications, including 25 company winding up applications and 73 IRD winding up applications. In November 2023, there were 76 applications, consisting of 22 company winding up applications and 54 IRD winding up applications.

From the below graph we continue to see that IRD’s November 2023 winding up applications now makes up just over 2/3rds of all creditors a jump back up to the June – August split. There are clearly still many delinquent debtors being pursued.

Personal Insolvencies – Bankruptcy, No Asset Procedure and Debt Repayment Orders.

Personal insolvency appointments have finally done something after a lacklustre 2023. Time will tellif this is the start of an upward trend in appointments or just a 1 off instance while we wait for personal insolvencies to mirror corporate and pick up.

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 appointment for the next year. The OCR is unlikely to be dropped till mid-2025 and inflation just keeps biting.

If you want to have a chat about any points raised or an issue you may have you can call on 0800 30 30 34 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

Managing cash flow during the Christmas close-down period is crucial for businesses, as it often involves reduced operations and potential disruptions. Implementing proactive measures can help mitigate cash flow challenges during this time:

1. Forecast Cash Flow:
• Prepare in Advance: Anticipate the impact of reduced sales or operations during the holiday period. Review historical data to estimate income and expenses accurately.
• Create a Cash Flow Forecast: Develop a detailed cash flow forecast covering the close-down period. This forecast should include expected revenues, expenses, and any planned payments.

2. Adjust Payment Schedules:
• Invoice and Payment Timing: Expedite invoicing before the close-down period to ensure prompt receipt of payments. Request early payments from clients or customers to improve cash flow before the break.
• Negotiate Terms: Negotiate payment terms with suppliers or creditors to align payment schedules with reduced cash flow during the holiday period.

3. Manage Expenses:
• Trim Unnecessary Costs: Identify non-essential expenses and reduce or postpone them during the close-down period. This might include discretionary spending or non-urgent purchases.
• Review Overheads: Assess fixed costs and explore opportunities to minimize or renegotiate contracts, utilities, or subscriptions temporarily.

4. Credit Management:
• Monitor Receivables: Follow up on overdue invoices and encourage early payments to maintain steady cash flow.
• Supplier Negotiation: Consider negotiating extended payment terms with suppliers to manage cash flow better during the holiday period.

5. Cash Reserves and Financing:
• Build Cash Reserves: If feasible, set aside cash reserves to cover essential expenses during the close-down period. This acts as a buffer against cash flow disruptions.
• Explore Financing Options: Explore short-term financing options, such as lines of credit or business loans, to bridge any temporary cash flow gaps.

6. Plan Staffing and Inventory:
• Staffing Levels: Adjust staffing schedules or hours to match reduced business activity during the close-down period, minimizing labour costs.
• Inventory Management: Manage inventory levels to avoid excess stock or tying up cash in surplus inventory. Plan orders based on anticipated demand.

7. Communicate and Plan Ahead:
• Communication: Notify clients, suppliers, and employees in advance about the close-down period, payment deadlines, and any operational changes.
• Contingency Plan: Have a contingency plan in place to address unexpected emergencies or cash flow challenges that may arise during the holiday break.

By implementing these proactive steps and meticulous planning, businesses can navigate the Christmas close-down period more effectively, ensuring smoother cash flow management and minimizing financial strain during the holiday season.

The impacts of global unrest and overseas bank failures can have various implications for businesses in New Zealand:

1. Financial Instability:
• Market Volatility: Global unrest can lead to financial market volatility, impacting investment portfolios and affecting businesses relying on international trade.
• Credit Availability: Overseas bank failures or financial crises may tighten credit availability, affecting businesses seeking loans or lines of credit from international financial institutions.
• Exchange Rate Fluctuations: Currency fluctuations due to global instability can impact import/export businesses, affecting profit margins and pricing strategies.

2. Supply Chain Disruptions:
• Dependency on Imports: New Zealand businesses reliant on imports may face challenges due to disruptions in global supply chains, leading to delays in raw materials or finished goods.
• Export Market Instability: Instability in international markets could reduce demand for New Zealand exports, affecting sales and revenue streams.

