Bankruptcy petitions hit post-Sars high

PUBLISHED : Saturday, 21 March, 2009, 12:00am
UPDATED : Saturday, 21 March, 2009, 12:00am

The number of personal bankruptcy petitions rose last month to 1,500, the highest level since the Sars outbreak in 2003, reflecting the fallout of the downturn on household wealth.

According to the Official Receiver's Office, of the 1,500 petitions, 1,437 were submitted by debtors, the highest since October 2003.

The number of compulsory winding-up petitions for businesses fell to 53 last month from 61 in January.

There were 1,266 personal bankruptcy petitions in January, bringing the two-month total to 2,766, compared with 1,678 petitions reported in the same period last year.

Significantly, the number of receiving or bankruptcy orders rose to 1,675 last month, more than double the 759 orders recorded in January.

Despite the gloomy outlook for global economic growth, bankruptcy figures usually lag by six to 12 months and economists expect more bad news for the rest of the year. Hong Kong's economy is expected to contract this year as international trade dries up and cash-strapped consumers rein in their spending.

The government estimates that the economy will shrink by 2 per cent to 3 per cent this year, down from growth of 2.5 per cent last year. The jobless rate last month increased to 5 per cent and is likely to top 6 per cent this year.

The city's growth has largely been fuelled by strong exports and healthy domestic consumption. This saw household wealth and businesses flourish over the past few years but quickly deteriorate as the job, stock and property markets succumbed to the financial crisis.

Although interest rates, which affect mortgage payments, are relatively low, many economists say businesses are still struggling with high rents, which are hurting their bottom line and have claimed a number of corporate victims.