XN000022-1996-03-13 — Page 23

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The Bankruptcy Ordinance is based on obsolete English legislation of 1914. It embodies procedures and practices that are cumbersome and outmoded. In the UK and in certain other jurisdictions whose insolvency legislation has had similar origins, such as Singapore, insolvency laws have been modernised.

The Bankruptcy Ordinance is an important element in our legal framework for the operation of business and it is therefore important for Hong Kong as a major commercial and financial centre to bring our regulatory regime into line with the changing needs and expectations of the community.

This Bill largely implements the recommendations of the Law Reform Commission's "Report on Bankruptcy" which took on board many of the changes implemented in the UK and in Australia. These changes have shifted the emphasis more towards rehabilitation than punishment. In the one or two places where we have differed from the Law Reform Commission's recommendations, this has been for technical reasons which emerged during the drafting of the Bill. Our proposed approach on these matters has either resulted from subsequent discussion with the Commission's Insolvency Sub-committee or has been accepted by the Chairman of the Sub-committee.

Bill:

May I mention briefly some of the more significant proposals contained in the

Acts of Bankruptcy, which constitute the grounds on which a bankruptcy petition may be presented, are mostly obsolete and will be abolished;

bankruptcy notices issued to creditors, which are based on court judgements and require a debtor to pay a debt due or make some other arrangement satisfactory to his creditors and the court, will also be abolished and replaced with a simpler procedure;

the current procedures will be replaced by more straightforward arrangements which will entail the issuing of a statutory demand requiring a debtor to pay his debts, then due, within 21 days. Failure to comply with this will enable a bankruptcy petition to be presented, as will an unsatisfied execution of a judgement against the property of a debtor. If a debtor departs from Hong Kong or intends to do so knowing that his departure would delay or thwart his creditors, this will also be grounds for presenting a petition;

a single bankruptcy order will replace the present two-stage system of a receiving order followed by an adjudication order, thereby simplifying procedures and reducing costs;