3. Economic Impact:
• Decreased Consumer Confidence: Global uncertainties can lead to reduced consumer confidence, impacting spending habits and local businesses' sales.
• Investment Climate: Uncertainty may lead to a cautious investment climate, affecting local businesses seeking foreign investments or partnerships.

4. Financial Security and Risk Management:
• Risk Mitigation: Businesses need to review their risk management strategies, diversify suppliers, and explore hedging options to mitigate currency and market risks.
• Reviewing Banking Relationships: Assessing banking relationships and considering local banking options for stability and security in case of global banking uncertainties.

5. Regulatory Changes:
• Impact on Regulations: International financial crises may prompt changes in global financial regulations, which could indirectly impact New Zealand businesses, especially those operating internationally.

6. Government Interventions:
• Policy Changes: Government interventions or policy adjustments may occur to counteract the effects of global instability, affecting businesses through changes in taxation, trade policies, or economic stimulus packages.

In summary, global unrest and overseas bank failures can create ripple effects on New Zealand businesses through financial instability, supply chain disruptions, economic impacts, and changes in regulations. To mitigate these effects, businesses should focus on diversification, risk management, reviewing financial strategies, and staying informed about global developments impacting their operations. Additionally, maintaining flexibility and agility in responding to changing market conditions is crucial for business resilience in uncertain times.

If your company has been significantly impacted and is struggling contact one of the MVP team to discuss the options.

Personal guarantees (PGs) are regularly sought to secure trade terms for company debt. Understanding the implications of PGs in the event of a company's failure is critical for both business owners and stakeholders.

1. Personal Guarantees Defined:

Personal guarantees represent a commitment by an individual, often a company director or shareholder, to take responsibility for a company's debts or obligations in case of default. These guarantees provide lenders with an added layer of security when extending credit to businesses.

2. Impact of a Failed Company and Personal Guarantees:

When a company fails, and it's unable to meet its financial obligations, the presence of personal guarantees ties the guarantor (often the director) to the debt. In such instances, the guarantor becomes personally liable for the outstanding debt (the balance the company does not pay), which could have significant financial and legal consequences.

3. Bankruptcy in New Zealand and Personal Guarantees:

In New Zealand, personal bankruptcy entails a legal process where an individual unable to pay debts is declared insolvent. Personal guarantees can exacerbate the situation for guarantors. In such cases, creditors can pursue the guarantor's personal assets (following a Court judgment) to recover the outstanding debt and failing payment, can opt to issue a bankruptcy notice and following that bankruptcy proceedings.

4. Legal Ramifications:

The consequences of personal guarantees in bankruptcy can include:
• Credit Rating Impact: Bankruptcy resulting from personal guarantees can significantly impact the guarantor's credit score, affecting their ability to secure credit in the future.

• Legal Proceedings: Guarantors may face legal actions to enforce the personal guarantee, leading to additional costs and stress.

• Bankruptcy: Guarantors may face a bankruptcy notice and then a legal proceeding and potential adjudication as bankrupt if the debt is not settled or paid

5. Mitigating the Risks and Seeking Advice:

Given the weighty implications of personal guarantees in case of company failure, individuals considering signing such agreements should proceed cautiously. Seeking legal advice before committing to personal guarantees is crucial to understanding the extent of liability and potential risks involved.

6. Alternative Risk Mitigation Strategies:

Exploring alternative risk mitigation strategies, such as limited liability structures, insurance options, or negotiating for limited or conditional guarantees, can help minimize personal exposure in case of company insolvency.

In conclusion, personal guarantees in the context of company failures carry substantial ramifications for guarantors. Directors and individuals should carefully evaluate the potential risks before committing to personal guarantees, seeking legal advice to fully comprehend the extent of liability and exploring alternative risk management strategies to safeguard personal assets. Being well-informed and proactive can significantly mitigate the financial and legal impacts of personal guarantees in times of business distress.

If you are facing pursuit of many company debts that you have personally guaranteed, an option is to reach informal settlements but care needs to be taken to not give preference.  An option is to consider a Part 5 Subpart 2 proposal under the Insolvency Act 2006. To discuss your options contact MVP team.