Insolvency and Recovery: A 2020 snapshot

November 23, 2020

 

Introduction

The Nexia New Zealand Insolvency & Recovery team has seen an increase in work in 2020 with new engagements almost doubling those in 2019. While the majority have been shareholder appointments across varying industries, we are also beginning to see the effects of COVID-19 and the strain it has placed on the economy.

As a result of closing our borders, a number of our appointments have been in the tourism industry. We predict this trend will continue over the coming months. Recent assignments have included a tour bus operator, an international travel guide company, and a popular South Island resort.

Interestingly, the number of insolvencies across the country is down from last year. We anticipate this may change as ‘zombie companies’ are liquidated following the Government’s COVID-19 relief ending. While there may be some fallout prior to Christmas, we expect the real impact will show in early 2021.
 

Key legal changes

The implementation of the Insolvency Practitioners Regulation Act 2019 and key changes to the Companies Act 1993 has impacted our work as Insolvency Practitioners. Key points to note:

  • As of 1 September, only licenced insolvency practitioners can carry out insolvency engagements
  • New reporting requirements have been implemented, with prescribed information that is to be included in Liquidators’ reports
  • Liquidators are now required to give notice as to who appointed them, this includes advising the name of the applicant where the appointment is by the Court
  • Liquidation records were previously only required to be kept for one year after the completion of a liquidation, this has been extended to six years

Additionally, a recent Supreme Court decision has highlighted the need for directors to be cautious. There are now clear guidelines for scrutinising directors’ actions when a company continues to trade while insolvent, and where the shortfall to creditors is increased, this will be a clear breach of the duty not to trade recklessly. 

 

How can Nexia New Zealand help you?

All businesses encounter challenges at some point. Timely and expert advice may be able to prevent insolvency and can lead to recovery options. We help businesses spot early signs of concern and set them back on the right track.

Should insolvency become unavoidable, our licenced practitioners are here to help. Our team are authorised to act in respect of all types of insolvency engagements, including solvent and insolvent liquidations, high court and shareholder appointments, receiverships, and voluntary administrations.

Please get in touch to find out more. 

 

Our appointments in the last 12 months

 

National insolvency statistics - YTD comparisons

     


Talk to a specialist

 

Craig Melhuish

Craig is a Partner at Nexia  Christchurch, and is Chair of the Nexia New Zealand Board. He has extensive experience in the commercial environment.

He is also an accredited Insolvency Practitioner, a member of Chartered Accountants Australia New Zealand, and Restructuring Insolvency and Turnaround Association of New Zealand (RITANZ).

p 03 379 0829

e cmelhuish@nexiachch.co.nz

 

 

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