Welcome to the final edition of Buddle Findlay's insolvency and restructuring update for 2025. As we head towards the silly season and a well-deserved break for many, it's an opportunity to reflect on what has been a very busy year in the insolvency and restructuring space.
There is no doubt that 2025 has delivered significant challenges for many businesses, and this is reflected in the statistics published by the New Zealand Companies Office. As at 31 October 2025, 2,278 companies had been placed in liquidation this year. This is an increase of around 200 on the same time last year (2,065). The number of company liquidations has steadily increased from the post-Covid lows of 2020 and 2021 (1,217 and 1,196 respectively as at 31 October). Company receiverships and voluntary administrations have followed a similar trend, although numbers are slightly down on the same time last year. The statistics reflect the financial pressures that many sectors have felt over the past two years. As reported recently by the Reserve Bank:
- Financial stability risks remain higher than in recent years due to global uncertainty and underperformance in parts of the New Zealand economy
- Soft demand and reduced profitability are contributing to financial stress in many sectors, especially those reliant on discretionary consumer spending
- Subdued discretionary spending by households has affected sales for many sectors. Business financial data show that sales in the construction, manufacturing, retail and wholesale trade sectors have been weak over the past two years
- Pandemic-era savings buffers have largely been depleted, particularly for smaller firms. Business failures are increasing as financial pressures accumulate.
The Reserve Bank offers a light at the end of the tunnel for many businesses, suggesting that conditions are expected to improve gradually, as profitability and debt-servicing capacity recover with strengthening demand.
2025 has also brought many interesting case law developments both in New Zealand and around the world. Our final edition of the year offers an update on a proceeding that has featured in two of our earlier updates this year – in our June update we reported on the judgment in Arena Alceon NZ Credit Partners, LLC v Grant which related to liquidators' conduct. In our August update we reported that the decision has been appealed. This month we report on the costs decision from the High Court.
We also report on a recent High Court decision reversing a decision made by liquidators to apply retentions held on statutory trust under the Construction Contracts Act 2002 to the liquidators' fees and remuneration. The High Court emphasised the importance of liquidators distinguishing between trust assets and general company assets, and the importance of liquidators applying to the Court for directions in complex cases.
Looking overseas, we provide a summary of an Australian decision in which the New South Wales Court considered the interesting issue of "shadow" directors – a person that exercises ultimate managerial control over a company despite never having been formally appointed, and may be held personally liable for insolvent trading.
We hope you enjoy our final update for the year. No doubt many retailers and hospitality businesses will be awaiting the pre-Christmas spending boom.
We wish you a safe Christmas break.
