When the maths beats the case
When Christchurch modular builder Shape Construction went into voluntary liquidation, the final tally was grim. The April 2026 liquidator’s report recorded $3.5 million owed to creditors, with only about $50,000 recouped through asset sales, at least six partially built homes scattered across the country, and a $267,000 unpaid tax debt. The director and sole shareholder, Toby Van T Veen, denies acting dishonestly or misleading customers.
The more revealing detail is what happened next. Liquidator Brenton Hunt of Insolvency Matters identified a number of potential breaches of the Companies Act and wrote to Van T Veen, who strongly refuted the claims. Hunt then asked a lawyer what legal action would cost. The answer was upwards of $100,000. He judged it “not economic” to pursue.
That is the whole story in one line. A $100,000 legal bill against a $50,000 estate is not a recoverable position, no matter how strong the underlying case. Enforcement of director accountability in small-company insolvencies is funded from the insolvent estate, and most small estates are empty. The strength of the case is irrelevant when the arithmetic says stop.
The complaint that went nowhere
The regulatory backstop fared no better. A complaint against Van T Veen to MBIE’s Building Practitioners Board, lodged in December 2024, remained unresolved more than 18 months later. A second complaint, alleging he carried out restricted work while unlicensed, was closed for insufficient evidence. Customer JD Rayner told Stuff he received no updates until the day after Stuff began making inquiries.
Rayner had paid about $228,000 of a $490,000 fixed-price contract for a bach near Lyttelton. He got plans and prefab shells. His land sits empty and his prefab sits in storage. For a homeowner, that is the practical reality of advance payment risk in construction. It is very real, and it is very poorly protected.
A pattern, not an outlier
Shape follows FirstBuild Homes and Kiwi Modular Homes onto the scrap heap, and construction is the hardest-hit industry in the current cycle. 768 building firms were liquidated in the year to March 2026, roughly 30 percent of all appointments, as total company liquidations hit a 3,023 eleven-year high. Insolvency and Trustee Service data shows the liquidations it administers rose 401 percent over seven years.
The Teak Construction collapse is a near-identical script, with Teak building firms owing roughly $8 million and subcontractors chasing retentions. One driver of the wider surge is IRD finally enforcing deferred Covid-era tax debt. As the Newswire analysis put it, “some of this surge is not new failure so much as a reckoning that was postponed.” With total tax and entitlement debt reaching $9.3 billion at June 2025 and company tax debt up to $5.7 billion, the pipeline of failures is not empty.
The reform that might matter
The Law Commission is reviewing directors’ duties and reports in 2027. An RNZ analysis noted that sections 135 and 136 of the Companies Act may actually push directors toward immediate liquidation rather than genuine rescue attempts, because the liability threshold around reckless trading is unclear. Australia’s statutory safe harbour for directors attempting real rescues is one model on the table.
A May 2026 Newsroom commentary argued bluntly that “New Zealand’s system for dealing with business distress is too blunt,” proposing a preventive restructuring process for SMEs. But none of that touches the Shape problem directly. The enforcement gap is not a bug. It is a design choice. Enforcement costs fall on the estate, and most small estates have nothing in them.
Until that changes, through state-funded enforcement, a levy on company registrations or some other mechanism, the Shape Construction outcome will keep repeating. Directors who behave badly walk away, and the families, subbies and tax department who funded the failure are left holding the loss because chasing the money costs more than the money itself.
Sources
- Builder left unbuilt homes and $3.5m of debt, but pursuing him is ‘not economic’ (2026-06-27)
- Modular home builder Shape Construction goes into liquidation owing $1m (2025-06-26)
- The industries behind NZ’s 11-year liquidation high (2026-06)
- Statistics – Insolvency and Trustee Service (2026-04)
- Tax and entitlement debt statistics – Inland Revenue (2025-06)
- NZ needs to learn blunt lessons of business failure (2026-05-07)
- Insolvencies have spiked – would a law change let more businesses trade their way out of trouble?