THE NUMBERS TELL THE STORY: INSOLVENCY IN 2025

The statistics are stark. From January to September 2025, there were 1,974 company liquidations - a significant increase from 1,846 over the same period in 2024 and 1,353 in 2023. Current projections suggest 2025 will see a 20-30% increase in total liquidations compared to 2024, making it one of the busiest insolvency years since the Global Financial Crisis.

However, context matters. While these numbers represent a significant upturn, they remain well below GFC peaks when 3,258 liquidations occurred between January and September 2008 alone.

What's Driving the Increase?

Three key factors are converging to drive the current wave of insolvencies:

1. Inland Revenue's Renewed Enforcement

Tax debt has become a critical pressure point. IRD's outstanding debt book has more than doubled from $4 billion in December 2020 to $9.3 billion by June 2025. The Government's allocation of an additional $35 million in Budget 2025 specifically for tax compliance and collection signals a decisive shift from the leniency shown during the COVID-19 period.

The impact is already evident. In January 2025 alone, IRD advertised 100 winding-up applications - triple the number from January 2024 and the highest single month in five years. Historically, approximately 70% of IRD applications result in liquidation.

2. Post-COVID Reality Check

Many businesses that received government support and creditor leniency during 2020-2022 are now facing the accumulated weight of deferred obligations. The "COVID debt" that was temporarily parked is now being called in, and not all businesses have recovered sufficiently to meet these obligations.

3. Economic Headwinds

Despite the Reserve Bank cutting the Official Cash Rate from its peak (currently sitting at 4.25% following cuts in August, October and November), many businesses are feeling the delayed effects of the prolonged high-interest environment, reduced consumer spending, and sector-specific challenges - particularly in construction, hospitality, and retail.