Bankruptcy filings rise, reversing the trend

The number of personal bankruptcy filings jumped to 989 last month, up 10.5 per cent on October and an increase of more than 17 per cent year on year - reversing a steady decline since August.

However, the number of petitions filed for compulsory winding up dropped to 43 and the number of winding-up orders made by courts to 67. Both figures represent record post-handover lows.

Lawmaker and Bank of East Asia chairman and chief executive David Li Kwok-po could not offer a reason for the rise in bankruptcy petitions, since cases usually peaked in the summer.

This year, August saw the highest number of bankruptcy petitions - 1,078.

Hong Kong's economy grew by a better-than-expected 6.8 per cent in the third quarter, and the government expects full-year growth to reach 6.5 per cent, up from its previous forecast of 5 per cent.

But bankruptcy data reflect past economic conditions.

Mr Li said he was not concerned personal bankruptcies were taking a turn for the worse, and said that, overall, the quality of bank loans remained fairly good. He said it would be wrong to read too much into monthly bankruptcy totals.

The Official Receiver's Office said 916 of the 989 personal bankruptcy petitions last month were filed by debtors, a slightly lower proportion than in October, when debtors filed 815 of 895 petitions.

So far this year, 9,923 petitions for personal bankruptcy have been filed, 10 fewer than in the whole of last year. The courts issued 882 personal bankruptcy orders last month, down 131, or 12.9 per cent, from October and a drop of 10 per cent year on year.

Li Kui-wai, a City University professor of economics and finance, said the rise in personal bankruptcies, given the surging stock market and sound economy, was puzzling. The unexpected jump in numbers might indicate possible abuse of the system, he said.