Liquidations statistics

Liquidations past 48 months

Click on the thumbnails for an enlarged views of the most recent monthly liquidations statistics (March 2011) - companies, close corporations and the total of the two.


Company liquidations per month

Close corporation liquidations per month

Company plus close corporation liquidations per month.

The short-term trend in liquidations is down

Company liquidations for the first 3 months of 2011 are 15% higher than in the corresponding period in 2010, and the latter -12% are higher than in the first 3 months of 2009.  The corresponding figures are 10% and -1% for close corporations, and 23% and -6% for total liquidations.

There is, however, no discernable short-term trend.

Note that liquidators face significant case backlogs and fluctuating capacity, compromising the consistency of liquidations data.  Because of this, longer-term trends in the data, such as for liquidations per annum shown below, are considerably more useful than the volatile shorter-term monthly data.

See turnaround market watch for more information on the prospects of future liquidations activity.

Liquidations since 1989

Click on the thumbnail for an enlarged views of the most recent annual liquidations statistics (March 2011) - companies, close corporations and the total of the two.


Monthly company liquidations per annum

Monthly close corporation liquidations per annum

Monthly company plus close corporation liquidations per annum



Monthly liquidations have been flat over the period 2009 - 2011

Monthly company liquidations per annum have been growing steadily since 1997.

Monthly close corporation liquidations peaked in 2001, then dropped to a low point by 2007, only to increase to current levels by 2009.

Similarly, total liquidations peaked in 2001, then dropped to a low in 2006, and then increasing current levels by 2009.

New business rescue legislation implemented on 1 May 2011will give financially distressed but economically viable companies a second chance should informal creditor workout fail or not be attempted, and should have a tempering effect on liquidation statistics. The new business rescue procedure, however, is not operative yet, since business rescue practitioners cannot yet register as such.

See turnaround market watch for more information about the state of the economy and its effect on liquidations.

Liquidations statistics as a leading indicator for turnaround industry activity

The level of company liquidations serves as a proxy for market potential for turnaround and business rescue practitioners involved in the Turnaround industry and Business rescue industries.

Compulsory company liquidations

Traditionally, as is the international practice, the focus has been on compulsory company liquidations representing a lagging indicator of the potential market for turnaround. 

Voluntary company liquidations

In the past, voluntary company liquidations did not receive much attention as these are not necessarily as a consequence of financial distress.

In the case of a voluntary liquidation by companies themselves, the companies are solvent and are terminated (and consequently liquidated prior to their dissolution) due to the companies wanting to discontinue operations, for whatever reason.

Many of the voluntary liquidations may be by creditors, in which case the company is insolvent, but a less expensive (and less onerous) procedure than compulsory liquidation is followed to get them into liquidation.

The breakdown between voluntary liquidations by companies vs. by creditors is not published by Stats SA.

Shift towards voluntary company liquidations

Over the past decade, compulsory company liquidations decreased whilst voluntary company liquidations increased (see the section on company liquidations since 1989 below).

As a result, compulsory company liquidations have decreased from between 60% and 80% of total company liquidations during the early nineties, to 40% to 60% during the late nineties, and to less than 20% during the twentieth century, and less than 10% during the past 3 years (see graph below). 


Compulsory company liquidations as a percentage of total company liquidations


Why the shift?

For many years prior to the early nineties advisors to companies wanting to place itself in a form of voluntary liquidation was of the view that such a process could only be facilitated through the Courts when the company was unable to pay its debts or insolvent.

The issue of which liquidator(s) to be appointed was an integral part of the process.

In those days the Master did not make the details of pending liquidations public by publishing the lists of Respondents on its notice board so liquidators who had been “tipped of” about the pending liquidation could do all their canvassing without fear of any opposition.

In the middle nineties the Master started making the lists available and the “competition” for appointment became fierce because the information was now in the public domain.

It then dawned upon companies, attorneys and liquidators that the passing of a resolution for a creditors’ voluntary winding-up was a much better way to keep the information of the pending liquidation out of the public domain as there was no legal requirement to obtain a security bond from the Master prior to the adoption of a resolution as is the position when launching a Court application.

It became the preferred route and was being driven by the fact that, in many instances, insolvency practitioners and attorneys specialising in insolvency law deemed it to be more beneficial to control the process through the mechanism of a voluntary winding-up as opposed to a Court liquidation.

In following the resolution route the role players once again had the inside track as the prospective liquidator could do all his canvassing in peace and quiet. 

It also became a much cheaper and less cumbersome option than to go to Court for an Order placing a company in liquidation bearing in mind that the costs involved for a Court liquidation could be anything between R20,000.00 and R50,000.00 as opposed to, possibly, a maximum of R5,000.00 in the case of a voluntary winding-up.

Most, if not all, liquidation applications are driven by the parties who have a vested interest in the appointment of the liquidator, i.e. the attorneys or the liquidators themselves.

It took the Master a few years to cotton on to this and the Master started publishing resolutions with a 48 period to all role players to get their act together in so far as nominations etc. are concerned.

By then the process of passing a creditors’ voluntary winding up resolution had proved to be a much cheaper, quicker and more effective way to place a company in liquidation than to go the Court route.

New business rescue legislation

Implemented on 1 May 2011, new business rescue legislation will not only have an impact on compulsory liquidations, but perhaps on voluntary liquidations too. 

The potential for business rescue of companies that would have followed the voluntarily liquidation route seems limited:

  • More than 90% of companies being liquidated have assets of less than R150,000;
  • More than 95% of companies being liquidated have less than five employees;
  • Most liquidations are voluntarily liquidations.

The reason for this is self evident as those statistics relate to insignificant companies, one man shows, empty shells and by and large defunct companies.

However, in terms of the new business rescue legislation employees will be better off in a (compulsory) liquidation following unsuccessful business rescue compared with a voluntary liquidation by creditors.

  • Their employment contracts will be maintained during business rescue, rather than having their employment contracts suspended in liquidation.
  • In the event of unsuccessful business rescue, they will be preferred creditors during subsequent liquidation rather than having limited preferred creditor status they would otherwise have had under insolvency legislation.

It therefore follows that employees, who will have the right to commence business rescue proceedings, will prefer business rescue above voluntarily liquidation.  Failed business rescue will result in compulsory liquidation.  The net effect of new business rescue legislation will therefore be a further increase in the high proportion of compulsory liquidations.

References and readings

Smit, P. (2010, September 10). Formalisation of Business Rescue Rules Could Help Lower SA’s Liquidation Rate. Engineering News.

Van der Walt, J. (2010). Business Rescue in South Africa. CRS Business Rescue.

Van der Walt, J. (2010). Business Rescue Legislation in South Africa. CRS Business Rescue.

Van der Walt, J. (2010). Business Rescue Regulations in South Africa. CRS Business Rescue.

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