Liquidation is an ending, not a fix
Liquidation brings a company’s life to a close. A liquidator takes control, sells the assets, investigates the company’s affairs, and distributes whatever’s available to creditors in the order set by the Companies Act. The business, if it continues at all, usually does so under new ownership.
For a company with no future, that can be the right outcome. For a company that’s viable but has run out of cash to pay its old debts, it can be an expensive way to solve a funding problem. New Zealand saw more liquidator appointments in 2025 than in any year since around 2010, and a meaningful share of those companies were pushed there by tax debt: Inland Revenue referred 650 cases to court for liquidation in the year to June 2025.
What are the alternatives to liquidation?
1. Refinance the debts
If you or a supporting party own New Zealand property with equity, a property-secured business loan from $20,000 to $1m can pay IRD and creditors directly at settlement, even with arrears, defaults or no recent financials. Without property, an unsecured loan or line of credit based on turnover may cover smaller debts for businesses trading six months or more.
2. Pay out the statutory demand
If a creditor has served a statutory demand, the company has 15 working days to pay, compound or secure the debt. Paying it removes the basis for a liquidation application on that debt. See statutory demand funding.
3. Deal with IRD before it goes to court
IRD applies to liquidate companies that don’t engage or don’t keep arrangements. An instalment arrangement or paying IRD out with a loan can stop that path.
4. Negotiate with creditors
Informal payment plans, or a reduced settlement paid in cash, can work when creditors see a credible plan. Money in hand makes those negotiations much easier.
5. A formal compromise
A Part 14 compromise lets creditors vote to accept reduced or deferred payment while directors generally stay in control. It’s a formal process with costs and requires creditor approval.
Comparing the paths
| Refinance | Creditor arrangements | Liquidation | |
|---|---|---|---|
| Company continues | Yes | Yes | No |
| Directors in control | Yes | Yes | No |
| Creditors paid | In full | Over time or by agreement | By priority, after costs |
| Personal guarantees | Guaranteed debts paid, so guarantees aren’t called | Depends on terms | Can be called in |
| Reputation with suppliers | Protected | Mostly intact | Damaged |
When liquidation may still be right
We’d be doing you no favours if we pretended every company can be saved. If the business loses money every month, if there’s no equity and no steady turnover, or if the debts are far larger than any realistic loan, borrowing more will make things worse. In those situations a licensed insolvency practitioner is the right person to talk to, and we’ll say so.
The test
Ask one question: if the pressing debts were cleared tomorrow, could the business pay its way from here? If yes, liquidation may not be your only option. Read before you talk to a liquidator, then start an enquiry to check the funding route. It takes a minute and won’t affect your credit score.