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The recent liquidation of Libelle Group, a major provider in New Zealand’s Ka Ora, Ka Ako Healthy School Lunches programme, highlights the financial risks businesses face—even those operating in essential sectors.

The company was responsible for delivering 125,000 school lunches per day, making its sudden collapse a significant disruption to both schools and suppliers.

While Compass Group New Zealand has since stepped in to acquire Libelle’s school lunch operations, the financial impact of its liquidation is far-reaching.

Suppliers, contractors, and other creditors now face the challenge of recovering outstanding payments, while the event serves as a reminder that even well-established businesses can experience financial distress.

The Ripple Effect of a Business Collapse

When a company like Libelle enters liquidation, the consequences extend well beyond its own operations. Affected parties include:

• Suppliers – Businesses that provided ingredients, packaging, and logistics services may be left with unpaid invoices.
• Employees – Job losses and uncertainty can affect livelihoods, particularly for staff who relied on steady employment.
• Schools and students – Disruptions in essential services, such as meal provision, can create instability for those who depend on them.

For businesses caught in these situations, financial exposure can be severe and unpredictable. The Libelle case serves as an important reminder of why companies—no matter their industry—should have strategies in place to manage financial risk.

Key Lessons for Business

The collapse of a large company can be a wake-up call for businesses that work within supply chains. Some key takeaways include:

• Diversification is crucial – Relying too heavily on a single large customer or contract can create significant financial vulnerability. A well-balanced client base can help reduce exposure if one customer fails.
• Cash flow and credit management matter – Businesses should regularly review their credit policies, monitor customer payment behaviours, and establish clear payment terms to reduce risks of late or non-payment.
• Financial protection strategies are essential – Companies can use tools like trade credit insurance, strong contractual agreements, and credit checks to mitigate the risks of unpaid invoices.
• Contingency planning is key – Having a financial safety net, such as accessible reserves or alternative revenue streams, can help businesses survive sudden disruptions.

Building a More Resilient Business

While no business is completely immune to financial challenges, those that take a proactive approach to risk management are in a much stronger position to navigate uncertainty. Ensuring a balanced customer portfolio, maintaining cash reserves, and implementing risk mitigation strategies can make all the difference in protecting business stability.

The Libelle liquidation is just one example of how quickly circumstances can change. In an unpredictable economic environment, being prepared isn’t just an advantage—it’s a necessity.