Executive Summary
The restructuring landscape across Australia and New Zealand in 2026 is defined by the simultaneous arrival of multiple structural pressures. This is not a single-cause cycle. It is a compounding one.
In Australia, formal insolvency appointments exceeded 11,000 in FY2023-24 - the highest level in over a decade. The rate of increase has moderated, but the underlying drivers have not resolved. Construction accounts for approximately 27% of all insolvencies. Hospitality follows at 15%. The ATO issued over 84,000 Director Penalty Notices in FY2024-25, a 136% increase on the prior year. From 1 July 2025, the General Interest Charge is no longer tax-deductible, increasing the effective after-tax cost of carrying ATO debt by approximately one-third.
In New Zealand, formal appointments reached a 15-year high in calendar year 2025. Inland Revenue has adopted a similarly assertive enforcement posture, with court liquidations increasing 49% in the year to June 2025.
Layered over this environment: the introduction of Payday Super from 1 July 2026 will remove the quarterly superannuation float that many stressed businesses have relied upon as an informal working capital buffer. The February 2026 fuel shock - driven by Middle East conflict and restriction of the Strait of Hormuz - delivered an 88% increase in Melbourne diesel terminal gate prices in four weeks. And global tariff disruption has created supply chain uncertainty and price pressure across multiple sectors.
The Critical Distinction: Lodgement, Not Payment
Directors who lodged their BAS and IAS on time retain options - including remitting personal liability through VA, SBR, or liquidation within 21 days. Directors whose lodgements are overdue by more than three months lose those options entirely. Permanently. The lever is lodgement, not payment.
The businesses that will emerge strongest from this period are not the ones that responded fastest to crisis. They are the ones that anticipated it, understood the structural forces at work, and acted before their options narrowed.
Insolvency Outlook: Australia & New Zealand
Australia
Formal insolvency appointments in Australia exceeded 11,000 in FY2023-24, the highest level in over a decade. Early data for Q1 FY2025-26 suggests a possible plateau, but structural pressures remain unresolved. The ATO's enforcement posture continues to drive appointment volumes, with Director Penalty Notices functioning as the primary trigger for formal restructuring activity.
Small Business Restructuring has emerged as a significant pathway. SBR appointments grew from 448 in FY22-23 to approximately 3,000 in FY24-25, now representing around 22% of all formal appointments. For eligible businesses - total liabilities under $1 million, all tax lodgements current - SBR offers directors the ability to remain in control while restructuring debt.
New Zealand
New Zealand recorded 3,080 formal appointments in calendar year 2025, a 15-year high. Inland Revenue's enforcement funding increased by NZ$35 million, resulting in 650 court-referred liquidations. The Official Assignee has become the busiest liquidator in the country. IRD is carrying approximately NZ$9 billion in taxes to be recovered.
Business confidence has recovered to its highest levels since 2014, and the RBNZ's aggressive easing cycle (OCR cut from 5.5% to 2.25%) has provided meaningful rate relief. However, insolvency practitioners point to a persistent "disappointment gap" between the recovery businesses expected and the one that has actually materialised.
Comparative Snapshot: Australia vs New Zealand
| Feature | Australia | New Zealand |
|---|---|---|
| Insolvency trend | 11,000+ (FY23-24); early plateau signal Q1 FY25-26 | 3,080 formal appointments (CY2025); 15-year high |
| Dominant sector | Construction (27% of all insolvencies) | Construction (~30% of liquidations) |
| Tax authority posture | 84,000+ DPNs in FY25; GIC now non-deductible from 1 July 2025 | IRD enforcement funding +$35m; 650 court-referred liquidations |
| Key regulatory change | Payday Super from 1 July 2026 | Directors' duties review (consultation in 2026) |
| Restructuring uptake | SBR appointments up 200%+; ~22% of all appointments | VA uptake growing from low base |
| Creditor landscape | Growing private credit sector; diverse creditor base | Bank-dominated; limited private credit alternatives |
| 2026 outlook | Possible plateau, but Payday Super may reverse | Elevated activity; recovery slow and uneven |
Industries in Distress
Construction: A Structural Crisis, Not a Cycle
Construction has been the dominant insolvency sector for three consecutive years in both countries and shows no signs of relinquishing that position. In Australia, construction accounts for approximately 27% of all company insolvencies - an unprecedented share for a single industry.
Australian Construction Insolvencies - ASIC Data
The root cause is structural, not cyclical. Fixed-price contracts signed before and during the pandemic are wildly out of sync with post-pandemic costs. Material costs remain approximately 35% above 2019 levels. Labour shortages persist. The domino effects are immense - subcontractors relying on a single builder are exposed, unpaid invoices cascade through the supply chain, and homeowners are left with unfinished homes and limited insurance protection.
