XN000022-1994-06-29 — Page 25

WEDNESDAY, JUNE 29, 1994

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PREFERENTIAL DEBTS LIMITS UNDER REVIEW

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PREFERENTIAL

TO A

THE GOVERNMENT IS CONSIDERING BRINGING THE LIMITS UNDER THE COMPANIES AND BANKRUPTCY ORDINANCES REALISTIC LEVEL, THE SECRETARY FOR EDUCATION AND MANPOWER, MR LEUNG, TOLD THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY),

MORE MICHAEL

THESE LIMITS RELATE TO ARREARS OF WAGES, WAGES IN LIEU OF NOTICE AND SEVERANCE, WHICH WERE SET IN 1977.

IN HIS WRITTEN REPLY TO A QUESTION BY THE HON PETER WONG, MR LEUNG SAID IN REVIEWING THE LIMITS, THE INTEREST OF OTHER DEBTORS WOULD ALSO BE TAKEN INTO ACCOUNT.

HE SAID THE RATE OF RECOVERY BY THE PROTECTION OF WAGES INSOLVENCY FUND FROM INSOLVENT EMPLOYERS' ESTATE HAD BEEN DROPPING, WITH THE ANNUAL AVERAGE RATE AT 17 PER CENT.

LIMITS

THIS IS PARTLY DUE TO THE FACT THAT THE PREFERENTIAL UNDER THE TWO ORDINANCES HAVE NOT BEEN REVISED SINCE 1977 WHILE THE MAXIMUM PAYMENT LIMITS TO EMPLOYEES OUT OF THE FUND HAVE BEEN REVISED UPWARD FOR SEVERAL TIMES.

CITING STATISTICS, MR LEUNG SAID THE NUMBER OF APPLICATIONS MADE TO THE FUND HAD BEEN INCREASING DURING THE PAST FIVE YEARS FROM 4,460 IN 1989/90 INVOLVING $60.6 MILLION TO 7,091 IN 1993/94 INVOLVING $189.6 MILLION.

DURING THE PAST FOUR YEARS FROM 1990/91 TO 1993/94, AN AVERAGE OF 6,800 APPLICATIONS FOR THE FUND WERE RECEIVED EACH YEAR.

"CONSIDERING THAT THE TOTAL ACCUMULATED FUND OF $500 MILLION IS ONLY SUFFICIENT TO COVER 4,237 APPLICANTS AT THE MAXIMUM PAYMENT OF $118,000 EACH, THE LEVY AT THE CURRENT RATE OF $250 FOR EACH BUSINESS REGISTRATION CERTIFICATE ISSUED IS NOT EXCESSIVE, HE SAID.

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"BESIDES, THERE IS A NEED FOR THE FUND TO HAVE A RESERVE TO COPE WITH ANY SUDDEN DOWNTURN OF THE ECONOMY GIVE RISE TO MORE INSOLVENCIES, HE ADDED.

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SIGNIFICANT

WHICH WILL

ON PAYMENTS FROM THE FUND, MR LEUNG SAID THEY HAD BEEN MADE TO APPLICANTS MUCH FASTER THAN WAS POSSIBLE UNDER THE NORMAL LIQUIDATION AND BANKRUPTCY PROCEEDINGS.

HARDSHIP CAUSED то

"THE OBJECTIVE OF PROMPTLY RELIEVING EMPLOYEES IN THE EVENT OF INSOLVENCY OF EMPLOYERS HAS ON BEEN ACHIEVED,' HE NOTED.

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P

THE WHOLE

APRIL AND

OF THE 1 150 APPLICANTS WHO RECEIVED PAYMENTS IN MAY 1994, 129 WERE PAID WITHIN THREE MONTHS AFTER LIQUIDATION PETITIONS WERE PRESENTED OR UPON THE RECOMMENDATION OF THE DIRECTOR OF LEGAL AID WHERE THE PRESENTATION OF SUCH PETITIONS WERE CONSIDERED NOT APPROPRIATE.

ANOTHER 1,015 APPLICANTS WERE ABLE TO RECEIVE PAYMENT IN FOUR TO SIX MONTHS.

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