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…

A guide for directors on what really happens in insolvency—and how to protect yourself. In closely held or family-run businesses, it’s common for directors and shareholders to move money in and out of the company—whether as loans, drawings, or transactions with related entities. These practices often feel routine, but in an insolvency scenario, they can become the focus of intense scrutiny—and even personal liability. Understanding how these transactions are treated when a business fails is essential for any company director. Here’s what you need to know. Director Loans: Not as Simple as They Seem Directors often treat loan accounts as flexible cash flow tools—drawing funds when needed, or injecting capital during tough periods. But unless documented properly and kept within…

If there was a cliff for the insolvency figures to jump off it would be called “Public Holidays” and they have effects across the board this month, but people taking 10 days in a row off will do that. April felt suspiciously like Christmas where you have a month’s work to do in half the time, so naturally some things get put off to next month. Coupled with the shorter month we also had global factors playing havoc with the economy and adding to the uncertainty for businesses, a number have started to take the wait and see approach to see what washes out rather than taking action to deal with problems they are facing. Winding Up Applications April saw…

The escalating tariff regime between the United States and China continues to cast long shadows across global trade routes—and New Zealand is far from immune. With the U.S. implementing new or increased tariffs on Chinese goods, the indirect consequences are set to impact a range of New Zealand industries, raising the risk of insolvency in already vulnerable sectors. Indirect Shockwaves: How U.S.-China Tariffs Affect NZ New Zealands economy is deeply interconnected with both the U.S. and China. The tariff regime creates cost distortions, re-routes global trade flows, and introduces volatility to commodity markets. These dynamics are especially relevant for New Zealand exporters, importers, and manufacturers. Industries most at risk include: Exporters of Raw Materials & Agricultural Commodities: A slowdown in…

In the life cycle of a company, disputes between shareholders or directors are not uncommon. Tensions may escalate due to differing visions, a breakdown in trust, or major life events—like the death of a key shareholder-director. When parties are no longer aligned and cannot find a viable path forward, liquidation is often seen as a last resort. But it can also be a strategic tool for resolving conflict and unlocking value in a deadlocked business. When Business Relationships Break DownMany small-to-medium enterprises (SMEs) in New Zealand are closely held, often by friends, family members, or long-time business partners. These relationships can deteriorate over time due to: Disagreements on strategy or financial direction Disparities in workload or contribution Retirement plans or…

Winding Up Applications Yet another month where we saw a drop in appointments when compared to the prior month, but we remain above the prior year March figures. Traditionally we would see a drop in March before we begin the climb to the mid-year highs, coupled with the end of financial year keeping creditors distracted with other matters. The winding up notices advertised still present a strong showing for the month, with triple digits for each month in the first quarter of 2025. It suggests we will continue to see this increased level of creditor activity for the rest of the year. While the appointments since January have been decreasing, as a cumulative total we remain above the totals in…

Winding Up Applications February applications were down on January but still above what we saw in 2024. Historically February would be a bumper month as the winding up notices that couldn’t be processed in January would spill into February. Regardless it was still a strong showing for the month and is setting the tone for what we expect to see in the rest of the year. IRD made up 78 of the 118 appointments for the month and continued applying the pressure to derelict debtors. The IRD has continued with its 23-month streak of having more applications than all other creditors. The last time they made less applications was back in March 2023. I have also included the trend line…

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…

Selling your business and ceasing trading is a significant milestone, but what happens to the company itself? While some business owners leave the company dormant, others take proactive steps to formally close it. The best approach depends on several factors, including tax efficiency, legal certainty, and cost considerations. This article explores the options available, the benefits of a solvent liquidation, and how to manage post-sale company affairs effectively. What Are Your Options? Once you have sold your business and ceased trading, you generally have two primary options for dealing with the company: 1. Short-form removal from the Companies Register 2. Formal solvent liquidation The choice depends on factors such as outstanding liabilities, retained earnings, tax implications, and the level of…

Walking away from a company without fulfilling your obligations can have legal and financial implications. It is simply not wise to cease trading your company and ignore your creditors and obligations. It is also important to take the right steps when you are one of a number of directors and you want out. Your actions or inaction can come back to bite you. Here are some risks to consider and why the option of a formal liquidation may be worthwhile considering particularly if your company is struggling or no longer viable. The Risks for a Director Breach of Fiduciary Duty: Directors owe fiduciary duties to the company and its shareholders. These duties include acting in the best interest of the…

2024 was a year that got progressively busier for insolvency practitioners and it looks like it will carry on into 2025 based on the Jan figures. The economy continues to struggle on, with businesses facing shrinking margins and decreased demand. The OCR began to drop from the middle of the year, earlier than originally indicated (originally projected to be mid 2025) with the next announcement due out in a few weeks, pundits seem to be predicting another cut of 25 – 50 points. To date these drops have yet to have the desired effect due to the 12-month lag between the drop taking place and the effect being felt. Latest unemployment figures released in January showed the level of unemployed…

Paying tax debts to the Inland Revenue Department (IRD) on time is a critical obligation for businesses in New Zealand. Neglecting this responsibility can lead to severe repercussions, including statutory demands, winding-up notices, and even liquidation. The New Zealand Herald reported that IRD ramped up compliance efforts in January 2025, following last year’s Budget boost. This trend is continuing. Companies failing to pay taxes are facing swift action, including liquidation applications. The IRD appears to have "started the war drums early." We discuss the importance of timely IRD debt payments, the benefits of proactive communication, and practical steps businesses can take to manage tax obligations while navigating financial challenges. ________________________________________ Why Timely Payment Matters IRD tax debt is a legal…