High-profile collapses including Porter Davis Homes (approximately 1,700 homes in progress), Lloyd Group (59 projects worth over $350 million), and hundreds of smaller builders across every state have demonstrated that balance-sheet size does not insulate a firm from structural contract risk. In New Zealand, construction comprises around 30% of liquidation appointments, with approximately 95% of construction businesses having five or fewer employees.
Hospitality, Retail, and Business Services
Hospitality has been the second-largest contributor to the Australian insolvency wave, with insolvencies rising 57% in the twelve months to March 2025. The collision of ATO debt recovery, consumer spending compression, and persistent labour cost escalation has overwhelmed margins. CreditorWatch data showed that one in three businesses with ATO debt exceeding $100,000 and more than 90 days overdue had either become insolvent or voluntarily closed within the prior year.
Retail distress in both markets is being driven by rising operating costs, compressed discretionary spending, and intensifying competition from offshore e-commerce. In New Zealand, 61 stores announced closures or liquidation in the first ten days of 2026 alone.
Australian Insolvencies by Sector (FY2023-24)
Source: ASIC Series 3 data; external administrator reports FY2023-24
Key Themes Shaping 2026
Tax Authority Enforcement: The ATO and IRD
The single most significant driver of insolvency volumes across both countries is the posture of the tax authorities. This is not incidental. It is the defining feature of the current cycle.
The ATO issued over 84,000 Director Penalty Notices in FY2024-25, a 136% increase on the prior year, covering approximately $4.5 billion in company tax liabilities. From 1 July 2025, the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) are no longer tax-deductible for amounts incurred on or after that date, increasing the effective after-tax cost of carrying ATO debt by approximately one-third. Departure Prohibition Orders have escalated sharply, with 21 issued in the first half of FY2025-26 alone.
Important Clarification: Safe Harbour and DPNs
Safe Harbour does not protect directors from Director Penalty Notices. The DPN regime operates under separate legislation (Division 269 of Schedule 1 to the Taxation Administration Act 1953). Directors seeking to rely on Safe Harbour should ensure that employee entitlements, including superannuation, are paid as they fall due, and that tax reporting obligations are met.
In New Zealand, IRD has adopted a similarly assertive posture. Court liquidations increased 49% in the year to June 2025. IRD is now carrying approximately NZ$9 billion in taxes to be recovered. The message in both jurisdictions is unambiguous: the post-COVID era of forbearance is definitively over.
Payday Super: The Next Pressure Point
From 1 July 2026, employers must pay superannuation at the same time as wages, with contributions reaching employees' super funds within seven business days of payday. This replaces the existing quarterly contribution model.
The total amount of superannuation owed does not change. But the timing changes fundamentally. A business currently accumulating a $40,000 quarterly superannuation liability and using those three months to manage cash flow will lose that buffer overnight. Treasury has acknowledged that this reform will likely result in an increase in insolvencies. Research suggests that more than one in five SMEs could struggle with the cash flow impact.
The Operational Impact: What the Policy Summary Understates
Loss of the quarterly float
For a business with $160,000 in quarterly wages and 12% super, the cash flow timing shifts from one payment of approximately $19,200 every quarter to payments of approximately $1,476 every fortnight. The total is the same, but the cash must be available on payday, not three months later.
Payroll system readiness
Payroll systems must be configured to calculate, report, and remit super on every pay run. The ATO has confirmed that the Small Business Superannuation Clearing House will be retired, and all businesses will need to use a compliant alternative.
Single Touch Payroll integration
STP data will provide the ATO with real-time visibility over super compliance. Non-compliance will be detected faster than under the current quarterly model. The lag between a missed payment and an ATO response will shrink from months to weeks.
Safe Harbour interaction
Directors seeking to rely on Safe Harbour protection should ensure superannuation is paid as it falls due. Late super payments under the Payday Super regime may undermine a director's ability to establish Safe Harbour eligibility.
The Fuel Shock: Energy Prices and the Middle East
The escalation of the Middle East conflict in late February 2026 has delivered the most immediate and visceral pressure point of the year. When Iranian forces restricted tanker movements through the Strait of Hormuz, the consequences arrived at Australian and New Zealand forecourts within days. Australia imports over 90% of its refined fuel, primarily from Asian refineries that depend on Middle Eastern crude. New Zealand, which closed its last refinery at Marsden Point in 2022, imports every drop.
The transmission into business costs has been swift and broad. Diesel powers construction equipment, freight trucks, farm machinery, and generators. A trucking company running 20 vehicles saw fill costs nearly double overnight. Construction contractors on fixed-price contracts without escalation clauses faced an immediate margin hit they cannot pass through.
The federal government halved fuel excise from 52.6 to 26.3 cents per litre from 1 April to 30 June 2026 and reduced the heavy vehicle road user charge to zero. New Zealand explicitly declined to cut excise, instead offering a $50 per week boost to the in-work tax credit. A fragile ceasefire in mid-April has eased some pressure, with Brent falling to approximately US$94-95, but the ACCC notes that without a sustained resolution, prices will remain elevated.
