When Pitch Black Construction entered voluntary liquidation owing roughly $300,000 to creditors, the story might have been unremarkable. Another small builder, another shortfall, another line in the insolvency statistics. Except that a new company, Pitch Black (2006) Ltd, was incorporated just days before the liquidation filing. Same name, fresh entity, old debts left behind. Liquidators are investigating. No wrongdoing has been proven. But the pattern is now so familiar in New Zealand construction that it has its own name: phoenixing.
And it is happening at scale.
747 construction failures in a single year
New Zealand recorded 3,132 insolvency events in 2025, an 11.3% increase on 2024 and the highest annual total in 15 years. Construction led the wreckage. Deloitte recorded 747 formal construction appointments, representing 24% of all company failures and a 14% jump year-on-year. The December quarter alone produced 197 construction appointments, the highest quarterly figure since sector-specific tracking began in 2022.
Simplicity chief economist Shamubeel Eaqub puts it bluntly: construction accounts for roughly 30% of all businesses wound up in the year to February, at a rate of about four per 1,000 businesses. The structural fragility is obvious. About 95% of construction businesses have five or fewer employees, meaning there is no balance sheet buffer when a single payment is delayed or disputed.
Eaqub warns the recovery phase itself is dangerous: “This is probably the riskiest period for the sector because they can see the recovery and then make decisions, they make rush decisions at this point in time then catch them later on.”
Teak Construction shows how the playbook works
The Pitch Black investigation is small. Teak Construction is the case that reveals the mechanics. The 34-year-old Auckland builder had more than $900 million of projects to its name before shareholders moved against it on 2 March. Liquidators found $7.9 million in creditor claims against $6.4 million in available assets, a $1.5 million shortfall before costs.
The phoenix signal was visible months earlier. Construction law specialist Raine Selles of Concordia Resolution noted that a new company, Teak Group, was started last March with the same directors plus additional family members: “We knew then that the writing was on the wall.” Selles had approximately 60 subcontractors approach her attempting to recover retentions in the last year alone.
Max Key’s company is among the casualties. Key said his business is owed “well into six figures”: “We finished the work, we handed over the documentation, we provided the warranties. Then the head contractor went into liquidation.”
Creditors are now pushing to replace the current liquidators over independence concerns, and the Building Federation is funding legal costs for subcontractors in the retention dispute. This is no longer a routine liquidation. It is a test case.
The enforcement system cannot keep up
Even where phoenix behaviour is suspected, the machinery meant to catch it is overwhelmed. Insolvency lawyer Brent Norling warned that the Official Assignee “appears to be receiving so much work it lacks capacity to properly deal with it”. He noted a pattern of companies being removed from the register within three months of an IRD-initiated appointment, with little investigation of director conduct. Deloitte confirms 95% of Official Assignee appointments are court liquidations linked to IRD enforcement, meaning the agency is processing volume, not pursuing accountability.
The legal framework is equally weak. Sections 135 and 136 of the Companies Act impose duties on directors approaching insolvency, but the language around “substantial risk” and “serious loss” is widely criticised as too vague to deter. A Law Commission review is not due until 2027, three decades after the Act was passed.
What this means if you supply the construction sector
The payment chain in New Zealand construction is structurally broken. The Construction Contracts Act requires head contractors to hold subcontractor retentions in trust. In practice, as Selles noted regarding Teak: “Let’s see if those retentions are actually held in trust as they have constantly advanced by themselves and their lawyers.” The rules exist. Enforcement does not reliably follow.
For any business extending credit to a construction firm, the practical lesson is uncomfortable but clear. When a new company with a near-identical name appears on the Companies Register shortly before a head contractor enters liquidation, that is not a legal technicality. It is a credit risk signal. Check the Companies Office register before you extend another dollar. Because right now, the law will not protect you faster than a phoenix can fly.
Sources
- BusinessDesk: Angry Teak subbies on warpath to replace liquidator
- BWA Insolvency: NZ Quarterly Market Report Q4 2025
- Deloitte: Insolvency trends and the uneven road to recovery
- Insurance Business: NZ insolvencies hit 15-year high
- NZ Herald: Teak Construction liquidators issue list of creditors claiming $7.9m
- NZ Herald: Teak Construction liquidation – subcontractors chase unpaid retentions
- NZ Herald: Teak Construction liquidation – directors tout $10m in claims as creditors push to oust liquidators
- NZ Herald: Max Key ‘rattled’ as Teak Construction liquidation hits subcontractors
- NZ Herald: Liquidations hit 15-year high as 2025 proves brutal for struggling firms
- Newsroom: Questions raised about whether govt’s liquidator can navigate insolvency boom
- RNZ: The businesses failing most frequently
- The Conversation: Insolvencies have spiked – would a law change let more businesses trade their way out of trouble?
- Companies Office: Latest company statistics