Insolvency And Restructuring Newsletter March 2023

Our last newsletter commented on high inflation, dwindling business confidence and international supply chain issues.  Those factors continue to influence the economic outlook, with some businesses unable to survive the strengthening head winds impacting the economy.  The consumer price index increased 7.2 percent in the 12 months to December 2022, remaining stubbornly high despite significant movements in the official cash rate to 4.5%, up significantly from the 0.25% it was sitting at in October 2021.  ANZ's economic forecast warns that a "policy induced recession is looming".  Westpac, among other banks, have indicated more pain for mortgage holders in the coming year.

Over the past six months, we have seen a steady trickle of insolvencies and appointments across a variety of sectors, including the liquidation of Redcurrent in the retail sector, the voluntary administration of Ruapehu Alpine Lifts, and a number of insolvencies in the building and construction sector.  Auckland, Northland, Gisborne and Hawke's Bay have seen unprecedented weather impacts, and Cyclone Gabrielle has brought widespread flooding and damage to the majority of the North Island.  These events will have flow on impacts for business, but we are yet to see the size and scale of Central Government's response which will be relevant to assessing the extent of the impact.  Whatever the response, it is likely to have an impact on inflation.  Our thoughts are with those most severely affected by the severe weather.

We open our newsletter with an update on the recent High Court of Australia's treatment of statutory set off in relation to a voidable preference claim. The High Court of Australia's decision in Metal Manufacturers Pty Ltd v Morton [2023] HCA 1 provides useful clarity on this issue, and is likely to be persuasive in the New Zealand context. 

The newsletter also includes useful case notes on issues including the Construction Contracts Act payment claim and payment schedule regime in a disputed debt situation, the controversial Quincecare duty of care, and what rights replacement liquidators have to the files of their predecessor liquidators.

We hope you enjoy the first edition of our newsletter for 2023.  Please get in touch if we can provide more information.


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