XN000022-1996-02-28 — Page 4

3 -

Bill to update HK bankruptcy law to be introduced

The Bankruptcy (Amendment) Bill which seeks to updating and streamlining the existing Bankruptcy Ordinance will be published in the Gazette on Friday (March

1).

A government spokesman today (Wednesday) said the Bill makes a number of significant legal and procedural changes to the law of bankruptcy in Hong Kong.

"The present legislation is out of date in terms of its concepts and procedures. The Administration, after taking into consideration the Law Reform Commission's Report on Bankruptcy published in May 1995, proposes to adopt virtually all the recommendations in the report, except for revising some technical issues," the spokesman said.

The salient changes to the existing law include the abolition of the Acts of Bankruptcy and bankruptcy notices and their replacement by a system of statutory demands for a debtor to pay his debts due; new procedures for automatic discharge from bankruptcy and for independent voluntary arrangements between debtors and their creditors; simpler and/or more flexible court procedures and arrangements for meetings of creditors; and new "anti-avoidance" provisions to overturn disposals of property made by a debtor prior to bankruptcy that are contrary to the interests of the

estate.

Other clauses in the Bill make amendments that are essentially technical or consequential to these changes.

"The Bill should be welcomed by the business community as it updates and simplifies bankruptcy procedures and should help to reduce the time and costs. involved," the spokesman said.

7

"This is also in line with the needs of the economy as business activities continue to expand and increase in complexity.

"Insolvency legislation forms a key part of our overall legal framework for the operation of business. The changes that we propose to make provide a further demonstration that Hong Kong remains responsive to the demands of its status as a forward-looking, international business centre."

The Bill will be introduced into the Legislative Council in mid-March.

End