Despite growing concern over the current state of the economy, recent data show that fewer companies closed down in 2014 compared to 2013. The good news is that this is a trend that has been happening for some time.
According to the latest Statistics of liquidations and insolvencies report, released by Stats SA on Monday 26 January 2015, 2 064 companies in the South African economy closed shop during 2014, constituting a 13,1% decrease compared to the 2 374 liquidations recorded in 2013. The number of liquidations has been steadily decreasing since peaking in 2009, with 4 133 business closures recorded that year.
Liquidation refers to the winding-up of the affairs of a company or close corporation when liabilities exceed assets and it can be resolved by voluntary action or by an order of the court. There were 2 163 voluntary liquidations in 2013, decreasing to 1 698 in 2014. Compulsory liquidations, however, increased from 211 in 2013 to 366 in 2014. 82,3% of all liquidations in 2014 were voluntary.
In terms of liquidations per industry, the finance and trade industries recorded the largest year-on-year decreases. The finance industry experienced 855 liquidations in 2014, a decrease of 106 from the 961 liquidations recorded in 2013. The trade industry recorded 185 fewer liquidations, decreasing from 647 in 2013 to 462 in 2014.
The community and social services industry, however, recorded an increase in the number of liquidations in 2014 compared to 2013, rising from 360 to 389. The manufacturing industry also recorded an increase, from 107 liquidations in 2013 to 115 in 2014.
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