The Government’s in-house liquidator is 1000% busier than five years ago

Wednesday, 26 February 2025

Liquidations are on the rise as IRD pursues more debt work

The Government’s own liquidator has seen its caseload soar almost 1000% in the past five years as Inland Revenue cracks down on indebted companies.

Last year, the Official Assignee (OA) administered 508 liquidations. In 2020 it handled just 47, but says it is “confident” it can cope with the extraordinary increase and ensure all cases are properly investigated.

The OA, also known as the Insolvency and Trustee Service, is a unit of the Ministry of Business, Innovation and Employment (MBIE). It is mostly known for administering bankruptcies, but also handles debt repayment orders and asset seizures.

Liquidations were always part of its remit, too, but in the last two years that portion of its work has jumped dramatically. Normally, the OA handles less than 10% of all liquidations in New Zealand, but far exceeded this in 2023 (18%) and 2024 (20%).

Almost all of the increase came from Inland Revenue (IRD). The department has vigorously pursued debt work recently, after being instructed to ease off during Covid-19.

In the years before and during the pandemic, about half the OA’s caseload was liquidations triggered by IRD but 2023 (89%) and 2024 (87%) again vastly outstripped this norm.

IRD retains a panel from which it can nominate a preferred liquidator when it takes proceedings against a company. The current members are KPMG and PwC.

The department was unable to say what proportion of liquidations were assigned to the OA compared to panel members or other private firms, but in a statement said appointments were based on “a number of factors”.

“Although Inland Revenue may approach the panel members for their consent to be appointed as liquidator in a particular case, the panel members may choose not to provide their consent to appointment…

Insolvency industry leader Kare Johnstone says the OA typically handled smaller scale liquidations.

“Where a panel member or other liquidator is not appointed, the Official Assignee will be appointed as liquidator. Numbers referred to the Official Assignee are a reflection of the increased focus on debt.”

Nationally, liquidation numbers are tracking about 40% above pre-pandemic levels. Kare Johnstone, chair of the Restructuring, Turnaround and Insolvency Association of New Zealand, said the OA’s jump in its caseload was “substantially higher” than that.

“That’s not a surprise,” she said. “OA liquidations … would typically be smaller companies.”

Insolvency experts are picking that trend to continue. Liquidations picked up around 2021-22 after tracking downward for more than a decade.

IRD deferred to the OA itself on questions of its capacity to manage so many jobs on its books.

Insolvency and Trustee Service national manager Russell Fildes said: “While the number of liquidations handled by the OA has increased recently, we are confident that the processes we have in place allow the OA to efficiently administer liquidations, while still ensuring all liquidations are properly investigated.”

Liquidator Damien Grant, of Waterstone Insolvency, was more sceptical.

“The Official Assignee is significantly under-resourced,” he said. “I have 14 staff and I handle 80 to 100 [liquidations] a year.”

The OA could not specify how many people worked on its liquidations. The entire unit has 72 staff and a handful of others in support services across MBIE.

Grant doubted that would be enough to maximise recoveries for creditors. “Those people who are defrauding the taxpayer can have confidence the IRD will refer their case to a department that has no … capacity to chase them for their failure.”