Insolvency practitioners have been kept very busy over the past year as business failures continue their upward trajectory, said the report released by BWA Insolvency.
According to the Q2 2023 New Zealand Insolvency Market Report, there were a total of 475 formal insolvency proceedings lodged in the country compared to the corresponding period in 2022 when there were 281, which was an overall increase of 69 percent.
The report has been tracking the data on liquidations, receiverships and voluntary administrations since 2012, conducted a deeper investigation into each company that has gone into a formal state of insolvency and categorized them to show trends across different industries and regions.
"With rising interest rates to counter inflation and the rising costs of consumer goods ever present in the media, business uncertainty is an obvious outcome of an unstable market," BWA Insolvency's Bryan Williams said, adding businesses, particularly small to medium enterprises, are still walking into stiff post-COVID headwinds.
The sectors to fare worst in the year-on-year comparison were manufacturing, retail trade, and construction, the report said, adding manufacturing had the biggest increase in insolvencies, up from 14 to 30 when compared to the same time last year.
The food and beverage sector was the only one to record a year-on-year decline in insolvencies, down 21 percent from 33 to 26, according to the report, adding this drop in insolvencies is likely a result of businesses returning to normal after the pandemic.
Many companies that are at risk of failure can recover if business owners act quickly to reduce expenses and adapt their approach to fit the current market, Williams said.
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