South Africa's macroeconomic challenges are forcing more companies to consider liquidation.
South Africans are under no illusion that the local economy is experiencing hardship. The Reserve Bank is continuously being forced to increase interest rates and the prices of many basic products and services are continuing to increase at a rapid rate.
Statistics South Africa's recent data report indicates that in January and February of this year alone, 243 businesses have been liquidated. In February, 162 businesses were liquidated – a 1.3% increase in liquidations year-on-year.
The data also indicates that the finance, insurance and real estate industries were the source of the majority of the liquidations, followed by unclassified industries. The trade, catering and accommodation sectors saw the third-highest number of liquidations.
And, against the odds, mining, electricity, gas and water industries show strong resilience in these trying times.
Loadshedding will hold long-term tension on the economy and appears to have contributed to the findings of the Bureau of Economic Research that business sentiment in South Africa is similar to that experienced during the 2009 financial crisis. The Government's failure to address the energy crisis factored into the International Monetary Fund's adjusted GDP forecast down to 0.1% – being substantially less than the 0.9% projected by National Treasury.
Liquidating a company can be a complex and challenging process. When considering liquidation – whether as a distressed company or as a creditor – it is important to seek professional advice as there may be alternative options available.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.