Why This Matters for Restructuring
The fuel shock compounds every other pressure simultaneously. It lifts input costs for construction (already in crisis). It squeezes hospitality and retail margins (already under ATO enforcement pressure). It feeds into CPI, suppressing the consumer spending that distressed businesses need to recover. Businesses that were marginal before the fuel shock may now be unviable without intervention.
The Rise of Small Business Restructuring
SBR has evolved from a niche procedure to a meaningful restructuring pathway. For eligible businesses (total liabilities under $1 million, all tax lodgements current), SBR offers significant advantages: directors remain in control, the company continues trading, and the process is faster and less costly than formal administration. Crucially, appointing an SBR practitioner within 21 days of a non-lockdown DPN remits the director's personal liability.
Tariffs and Trade Disruption
The global tariff environment has created a complex set of pressures for Australian and New Zealand businesses. The direct impact on Australia is relatively contained: a 10% Temporary Import Surcharge on most goods exported to the US, with steel and aluminium subject to higher rates. Total Australian exports to the US account for approximately 6% of gross exports and around 1.5% of GDP.
However, the indirect effects are more significant: trade diversion creating surplus supply and price pressure, supply chain disruption from reorientation of global logistics, and weakened demand from key trading partners, particularly China. Commonwealth Treasury modelling suggests GDP impacts of 0.1% (2025) and 0.2% (2026), but for directly affected industries the impact is anything but marginal.
Private Credit and Alternative Lending
Private credit funds are increasingly filling gaps left by major bank retrenchment from higher-risk lending. For distressed businesses, private credit can offer more flexible terms and faster execution, but at materially higher cost and often with more onerous security and covenant structures. For restructuring practitioners, a more diverse creditor base means more stakeholders to align - the interests of a private credit fund with a defined fund life are fundamentally different from those of a relationship bank.
Regional Trends
Australia
Australia's restructuring environment in 2026 is shaped by several intersecting forces. The RBA has commenced an easing cycle, though the pace of rate cuts remains uncertain. For heavily indebted businesses, each 25 basis point reduction provides marginal cash flow relief, but for many the structural issues extend well beyond debt service costs.
State-level dynamics vary significantly. Victoria and New South Wales account for the largest share of insolvencies in absolute terms, with Victoria particularly affected in construction. The government's 1.2 million homes target under the National Housing Accord places enormous demand on an industry simultaneously experiencing its worst insolvency wave in decades.
Corporate governance concerns are rising. ASIC's misconduct data shows a 28% increase in reports of misconduct in the second half of 2025, with corporate governance matters accounting for 40% of all issues raised. The growth in SBR has created demand for practitioners with operational restructuring skills, not just formal insolvency process expertise.
New Zealand
New Zealand's economy entered 2026 with stronger forward momentum than Australia's. Business confidence has recovered to its highest levels since 2014, and the RBNZ's aggressive easing cycle (OCR cut from 5.5% to 2.25%) has provided meaningful rate relief. However, insolvency practitioners point to a persistent "disappointment gap" between the recovery businesses expected and the one that has actually materialised.
Inland Revenue's enforcement posture has become a dominant feature. The Official Assignee has become the busiest liquidator in the country. The directors' duties regime is the subject of public consultation in 2026, with Parliament reviewing the key obligations engaged when companies approach insolvency.
Sector-specific pressures mirror Australia's pattern but with local variations. Construction leads in liquidation volumes, but the rate of increase is slowing. Consumer-facing sectors saw substantial increases in 2025. The collapse of retail chains and the wave of January 2026 closures underscored the structural headwinds facing bricks-and-mortar operators.
Regional Comparison
| Feature | Australia | New Zealand |
|---|---|---|
| Interest rate direction | RBA easing cycle commenced; pace uncertain | RBNZ aggressive cuts: 5.5% to 2.25% |
| Business confidence | Cautiously improving; tariff uncertainty weighing | Highest since 2014; "disappointment gap" persists |
| Legislative outlook | Payday Super (1 July 2026); insolvency reform discussions | Directors' duties review; OIO reforms from March 2026 |
| Private credit | Growing rapidly; concentrated in property and special situations | Nascent but emerging; structural opportunity in mid-market |
| Housing policy tension | 1.2m homes target vs. construction insolvency crisis | Housing affordability crisis; building sector capacity constraints |
Recommendations and Outlook
How to Navigate What Comes Next
When facing underperformance or uncertain times, the businesses that preserve value are those that act early, reset ambitions honestly, and make decisions with speed and conviction.
Act Early
The businesses that achieve the best restructuring outcomes are consistently those that act before their options narrow. Waiting until enforcement action forces the issue means fewer pathways, less stakeholder goodwill, and higher costs. Every week of delay erodes value.
