Statistics South Africa has reported a drop in the number of companies closing down in April 2011 in compared with the same month last year.
Additionally, liquidations recorded a year-on-year decrease of 25.4%, from 358 to 267, in April 2011, Statistics SA reported.
The total number of liquidations registered for the three months ended April 2011 dropped by 7.3% in comparison with the same period of 2010. This appeared to be driven by a lower number of voluntary liquidations, dropping from 1 037 to 962 and fewer compulsory liquidations, from 59 to 54.
Statistics SA explained that liquidations occurred as soon as the affairs of a company or close corporation were wound up due to the fact that liabilities exceeded assets, and the matter was resolved either voluntarily or by a court order.
The overall number of insolvencies for the first quarter of 2011 decreased by 30.5% (from 836 to 581) in comparison to the first quarter of 2010, the agency reported.
“A year-on-year decrease of 30.6% (from 360 to 250) was estimated for March 2011.”
Statistics SA explained that insolvency referred to an individual or partnership which was not able to cover its debt and was in fact placed directly under final sequestration.
“The Stats SA trend-lines for liquidations and insolvencies have evidently entered long-term downward trends, using the figures for insolvencies, which relate to individuals, especially steep,” said Adam Harris, a director in the insolvency and restructuring department of corporate law firm Bowman Gilfillan.
He explained that the decline for the three months to April 2011 as compared to the same period in 2010, “was of a scale acceptable to suggest that the economy had entered a recovery phase”.
Harris mentioned 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.
Source: southafrica.info, Sapa