Bleak outlook as more SA companies face business rescue and liquidation in 2024
January 2024 saw a 34.6% increase in liquidations
Business Closed. Picture: Pexels
Bruce Whitfield speaks to Dr Eric Leventein|Head of the Insolvency and Business Rescue Practice at Werksmans Attorneys.
Dr. Eric Levenstein, head of the insolvency and Business Rescue Practice at Werksmans Attorneys warns of a surge in South African business closures this year, citing a 34.6% increase in liquidations in January 2024, compared to the same month last year.
109 businesses closed down in the first month of this year, raising concerns that more of the same lies in wait for other businesses in the remainder of 2024.
Manufacturing and mining sectors are notably distressed, with challenges like skilled labour shortages and energy deficits exacerbating the situation.
South Africa's energy crisis is largely to blame for the problem, with loadshedding eating away at profits and eventually leading to businesses suffering major financial losses and resulting in closure.
"There's certainly pressure on the economy, and I think directors of companies, obviously with stresses relating to issues with electrical supply and whatever else they are facing are looking at alternatives like business rescue and liquidation."
- Dr. Eric Levenstein, head of the insolvency and Business Rescue Practice - Werksmans Attorneys
"In February 2024, 17% of entities started business rescue proceedings, so that's not liquidation, obviously trying to restructure debt."
- - Dr. Eric Levenstein, head of the insolvency and Business Rescue Practice - Werksmans Attorneys
"Mainly there are stresses in the manufacturing sector, agriculture and mining."
- Dr. Eric Levenstein, head of the insolvency and Business Rescue Practice - Werksmans Attorneys