XN000022-1997-01-25+26 — Page 11

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Yearly figures on court insolvency cases released

There were 557 new compulsory company liquidations last year, representing less than 1.2 per cent of the total number of new companies incorporated during the year (49,730).

The corresponding figures in 1995 were 481 and 1.5 per cent.

Reviewing the work of the Official Receiver's Office in 1996, the Official Receiver, Mr Robin Hearder, said: "The number of new compulsory company liquidations in 1996 was only around 0.1 per cent of the total number of companies (483,200).

"Major causes of failure were a decline in business, cash-flow problems and poor management."

Mr Hearder also said the number of new bankruptcies increased from 455 in 1995 to 543 last year.

"The major causes of failure were inability to meet liabilities arising from personal guarantees and excessive use of personal credit facilities," he said.

He added that although the total number of new court insolvencies had increased from 936 in 1995 to 1,100 in 1996, it was low in comparison with other overseas jurisdictions in view of the huge volume of economic activities in Hong Kong.

The businesses mainly affected by compulsory company liquidations and bankruptcies included garment and knitting manufacturing, importers and exporters, restaurants and canteens, electrical and electronic manufacturing, construction and engineering, land/property development and investment, as well as transport and godowns.

Petitions were filed by the Director of Legal Aid (36 per cent), trade creditors (31 per cent), banks and financial institutions (22 per cent), landlords (4 per cent), shareholders (two per cent), personal (two per cent) and others (three per cent).

On insolvency prosecutions, there were 126 summonses as against 120 in 1995 issued against bankrupts and directors of compulsory wound-up companies for failure to submit statements of affairs to the Official Receiver, failure to keep proper books and records and misconduct.