Trading while broke now costs directors up to eight years off the board

The Registrar of Companies has banned five directors for between six and eight years, the second batch of prohibitions in roughly five months. Every owner-director should take the message seriously. A failed company does not quietly disappear once creditors, and especially Inland Revenue, have been left holding the losses.

This is the system doing what it should. Limited liability is a privilege that underpins risk-taking and enterprise. Directors who abuse it by trading insolvent, keeping no proper books and moving money to related entities make credit dearer and suppliers warier for everyone else.

The same four failures, five times over

The bans, issued under section 385 of the Companies Act 1993, took effect across August and September 2026. Jamie Mark Thomas received the longest, eight years from 10 August, after drilling and construction companies TCD 2015 Limited and Thomas Consulting Limited failed amid mounting tax debts and inadequate records. Limin Guo received seven years over nine construction and property development companies, Qingliang Zhang seven years over two insulation and construction businesses, and Reece Maaka Unahi seven years after six Ru&Co hairdressing businesses collapsed.

Anthony Gerard McKenna’s case is the textbook example. His Hamilton construction company, Cootehill Assets Limited, kept trading for nearly four years while unable to pay its debts. He failed to keep proper accounting records and lent company money to a related business without the required approval, even as Cootehill couldn’t meet its own obligations. He is banned for six years and six months.

The pattern across all five is consistent: continued trading while insolvent, poor records, unapproved related-party loans, and Inland Revenue as a creditor in every case. That last point matters. Unpaid GST and PAYE are not a free overdraft, and the IRD is increasingly the creditor whose losses start the paper trail.

Ten bans and the net is widening

In August, the NZ Herald reported five other directors banned in June and July, with bans of three to seven years. Heivon Constructors, whose sole director received seven years, went into liquidation owing $318,343 to Inland Revenue. The Companies Register’s own news and notices page shows the sequence clearly. This is sustained enforcement, not a one-off clean-out.

The Companies Office said in August that bans “help protect the public and creditors, reinforce appropriate standards of company management, and support confidence in New Zealand’s company regime”. That is the right framing. Confidence in the regime is an asset every honest business draws on.

Nor is this just a construction story, though builders dominate the list. A hairdressing chain and a financial services firm also feature across the two batches. Any sector where directors can lean on tax arrears to stay afloat is in scope.

Still only one ban per 62 liquidations

The odds remain long. Insolvency firm Waterstone’s analysis puts the enforcement rate at about 1.61%, or one ban for every 62 liquidations. But both the number of bans and the median ban length are rising. Waterstone links the increase to MBIE encouraging liquidators to report more often on conduct that may justify section 385 action, while warning that unclear reporting guidelines have likely left egregious conduct underreported.

The pipeline feeding that process is full. Companies Office data shows 800 liquidator appointments in the June quarter, up 14.4% on a year earlier, and 274 liquidations in September alone. At current enforcement rates, that June quarter alone implies around a dozen future bans. With liquidators being pushed to report more, it is likely to be higher.

The case for getting help early

There is a fair counterpoint. University of Auckland Business School professor Rod McNaughton argued in May that New Zealand’s distress system is “too oriented towards late-stage failure”, pointing to March’s 286 liquidations, the worst March in 11 years. “The issue is not liquidation itself, it’s whether we can distinguish early enough between firms that should close and firms that could recover,” he said.

He is right, and it does not contradict the bans. Failure is a normal part of business and should not be stigmatised. What gets punished is the conduct around it, in particular years of trading on creditors’ money without books to show for it.

What this means for directors

The practical lessons are plain. Keep proper accounts even when cash is tight. Document and approve any related-party loan properly. Treat tax arrears as an early warning, not working capital. Get advice while a business can still be saved, not after a liquidator has started reading the ledgers.

The Companies Office has now published two batches in five months, liquidations are climbing, and liquidators are being encouraged to report. Expect the next list to be longer. A business can fail and its director can recover, but only if the record shows they stopped when they should have.

Sources

• Scoop: Five Directors Banned Between Six And Eight Years (2026-11-02)
• Waikato Times: Hamilton construction company director banned for six years (2026-11-01)
• NZ Herald: Construction company director given seven-year ban; five directors banned in June and July (2026-08-31)
• Companies Register: News and notices (2026-08-31)
• Waterstone: Director prohibitions in 2026 (2026-10-14)
• Companies Office: Latest company statistics (2026-10-05)
• University of Auckland: NZ’s system for dealing with business distress is too blunt (2026-05-07)