Damien Grant: Waterstone Insolvency Principal on the sharp rise in the number of insolvency

Many businesses that limped through the pandemic are now going under. 

Insolvency practitioners have been reporting a sharp rise in the number of insolvencies since mid-2022. 

Smaller retail, hospitality, construction, transport and manufacturing operators are failing far more now than they were before the pandemic. 

Waterstone Insolvency Principal Damien Grant told Kerre Woodham a lot of businesses are subject to economic winds, which are outside of their control.  

He says we as a country are getting poorer, which means disposable income and things like hospitality are dropping, which is why you see a lot of pain in the hospitality sector in particular.  

LISTEN ABOVE 

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:09):
You're listening to a podcast from News Talks EDB. Follow
this and our wide range of podcasts now on iHeartRadio.

Speaker 2 (00:16):
Liquidation and receivership numbers have been trending upwards since the pandemic.
Business liquidations at a ten year high last year, with
twenty five hundred companies folding. It was the highest annual
figure since twenty fourteen, with retail and constructions suffering the most.
This year is looking to be even worse than that.
Waterstone Insolvency principal Damien Grant joins me, now, very good

(00:39):
morning to you.

Speaker 3 (00:41):
Good morning, a lovely morning.

Speaker 2 (00:42):
You're an Oakland, It is a lovely morning. Is that
going to help? Is that going to get businesses that
are shaky through? Or is that is that just pie
in the sky.

Speaker 4 (00:55):
I don't know what's going to help business gets the
businesses get through a lot of businesses are subject to
the economic winds. With dress out of our control, and
likewise my own insolvency firm, I am subject to economic
forces beyond my control. When insulvances goes up, I get busy.
If you're running a restaurant, there are so many things

(01:15):
that can make your restaurant go up or down. That
certainly the general economic tightening, we're seeing flat economic growth,
population increases. We are getting poorer and have been for
some time, which means disposable income and things. Our hospitality
is dropping, which is why you see a lot of
pain in the hospitality sector.

Speaker 2 (01:37):
It's interesting because if you are good at what you
do and you have loyal staff and you've got good customers,
that should be a recipe for success. But it's not enough.

Speaker 3 (01:51):
Well, if what you are really good at is making
wagon wheels for horse and buggies, then it doesn't matter
how good you are, does it because the market has
moved on. So if you're really good at encoding in dos,
well doesn't matter. You know, are there are more dots
coders and there are people who need that.

Speaker 4 (02:10):
So no, it's it's not enough. And sometimes luck features
a lot in business. You can see some real idiots
doing extremely well because they capture the mood. But that
but that's that is a nature of commis and the
way we structure our economic system as we design it

(02:32):
so that.

Speaker 3 (02:32):
A hundred people will try, ten people will do really well,
ad people will do okay, and ten people will fail.
And we need to not stigmatize those ten people who fail,
because the way we design our system, the way we
set up limited liability companies, we do it in anticipation
that some people will will fail. Failure is not a

(02:55):
it's not a bug. It's an embedded part of the system.
And so if your business comes un stuck, it doesn't
mean that you you're you're you are bad at business.
It just means that, for whatever reason, the economic tide
has moved, don't you. But I'll tell you this, A
lot of the people who I see who fail one year,
four or five years down the truck, they are succeeding

(03:17):
in business. You learn a lot more on the way
down than you do on the way out.

Speaker 2 (03:21):
Well, that is what I was going to do. I'll
never forget. Adriana were saying, yes, as well, we need
a recession to you know, call this market and you know,
glibally saying it at which you can do when you're
a public servant and you're getting very well paid. But
you know, for every recession and every oh, well, this
is going to get rid of the dead wood. They're people,

(03:42):
they're real life people who who are really suffering as
they try and hang on.

Speaker 3 (03:50):
Yes, that that is true in their respective Adrian or
his economic recklessness created a lot of companies that should
not have existed, which then subsequently failed.

