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BL Premium reports that the number of companies in business rescue is set to spike in 2021 as the effects of continued Covid-19 trading restrictions bring businesses that may have held on last year to their knees.
According to the Companies and Intellectual Property Commission’s most recent figures, published in October 2020, 233 companies started business rescue proceedings between April and October 2020, from 216 in 2019. Hans Klopper of business advisory firm BDO expects the figure to rise significantly in 2021 as the effects of restrictions become evident. “People are getting into trouble as we speak,” he said, adding that though he expected the retail and hospitality sectors to be hardest hit, there would be an impact in “every conceivable sector”. Ryszard Lisinski of law firm Fluxmans concurred: “There’s going to be a hangover from Covid-19. The longer the restrictions are in place, the bleeding will continue and there will be an increase in business rescue applications.” Klopper said many businesses would try to survive but he recommended that they take action early and begin the business rescue process. “If they see the light they should take action early before the train hits them.” The latest Stats SA figures, released in November 2020, show liquidations were up 30.7% in the three months ending November 2020, year on year. Liquidations of companies rose by 31 cases and of close corporations by 22.
- Read the full original of the report in the above regard by Jane Steinacker at BusinessLive (paywall access only)
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