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Bankruptcy (Amendment) Rules
Following is the speech by the Secretary for Financial Services, Mr Rafael Hui, in the motion on the Bankruptcy (Amendment) Rules 1996 in the Legislative Council today (Wednesday):
Mr President,
I move the second motion standing in my name on the Order Paper.
The Bankruptcy (Amendment) Rules 1996 revise the amount of deposit payable upon the presentation of a bankruptcy petition and in respect of compositions or schemes of arrangements put forward by debtors.
At present, a creditor presenting a petition for the bankruptcy of a debtor must deposit $10,000 with the Official Receiver to cover the Official Receiver's initial costs and expenses of administration of the estate. A debtor who petitions for his own bankruptcy must also deposit $10,000 with the Official Receiver.
We propose to reduce the amount of deposit in respect of a debtor's petition following the recommendation of the Bankruptcy Report of the Law Reform Commission published on 29 May 1995. The Report considered that people should not be discouraged from recourse to bankruptcy proceedings because of an unnecessarily high level of deposit required.
The Report recommends that, at 1991 price levels, the level of deposit should be reduced from $10,000 to $5,000. Having regard to inflation since then, we now propose that the level of deposit be now reduced from $10,000 to $8,000.
Although the Law Reform Commission recommended a similar reduction in the deposit payable in respect of a creditor's petition, we consider a higher level of deposit is not beyond the reach of creditors, most of whom are trade creditors, financial institutions or banks. Given that the existing level of deposit of $10,000 was set 11 years ago, we consider that a modest increase of 12.5 per cent to $11,250 is now justified.