Understand Your Tax Position
Check lodgement status. Check the running balance account. Know whether unlodged returns have created lockdown DPN exposure. Lodgement is the lever. Not payment. Lodge.
Model Payday Super
If your business pays employees weekly, you will owe 52 superannuation payments per year from 1 July 2026, not four. Model the cash flow impact now. Update treasury practices and payroll systems. Businesses relying on the quarterly super float need an alternative liquidity source before the deadline.
Invest in Financial Transparency
A rolling 13-week cash flow forecast is the minimum standard for any business experiencing, or approaching, financial stress. Monthly management accounts with variance analysis should be non-negotiable. The absence of reliable financial information is one of the most consistent features of businesses that fail.
Engage Stakeholders Early
Creditors, lenders, and the tax authorities all respond better to early, transparent communication than to late, forced disclosure. A business that approaches the ATO with a credible repayment plan will get a materially different response than one that waits for a statutory demand.
7-Day Triage Framework
If your business is under financial pressure, the following questions should be answered within the next seven days. This framework is designed to be used in management and board discussions to determine the urgency and nature of the response required.
Are all BAS, IAS, and SGC lodgements current?
If any lodgement is overdue by more than three months, you have lockdown DPN exposure. Lodge immediately. This is the single most time-critical action because it determines whether your future options include formal restructuring or are limited to payment in full.
Are wages, PAYG withholding, and superannuation current?
Employee entitlements are trust monies. Falling behind on these obligations creates DPN risk and undermines Safe Harbour eligibility. If super is in arrears, address it before 1 July 2026 when Payday Super makes non-compliance visible in real time.
What does a 13-week cash flow forecast show under realistic assumptions?
Build it now if one does not exist. Include actual debtor collection patterns (not invoiced amounts), all committed payments, and the impact of Payday Super timing from 1 July. If any week shows a negative cash balance, you have a liquidity problem that requires immediate attention.
Which creditors can force outcomes fastest?
Identify every creditor with enforcement power: the ATO (DPNs, garnishee notices), secured lenders (appointment rights), landlords (re-entry rights). Understand their current posture and your obligations to each. Prioritise engagement with the creditor most likely to act first.
Which liabilities become irreversible within the next 30 days?
Map the specific deadlines: DPN 21-day windows, lease notice periods, debt facility review dates, covenant testing dates. Any deadline that passes without action permanently narrows your options.
Is the underlying business viable if the balance sheet and cost structure were right-sized?
Strip away the debt. Strip away the ATO liability. Strip away the legacy costs. Can the business generate positive operating cash flow on a normalised basis? If yes, there is a restructuring pathway. If no, early engagement with formal options may be the best way to preserve value.
Do you have specialist advice?
Your regular accountant may not have specific restructuring or DPN experience. A 30-minute conversation with someone who understands the ATO's current playbook, lender negotiation dynamics, and the practical implications of each restructuring pathway can prevent a costly mistake. Early advice is always cheaper than late crisis management.
Outlook
The restructuring landscape across Australia and New Zealand in 2026 is characterised by cautious stabilisation in headline insolvency volumes, offset by structural forces that will maintain elevated levels of distress for the foreseeable future. The post-COVID reckoning is not complete, but the nature of the challenge is shifting from crisis response to strategic anticipation.
Construction will remain the dominant sector for insolvency activity, though the rate of increase may moderate. Hospitality and retail will continue to face margin pressure. The introduction of Payday Super on 1 July 2026 represents a specific, identifiable pressure point likely to trigger an uptick in insolvencies in the second half of 2026.
The tax authorities will remain the most influential single creditor across both markets. Directors who have not addressed their ATO or IRD position proactively should assume that enforcement will determine the outcome for them.
"The businesses that will emerge strongest from this period are not the ones that responded fastest to crisis. They are the ones that anticipated it, understood the structural forces at work, and acted before their options narrowed."
Restructuring is not something that happens to a business. It is something a business does - deliberately and early - to preserve enterprise value and protect the people who depend on it.
Methodology and Sources
This report was prepared by Rebound Advisory based on data and market conditions available as of mid-April 2026. It draws on three categories of source material: official data from ASIC, the ATO, the Reserve Bank of Australia, the Reserve Bank of New Zealand, the New Zealand Companies Office, Inland Revenue (NZ), and Commonwealth and New Zealand Treasury departments; current policy settings including the Payday Super implementation timeline, GIC deductibility changes, and Safe Harbour provisions under the Corporations Act 2001; and advisory interpretation based on Rebound Advisory's restructuring experience.
This report was produced by Rebound Advisory for general informational purposes. It does not constitute legal or financial advice. Directors, business owners, and advisors should seek professional advice tailored to their specific circumstances before taking any action. © 2026 Rebound Advisory. All rights reserved.