Formal Insolvency

Formal solutions with maximum returns.

Where a formal process is necessary, BDO can help with formal corporate and personal insolvency services. We provide a cost-effective solution drawing on the appropriate industry expertise and local knowledge to maximise returns for stakeholders. 

We provide the following services:

  • Receiverships
  • Liquidations (solvent and insolvent)
  • Voluntary administration
  • Creditor compromises

Recent industry engagements include a range of sectors such as agri-businesses and farms, retail, wholesale, export, manufacturing, tourism, hospitality, construction and property. 


A company is able to be placed into receivership by a secured lender in certain circumstances including a default and non-payment. The receiver’s primary function is to realise assets for the benefit of the secured creditor, although duties are owed to all creditors. In order for the receivership to be effective BDO quickly establishes the best strategy to maximise returns for the secured creditors and other stakeholders.

Liquidations (Solvent and Insolvent)

The purpose of a liquidation is to distribute the assets of the company to either its creditors or shareholders. A liquidator has certain powers under the Companies Act 1993 to investigate past transactions or breaches that may have disadvantaged creditors.

Voluntary Liquidations

If a company recognises its inability to pay its debts, the shareholders may choose to appoint liquidators. Once appointed, BDO act swiftly to establish the best course of action and protect the interests of all those involved. While the approach is tailor-made to the unique circumstances of each company, the liquidators’ principle duty is always to realise the company’s assets and distribute the proceeds to the creditors.

Court-appointed Liquidations

Court appointed liquidation is the result of a petition, usually by a creditor, to the court to place the company in liquidation. Often the petitioning creditor has exhausted all other remedies to recover outstanding amounts. BDO insolvency partners are regularly appointed liquidators by the High Courts across New Zealand.


Solvent companies that have ceased to trade and wish to distribute tax-free capital to shareholders can be placed into solvent liquidation. Solvent liquidations can also be used for the purpose of restructuring shareholder entities or simply where the company is no longer required. BDO have expertise in managing the tax implications and restructuring affairs of shareholders.

Voluntary Administration

Voluntary administration is an alternative option for companies facing financial difficulties. Voluntary administration can be a mechanism to maximise the opportunity of the company or its viable business, continuing. A moratorium immediately following appointment allows administrators time to assess the company’s position and provide recommendations to creditors.

Creditor Compromises

A creditor compromise is essentially a deal with some or all of your creditors to agree to either a reduction in their debt or payment over time. Any proposal to creditors needs to be achievable and worthwhile for creditors.

Creditor compromises have the opportunity to provide all parties with a better outcome. Creditors can expect a better outcome than they would receive in a formal insolvency and the company continues to trade.

BDO has experience in drafting, proposing and managing creditor compromises.

Frequently asked questions

The common warning signs of insolvency are primarily related to a lack of sufficient cash flow. The effect of this is often represented in an increased overdraft facility, missed payments to Inland Revenue for PAYE and GST, creditor payments stretching out beyond 60 days and creditors placing the company on stop credit.

Seeking advice earlier rather than later can result in more options being available to directors.

If your company is showing signs of insolvency you need to urgently seek help as The Companies Act 1993 dictates that directors must act responsibly when a company is facing financial difficulties. An insolvency specialist can quickly assess whether the business is able to be turned around to avoid a liquidation process. However if a formal appointment is required, you will be advised of the process, consequences and how it affects you.

The shareholders pass a resolution to place the company in liquidation. A shareholder resolution requires approval by 75% of the shareholders. The resolution must be signed, dated and timed and the appointee liquidators must consent to the appointment.

In most circumstance, a receiver is appointed by a creditor holding a General Security Agreement. Although a receiver has a duty of care to all creditors, their focus is to satisfy the secured creditor’s indebtedness. A liquidator is appointed either by shareholders, directors (in limited circumstances) or by a creditor pursuant to a petition to the High Court. A liquidator’s powers as defined by The Companies Act 1993 are much wider than those of a receiver. 

If you are a director you maintain your directorship without the associated powers. You will be required to provide information and assistance to the liquidator/receiver. A liquidation or receivership may trigger a personal guarantee claim where a personal guarantee has been given to a supplier/creditor, lender or landlord.

The cost of liquidations are typically borne by the company from asset realisations. The shareholders and/or directors are not usually required to settle a shortfall where there are insufficient funds from the company’s assets. Receivership administrations are also funded by the company but the receivers often accept an indemnity from the appointee for any extraordinary costs that can arise. Where a company has no assets there can be an agreement between the shareholders and the liquidators to meet the costs of the liquidation.

The length of a liquidation process differs for each company due to the variables of each administration i.e. the number of assets to be realized, the size and complexity of the receivables ledger and whether any litigation is required.

Liquidation relates to the insolvency of a company whereas bankruptcy relates to the insolvency of an individual.

Meet our team