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Stats show decline in insolvencies

23 Aug 2011

Commenting on the sharp 50.8% decline in the number of liquidations for the three months to July 2011, versus the three months to July 2010, released on 22 August by Statistics South Africa, Adam Harris, director in the insolvency and restructuring department, Bowman Gilfillan, says these are instructive.

"If one regards such numbers as economic barometers, as they have tended to be in years past, then the outlook for the remainder of the year is fairly favourable," he says.

The drop was occasioned by 493 fewer voluntary liquidations and 37 fewer compulsory liquidations. The number of insolvencies for the second quarter of 2011 was 36.4% lower, at 682, than the second quarter of 2010.

"Of considerable significance is that the number of liquidations have been falling steadily since November 2009, while insolvencies have been on a declining trend since August 2009.

"To a degree, the liquidation and insolvency statistics anticipated the revival in the economy following the 2008/09 recession, accepting that this is by no means the only barometer of the pressure upon the economy," he concludes.