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Economic recap The March 2022 insolvency figures continue to be below past years. For the wider economy we saw inflation figures for the year to date at 6.9%. Slightly under what was expected from economists as a group but still well above the levels where they should be. The high inflation figures have led to an expected response from the Reserve Bank lifting Official Cash Rate (OCR) by 50 basis points in an effort to head off rising inflation. From discussions with business owner on the coal face the cost of rising inflation, OCR raises, the rise in the minimum wage, increased sick days and introduction of new public holidays (Matariki) are a perfect storm of expenses that are unable…
Debt collection actions are gaining momentum. Winding up proceedings are on the rise. There is a climb in IRD initiated winding up proceedings. Many NZ companies have been impacted by Covid-19 and are facing insolvency. To be insolvent means one of two things: Debts can’t be paid when they’re due. Total debt is more than the value of all assets. The Commissioner of Inland Revenue has increased debt recovery actions. The CIR is able to issue a statutory demand as a step necessary to advance a proceeding against a company. Ignorance Isn't Bliss It is recommended for any business struggling to meet tax arrears that negotiations are entered into promptly to avoid a potential winding up proceeding. Taxpayers are required…
Problems in a business generally arise slowly. Problems can become disasters if not recognised and managed. Directors have some latitude in choosing to trade out of a temporary liquidity problem or to advance an insolvency procedure. Directors must carefully consider the responsibility they have to creditors and their duties under the Companies Act 1993 and if they can turn the business around. Steps towards Solvency for a Viable Business Insolvency is the inability to pay debts when they become due. Steps can be taken to avoid insolvency. The following are steps that can be considered for a viable business: Start with a review of overheads. When considering cutting expenditure take steps to analyse the costs involved. The restructure and reduction…
Economic recap Recent lockdown measures in China are once again causing delays at their ports, just as the shipping and freight delays looked to be easing. This will continue to keep freight prices high and flow through to the end consumer and businesses. With a cooling Housing sector delays and cost increases will continue to keep the pressure on developers in the building industry, where building materials for the large number of building consents issued continues to constrain supply. How these shortages and labour shortages are managed by developers and building companies will continue to be of interest; they can do little but watch on as their margins continue to whittle away on their ongoing projects. If you have been…
With the availability of government subsidies becoming harder to obtain the Inland Revenue Department (IRD) and Ministry of Social Development (MSD) have begun the process of reviewing a business’ entitlement to the various covid subsidies they had received. It was well publicised at the time that both the wage subsidy and resurgence support payment scheme were “high trust” models, with emphasis placed on getting the funds out to business’ in need quickly, rather than a proper review of the evidence upfront. Initially the “audits” of the wage subsidy scheme by the MSD were more of a check box exercise, where they accepted verbal confirmations from business owners rather than conducting a proper review. This subsequently resulted in the Auditor General…
COVID-19’s impact on the business world is unprecedented, presenting a challenge to all companies and businesses. Some companies have evolved quickly and some have or are falling behind. Managing a business is a delicate balance anyway. The deadlines, the finances, cashflow, controlling costs, the need to generate income and improve margins, the human emotions, staff needs, skill shortages and with Covid-19 in the mix, it is simply hard to navigate. Many businesses will rise to the challenge and get through it. Some businesses are no longer viable. Many have closed the doors or considering it. Struggling NZ Business in First Quarter 2022 – the Why NZ business owners have struggled in the last while with lockdowns, inflation, increased oil prices,…
Economic recap With inflation figures for the final quarter of 2021 coming in at 6%, it was of no surprise that the OCR would be getting a lift from the Reserve Bank, the question was how much? Last month we mentioned the possibility of a 50-basis point lift with a few commentators backing this size lift. We ended up seeing a 25-point lift with the Reserve Bank using strong language that the next OCR review would likely see the rate lift 50 basis points. The consensus seems to be that with the invasion of Ukraine, we will see inflation continue its upward trend for the year. Adding to the trend are the food cost increases and the possibility petrol prices…
Yearly recap It would be generous to say 2021 ended with a bang for appointments in the insolvency sector, it was more of a dull fizzle. Personal and corporate insolvency figures continued the downward trend, they have been following in the second half of the year. Winding up applications on the other hand, fell off a cliff, racking up 4 total applications for the whole country in the month of December. A considerable drop from the years high point of 83 in June. With the bulk of the country moving to the Orange Alert Level in the final days of the year (excluding northland) and the Auckland border closure being lifted in the middle of the month, it was somewhat…
For many businesses in Auckland, it’s been a tough year. Navigating Level 4, Level 3, Level 3.1, Level 3.2, and Red have all had their own challenges and a move to Orange will have both rewards and challenges for businesses that have made it to this point. The $60 million Government support package for Auckland businesses that was announced on 22 October 2021 is now open. There is $50 million available to fund advice and planning support for businesses and the implementation of that advice. A further $10 million is available for mental health and wellbeing support. In order to access this support, you will need to be registered with Activate Tāmaki Makaurau. This link will take you to the…
Economic Rundown While it feels like we have powered through the last quarter of this year, unbelievably it is already mid-December, and we are one week out from Christmas. Everyone is in a flurry of busyness trying to clear their desks before the holiday period and we enter the seasonal slowdown. Due to the late move in the alert level system and reopening of hospitality venues, especially in Auckland, a lot of the usual Christmas functions from clients, associations and work do’s have been cancelled. Due in part to the uncertainty of the time and the months of planning required. Businesses will no doubt be feeling the hurt having missed out on a traditionally busy time of year for them.…
Liquidations advanced through the High Court require Court fee approval in most cases. Shareholder appointments also subject to some form of review and oversight. In some liquidations a committee is appointed. Every insolvency practitioner now needs to be licensed and is subject to a complaints and disciplinary process. A reasonable and competent liquidator should take into account the amount owed to creditors, the prospects of recovery and consider the cost versus benefit of advancing claims and legal actions. It is a liquidator's obligation to maximise the return to creditors and to act in a reasonable and efficient manner. There have been a number of cases now where liquidators have been scrutinised for charging excessive fees. Liquidators facing criticism It was…
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…
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