Economic recovery underlined by latest insolvency, liquidation stats

South Africa’s liquidation numbers declined by a steep 25,5% between April 2010 and April 2011.

This figure, combined with a 30,6% drop in year-on-year March 2011 insolvency statistics, points to the buoyancy of the nation’s economic recovery, Adam Harris, a Director in the Insolvency and Restructuring Department of corporate law firm Bowman Gilfillan, said in Cape Town yesterday (Monday).

He was commenting on the most recent Statistics SA release of the liquidations and insolvencies numbers.

“The Stats SA trend-lines for liquidations and insolvencies have clearly entered long-term downward trends, with the figures for insolvencies, which relate to individuals, especially steep.”

Highlighting the statistics for the three months to April 2011, Harris maintained that the 7,3% decline relative to the three months to April 2010 (from 1 096 to 1 016) was of a magnitude sufficient to indicate that the economy had entered a recovery phase.

Statistics SA noted that the decline in the number of liquidations for the three months to April 2011 had been driven by lower voluntary liquidation figures (from 1 037 to 962) and compulsory liquidations (from 610 to 597).

For the first four months of the year to end-April 2011, the number of liquidations increased by 2,1% compared with the same period last year. “Although there was a decrease of some 2% in company liquidations (from 610 to 597) during this period, an increase of 5,8% was recorded in close corporation liquidations (from 692 to 732),” according to Statistics SA.

The sectors hardest hit for the first four months of 2011 were:

• financing;
• insurance;
• real estate;
• business services;
• wholesale and retail;
• catering and accommodation; and
• community, social and personal services.