SA liquidations move above 1 350 mark year-to-date

The number of liquidations in South Africa surged by 41,3% year-on-year in April to 349, increasing to 1 357 the number of liquidations that have occurred between January 1 and April 30.

Overall, the total number of liquidations rose by 45,3% when compared with the same four-month period last year.

Statistics South Africa said on Monday that the increase in the number of liquidations for the period was the result of a 48,2% increase in voluntary liquidations, from 827 to 1 226, as well as a 22,4% rise in compulsory liquidations, from 107 to 131.

The number of company liquidations during the four-month period surged by 54,6% year-on-year, from 416 to 643, while there was a 37,8% increase in close corporation liquidations, from 518 to 714.

The Credit Guarantee Insurance Corporation said the figures were not unexpected, and forecast that there would 4 200 corporate closures for the full year, compared with 3 300 in 2008.

“That obviously presupposes that interest-rate relief will start to benefit cash-strapped consumers and battling firms alike in the months ahead,” the group’s marketing and research and development GM Roger Munitich said.

He added that there were “tentative signs of a let-up” in potential payment defaults, which could be an early sign of a “bottoming out”.

But he also pointed to some alarming sectoral trends, including the 125% increase in agricultural failures, from 8 to 18 year-on-year; a doubling in mining closures from 3 to 6; and the somewhat 105,7% rise in construction firm closures, which surged to 71 from 35 when compared with the same period last year.

“The largest services industry, financing, insurance, real estate and business services, saw 51,6% more failures at 561 from 370,” Munitich noted, while manufacturing casualties rose 17,9% to 79 from 67.

Article by: Terence Creamer -