Photo: 123RF
- Insolvencies rise in fourth quarter, annual rate highest in 10 years
- Failures reflect companies weakened some time ago
- Signs of economic improvement too late for some companies
- Construction biggest insolvency group, broad hospitality second
The number of companies going broke has surged to its highest level in 10 years as past economic and commercial problems catch up with a growing number of firms, despite signs of economic recovery.
The latest report from BWA Insolvency for the December quarter showed a 31.5 percent rise in the number of insolvencies to 933 on the previous quarter, and 11 percent higher than the same period in 2024.
BWA Insolvency principal Bryan Williams said the number of insolvencies reflected old pressures coming to the surface.
“The insolvencies we are seeing today are rooted in earlier events. Old debt, thin margins and stalled projects are what ultimately undermine a company’s viability.”
“The improvements we are seeing now in interest rates, building activity and export returns arrive too late for those already in deep financial trouble,” Williams said.
There was a total of 3132 insolvencies last year, involving more liquidations, a slight rise in voluntary administration, but a fall in receiverships. It was the highest annual tally since 2015 following the global financial crisis.
Williams said the figures showed by the end of 2025 more firms had reached “terminal distress” where there was little or nothing left to save and they had accepted the inevitable.
The high level of insolvencies in the past year has been put down, in part, to a more aggressive approach by Inland Revenue in collecting unpaid tax and other payments.
Better economy won’t save the weak
Williams said there was still a reasonable number of companies to fail even as economic conditions improved.
“A bit of extra revenue can provide temporary relief, but it is rarely enough to overcome the weight of historic debt. The cost of those past problems is often greater than the benefit of any new earnings.”
Construction had the most insolvencies, but the rate of failure was slowing. There were now also substantial increases coming through in food and beverage, repair and maintenance, personal services, retail trade, transport and delivery, and manufacturing.
Williams said the high level of insolvencies should not affect the broader economic rebound currently underway, and there were some positives to be taken.
“Employees from these companies can be absorbed into sectors that are strengthening. Moving these workers into growing industries is a helpful result from what is otherwise a tough situation.”
He said directors of struggling companies should seek advice and not hope that improving sentiment will save them.
“It is natural to hope that better times will solve current problems but continuing to fight a battle that cannot be won without new capital is exhausting and often futile.”
Sign up for Ngā Pitopito Kōrero, a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
