Seven cents, and the little guys got zero
Three years after Gisborne forestry operator Stubbs Contractors went into liquidation in May 2023, the final liquidators’ report has closed the file with numbers that should give every trade supplier pause. Against total creditor claims of $4,795,715, the liquidators distributed just $341,898, roughly 7.1 cents in the dollar. The shortfall runs to about $4.45 million.
The waterfall tells the story. UDC Finance, holding secured claims of $2.875 million against the company’s plant and equipment, recovered around 8 percent. Employees, ranking as preferential creditors, got about 34 cents on $96,593 in wages and holiday pay. Inland Revenue, despite secured status over $718,703 in tax debt, recovered nothing. And the roughly 50 trade creditors, local firms like Eastland Oil & Engineering Supplies, DL Technical Associates and Gisborne Hydraulic Services, sat at the very back of the queue and walked away with zero.
Secured did not mean safe
The detail worth dwelling on is that even the finance company at the front of the line took a beating. UDC held registered security over the very equipment that should have made it whole, yet it clawed back only 8 cents in the dollar. The reason is instructive. Stubbs did not fail in isolation. When several forestry contractors collapse at once, the second-hand market floods with the same depreciating diggers, loaders and harvesters, and the realisation value of the collateral craters.
“Secured creditor” is not a synonym for “protected” when the asset pool is underwater. That is the uncomfortable lesson for any lender or supplier holding a general security agreement over gear in a cyclical, capital-heavy industry. Security is only as good as the resale market on the day the receiver turns the key.
The warnings were on the record in 2023
None of this was a surprise to the people inside the industry. When Stubbs shut its doors, then-owner Robert Stubbs told the Gisborne Herald in May 2023 that the business had been going backwards for some time, with rising costs, thin margins and forest owners cutting harvest volumes as export log prices fell. In a separate RNZ interview that month, he described the sector’s “constant boom and bust cycles” as “wrecking lives” and said contractors were never able to negotiate more sustainable rates from forest owners.
Stubbs was one of two Gisborne contractors, each employing 60 or more people, to fall in the same week. At the time the Forest Industry Contractors Association warned the sector was “at breaking point”. A FICA survey that year found only 26 percent of member contractors could survive a year at 80 percent production, 21 percent had no current contract, and 40 percent held only a one-year contract. Those 2023 figures were a forecast, and the Stubbs report is the outcome.
A queue problem, not a one-off
The insolvency priority under the Companies Act 1993 is unforgiving for small suppliers. Liquidator fees come first, then preferential creditors (employees and certain Crown claims), then secured creditors, and only then unsecured trade suppliers and subcontractors. In an asset-light failure where the main assets are worn plant, the secured lender routinely exhausts the pool before anyone below sees a cent.
And the failures are not slowing. Around 3,023 New Zealand companies were liquidated in the year to March 2026, an 11-year high, with construction alone accounting for 768 of them. Deloitte’s Rob Campbell put formal insolvency appointments at 3,080 in 2025, the highest in 15 years, warning that “smaller and highly leveraged operators are most exposed” and that rising insolvencies have “increased risk exposure for landlords, suppliers and financiers.” Companies Office data recorded 188 liquidations in April 2026 alone.
What it means if you supply on credit
The practical takeaway is blunt. If your business extends trade credit to contractors in forestry, construction or any capital-intensive, cyclical sector, the Stubbs numbers are your realistic downside, not the worst case. When a contractor fails, unsecured suppliers frequently recover nothing, and the presence of a secured lender ahead of you makes that outcome more likely, not less.
That argues for tighter credit terms, personal guarantees where you can get them, retention of title clauses on goods supplied, and a hard look at concentration risk before a single large client becomes your whole ledger. The structural fragility FICA flagged in 2023 has not been fixed, and with insolvencies at multi-decade highs, the next final report reading seven cents in the dollar is already in the pipeline somewhere.
Sources
- Stubbs Contractors liquidation: Gisborne forestry firm falls nearly $4.5m short of creditor claims (2026-07-04)
- Forestry contractor shuts up shop, ‘devastated’ (2023-05)
- Constant boom and bust of forestry industry ‘wrecking lives’ (2023-05-30)
- Demise of two forestry contractor businesses sparks fears for industry (2023-05)
- Insolvency trends and the uneven road to recovery | Deloitte New Zealand (2026-03)
- The industries behind NZ’s 11-year liquidation high (2026-06-07)
- Latest company statistics | Companies Office (2026-05-07)