Speaker 4 (04:03):
The man was a catastrophe. I'm only disappointed society to
see Michael Raddell, not me. I thought I was much
more critical of him. The Michael was so Adrian. If
you want to have a go, you know, feel free
to see. Yeah, bring it on.

Speaker 3 (04:20):
He's a reckless economic and competent and he could barely
fit into a tie. I have no respect for the man,
but I just want to come back to that point though,
that when you go into business, you go into business
knowing that things could fail, but also in anticipposing that
things could work. And so there is yes, people, when

(04:44):
businesses fail, it gets hard. But also don't forget that
the way we structure things, bankruptcy in particular is the
worst thing that can happen to you, And bankruptcy in
New Zealand is not that catastrophic. And the state tender
around and says, all right, mister Grant, you've had to
go on business.

Speaker 4 (05:04):
And you've failed. We will now protect you from your creditors.
You take three years off, you go get a job
and then in three years you can go again. The
system is designed so that people can fail and fail
in an orderly way that allows them to reassemble their lives.
And for a lot of people, business is hard, and

(05:25):
a lot of times the best thing that can happen
for somebody whose business is not succeeding is to close
it down. One of the analogies I like to think about,
and this is this is really a problem for men.

Speaker 3 (05:37):
If you ask a guy what does he do?

Speaker 4 (05:39):
I will say I'm a liquidator, I'm a broadcaster, I'm
a lawyer. It's a bit sexist to say it. But
if you ask a woman, they will often say, ah,
you know, I work for Adia in New Zealand.

Speaker 3 (05:50):
I work at all Orten. Women are much more rounded
and rational individuals, and they have a sense of themselves. Men,
because we have no soul, We are completely shallow individuals,
and we completely identify with our jobs. And so when
a when a guy who business is in trouble, we

(06:11):
are too stubborn and too stupid to come to the
realization that it needs to stop. And that psychologically for
a guy is so very difficult, because if your identity
is wrapped into your business. There's not always true that
a woman who find themselves in the same situation. But
if your identity, your sense of worth is locked into

(06:32):
your business and the business fails, you don't just lose
your income, you lose a part of your identity, which
can be unbelievably. It's not just the economics that's harmful.
It's how people see themselves, which can.

Speaker 2 (06:44):
Be difficult, absolutely, but if they can gain a sense
of perspective. I mean, it's not good for you to
be waking at three in the morning with your heart
pounding and your mouth dry and feeling sick to your core,
wondering what the hell you're going to do, because everything
you can do you're doing, but it's beyond your control.

(07:06):
I just wondered, is there a set but it sounds
like you've already answered it. Is there a sense of
release once you realize that you cannot that's not your fault,
you can't keep hanging on, and that you're better off
to your family alive and working for somebody else than
running yourself into the ground trying to say that business.

Speaker 3 (07:28):
That is true, and I certainly see the visceral relief.

Speaker 4 (07:32):
On business owners when they finally say that's that I'm
going to close the ball, close the business. A lot
of times closing the business doesn't end it because people
have given personal guarantees, the landlords and so forth, and
so sometimes the business failure can then be followed up
with bankruptcy. But as long as you've got your affairs sorted,
your house and a trust and so forth, it's not

(07:54):
quite so catastrophic. But I just want to come back
to that person at three o'clock in the morning thinking.

Speaker 3 (07:59):
Hey, you pay your wages.

Speaker 4 (08:02):
I suffer from that. I will sometimes wake up at
three o'clock in the morning and thinking, oh my god,
how am I going to manage this this delegation I've
got that litigation. There is for some people, myself included,
there is a visceral thrill about that level of.

Speaker 3 (08:19):
Stress and that level of pressure, and we thrive on it.

