Voluntary Administration offers a second chance for businesses.
Struggling Kiwi business owners are waiting too long to seek help – but there are options available to survive tough economic times, says a leading insolvency specialist.
“Business owners often wait until it’s too late and the situation has completely got away from them,” says BWA Insolvency managing director Bryan Williams. “By that stage, the only option is receivership or liquidation, which we know is an outcome that has far-reaching impact.”
Williams believes that more businesses could be saved if company directors and owners knew their options.
BWA Insolvency has been instrumental in the rise of Voluntary Administration (VA) in New Zealand – the company handles more VAs than any other firm in the country. “Voluntary Administration allows financially distressed companies to explore alternatives to liquidation, offering a structured path to potentially rejuvenate business viability,” Williams explains.
Bryan Williams of BWA Insolvency says awareness of Voluntary Administrations is growing.
“Unlike liquidation, which typically signifies the end of a business, or receivership, which prioritises creditor claims, VA focuses on restructuring and recovery under the guidance of a licensed insolvency practitioner.”
The latest BWA Insolvency Quarterly Market Report has revealed insolvencies are on the rise, up by 23% in Q2 2024 compared to Q1 and 36% compared to the same period last year. The rise in business failures comes as no surprise to Williams.
Insolvencies in New Zealand by Quarter, including liquidations, receiverships and VAs.
However, he believes the silver lining within this data is the prevalence of Voluntary Administration (VA) among insolvency cases.
How Voluntary Administration saved a popular Masterton eatery
One of BWA’s recent clients found the best possible outcome after being referred to BWA Insolvency.
Tom Roseingrave, an experienced hospitality operator in the Wellington region, found his Lone Star restaurant facing significant cashflow challenges post-Covid restrictions as consumers tightened their belts.
“It has been an industry-wide issue. People’s food and beverage habits have just changed,” says Roseingrave.
“When I rang BWA, Bryan personally answered the phone and took the time to speak to me. He listened and was empathetic to our position.”
With BWA Insolvency on board, creditors were kept informed, and expenditure was overseen while the owners worked on business operations.
“This allowed us to trade without the burden of creditor claims bearing down upon us - the relief was like being freed from a noose around our neck”. says Roseingrave. “There was no question it was the right move.”
“There was a fiduciary duty from BWA Insolvency to act in the best interests of the creditors throughout the process, but this was very professionally interwoven with helping us preserve our position.”
The outcome of the Voluntary Administration was the sale of the business to new owners who have kept the restaurant open and saved about 40 jobs.
“I am extremely thankful I picked up the phone and called BWA when I did,” says Roseingrave.
Williams says he cannot stress enough the importance of business owners being proactive and talking to a professional as early as possible.
“When a business owner is in this very stressful situation, their vision and judgment can be clouded. A trusted professional can help you see more clearly.”
For a confidential chat with Bryan Williams, get in touch.