One insolvency practitioner expects winding up applications in the first six months of the year to exceed the total number recorded in either 2021 or 2022.
Keaton Pronk of McDonald Vague said there were 86 applications to wind up businesses in April, just down on the 90 in March, but ahead of last April’s 74.
There have been more than 400 in the year to the end of April.
“At this stage in the year, historically, winding-up applications have levelled out somewhat, until they once again jump in July to peak in November,” Pronk said. “We remain on track to beat out 2025 for total applications for the year.
“We will continue to see more and more court-appointed liquidations increasing their share of the total insolvencies.
“We expect that, by June this year, there will be more winding-up applications in six months than what we saw in the 2021 and 2022 years.”
He said company insolvencies were running at a high rate compared to the last 15 years.
“While not up to the levels seen during the GFC [Global Financial Crisis], emphasising that this downturn is longer, rather than short and sharp, we continue to bump up against the shoulder years 2008 and 2011 – appointment figures.”
He said deciding whether to wind up a company was a question of whether directors were breaching their duties under the Companies Act by continuing to trade and risking personal liability.
“Is there a reasonable chance that the business will recover and turn around, or is it insolvent, and continuing to trade will deplete the available assets further and incur more debt to the detriment of creditors?
“Is the reason behind their current circumstances due to a one-off event that is unlikely to occur again, such as a major debtor defaulting, or is it a more systemic issue, such as increased costs and reduced margins from falling revenues?
“A one-off event may be able to be recovered from, while an ongoing issue can’t be fixed without considerable changes to how the business operates.
“Every business faces a unique set of circumstances and challenges that need to be worked through, and a suitable solution found. There is not one cure-all that works for every problem.
“Ultimately, it is on the judgment of the director to make an informed decision, with input from their advisers, on whether their business is viable or if it should be wrapped up.”
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