Speaker 4 (08:23):
And so if you were to take away that three
o'clock in the morning worry and so the only thing
you've got to worry about is meeting the performance deadlines
of the Ministry of Funny Walks, whatever you're working for, life,
wouldn't it just would feel incomplete. So so pushing pushing
the envelope and being just a little bit reckless and

(08:44):
taking risks there. So there is a thrill to that.
But I'm sure some of your listeners will be sitting well,
we'll be.

Speaker 3 (08:51):
Aware of it.

Speaker 4 (08:52):
And sometimes you get through those three o'clock nightmares and
you come out the other side and.

Speaker 3 (08:57):
You feel bullet brief and then you think, oh my god.

Speaker 4 (08:59):
Well and then and then you go and do something
equally reckless to get those three o'clock chills back again.

Speaker 3 (09:04):
I don't recommend it that it's true for a lot
of us.

Speaker 2 (09:07):
Well, that's true. It's about pople's individual makeup and capacity
to deal with with stress. I guess stress can be
a good thing. What would you.

Speaker 4 (09:15):
I mean, some people would be enormously stressed about hosting
a radio show.

Speaker 3 (09:19):
You carry it off.

Speaker 4 (09:20):
It's just, you know, it's easy.

Speaker 3 (09:23):
You're doing it so well, you're doing your sleep.

Speaker 4 (09:25):
I mean, don't tell me you don't sometimes wake up
at three o'clock in the morning you're thinking, oh my.

Speaker 3 (09:29):
God, I've got to I've got to interview this. I
haven't done enough research for that. I mean, you you
know you must it that it's a similar sensation you
and you wouldn't want to lose it.

Speaker 2 (09:39):
It's more the pub, you know, that live public speaking
on stage, when you can see the whites of their eyes.
That that's where I get my chicks. That's what I
quite enjoy it. So what would you guys be damien?
Two business owners who are on the you know who
are who have been through five years and wondering if
they've got any more left in them to do another year?

Speaker 3 (10:01):
The don't don't go talk to an insolvency practitioner. And
my colleagues will hate me for saying that. If you
don't talk to insolvency pratitioner about what to do, it's
like going to a dentist. The dentists will recommend a
root canal. You've got to an insolvency petitioner, our advice
will be, oh, you should look at out closer business.

Speaker 4 (10:19):
The best people to talk to is go and talk
to your accountants, to go and talk to your lawyer.
And because they have the ability to be objective, and
they might say, look, you've asked me for advice. You've
been running this for five years. The market's not going
to shift. The business model doesn't work. It's time to
call it quits, or they might say insolvency has a

(10:43):
lot of tools to help businesses that have historically traded
badly but are now trading in the black. So if
you're sitting there in your business own and you think,
oh goodness, I am my credit is there the bank
that io the iod so much money? But if your
business is actually trading profitably months to month, then you've

(11:04):
got outstanding historical debts or legacies. Go and talk your
accountant and your lawyer and say, look, is there a
way that I can restructure my business affairs in such
a way to draw a line in the same between
my past trading and my future trading. And sometimes the
answer is no, we can't help you for whatever reason.
But sometimes the answer is yes. And a lot of

(11:26):
times people come and see us and they've their lawyer
account It brings them in, but it's too late. They've
gone on too late. If we've seen them six months
or twelve months earlier, we might be able to help
them if they're in that situation. And see, this is
the thing. It's like men and gps. We never go
and see the GP until the growth is so big
it's you know, it's jouring malignant men. We don't like

(11:50):
to seek advice, but this is an area where it's
really useful to go and get advice and talk to
your accountants. You don't go rushing off talking to an
insulvant a petitioner, because you'll you'll come out with the
company and liquidation.

Speaker 2 (12:06):
Absolutely brilliant advice. It's so good to talk. We've got
some great feedback. Thank you so much, Damien Grant, principal
at Waterstone Insolvency.

Speaker 1 (12:14):
For more from News Talk sed B, listen live on
air or online, and keep our shows with you wherever
you go with our podcasts on iHeartRadio