481 companies forced to liquidate

PUBLISHED : Thursday, 11 January, 1996, 12:00am
UPDATED : Thursday, 11 January, 1996, 12:00am

COMPULSORY company liquidations rose 12.9 per cent, or by 55 cases to 481, last year, according to the Official Receiver, Robin Hearder.

The 481 cases were 1.45 per cent of the 33,000 companies incorporated during the year.

There are 472,000 incorporated companies and the 481 liquidation cases represented about 0.1 per cent.

New bankruptcies rose 48.69 per cent to 455 cases from 306 in 1994.

Funds, excluding those pertaining to the Bank of Credit and Commerce Hong Kong (BCCHK) liquidations, administered by the Official Receiver at the end of last month totalled $1.05 billion, compared with $1.09 billion a year earlier.

'The majority of the increase was attributable to non-business individuals; only the minority concerned sole traders and partnerships,' Mr Hearder said.

He said although the number of court insolvencies had increased during the year, it was still low in comparison with other overseas jurisdictions.

'Some of the economic reasons included the moderation which occurred in some parts of the economy such as the consumption sector, cash flow and credit problems, the consolidation in the stocks and property markets, and the 'spill-over' effect on China's micro-economic adjustment and control measures.' The compulsory liquidations and bankruptcies hit businesses ranging from garment and knitting manufacturing to restaurants, some involving directors giving personal guarantees.

The liquidation and bankruptcy petitions were filed by trade creditors (35 per cent), the Director of Legal Aid (33 per cent), banks and financial institutions (20 per cent), landlords (5 per cent), shareholders (3 per cent), and personal (1 per cent).

On insolvency prosecutions, there were 120 summonses, against 77 in 1994, issued against bankrupts and directors of compulsorily wound-up companies for failure to submit statements of affairs and failure to keep proper books and records, and for misconduct.

Eighty-six bankrupts or directors, against 72 in 1994, were convicted. The amount of fines imposed by the court was $524,980, against $548,380 in 1994.

Fifty warrants of arrest were issued against unco-operative bankrupts or directors and 19 warrants were implemented.

Forty orders for disqualification of company directors were made by the court. The directors concerned were prohibited from acting as directors for periods varying from one to three years.

Total dividends declared by the Official Receiver (excluding BCCHK) amounted to $71.7 million in 242 insolvencies, compared with $62.58 million in 232 insolvencies in 1994.

One hundred per cent preferential payments or ordinary dividends were declared in 100 insolvencies.

Substantial dividends were also declared to the creditors of Armour Insurance Co ($21.07 million) and Nugan Hand Bank ($3.2 million).

The number of active insolvency cases being handled by the Official Receiver's Office at the end of last month was 2,509, representing 1,476 compulsory liquidations and 1,033 personal bankruptcies, compared with a total 2,208 at the end of 1994.