In one of the largest percentage year-on-year declines on record, the number of insolvencies in South Africa declined by a steep 33% (from 5 724 in 2009 to 3 835 in 2010).

“That’s a huge reduction,” says Adam Harris, a Director in the Insolvency and Restructuring Department of corporate law firm Bowman Gilfillan, in his assessment of Statistics SA report on liquidations and insolvencies released yesterday (Monday).
He highlights the numbers as reflecting a really significant drop.

“Looked at another way, there were nearly 2 000 fewer people sequestrated in 2010 than in 2009. That is highly positive.”

He says that while on the face of it the liquidation statistics are less encouraging – the figures grew from 206 in January 2010 to 257 in January 2011 – it is noteworthy that they are 13,9% down, from 1 075 to 926,  in the three months to January 2011 versus the quarter to January 2010.

While acknowledging that annual company liquidations continue to hover at an uncomfortable 4 000, he draws attention to last year’s 3 992 compared with 2009’s 4 133.

“This suggests that the trend is downwards, which observation, coupled with the impressive insolvency statistics, points to the likelihood that the economic recovery remains on track.”