Fewer firms closing down

Johannesburg - Fewer companies closed down in April 2011 compared to the same month last year, Statistics SA said on Monday.

Liquidations recorded a year-on-year decrease of 25.4% from 358 to 267 in April 2011, Statistics SA said. The number of liquidations recorded for the three months ended April 2011 fell by 7.3% compared with the same period in 2010.

This was driven by fewer voluntary liquidations, which dropped from 1 037 to 962, and fewer compulsory liquidations, from 59 to 54.

Statistics SA said liquidations took place when the affairs of a company or close corporation were wound up because the liabilities exceeded assets, and the matter was resolved either voluntarily or by a court order.

The total number of insolvencies for the first quarter of 2011 dropped by 30.5% (from 836 to 581) compared with the first quarter of 2010, the agency said.

"A year-on-year decrease of 30.6% (from 360 to 250) was estimated for March 2011."

Statistics SA said insolvency referred to an individual or partnership which was unable to pay its debt and was placed under final sequestration.

"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," said Adam Harris, a director in the insolvency and restructuring department of corporate law firm Bowman Gilfillan.

He said the decline for the three months to April 2011 compared to the same period in 2010 "was of a magnitude sufficient to indicate that the economy had entered a recovery phase".

Harris said 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.







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