Bankruptcy filings drop to five-year low

PUBLISHED : Saturday, 20 March, 2010, 12:00am
UPDATED : Saturday, 20 March, 2010, 12:00am

The number of people filing for bankruptcy fell to a five-year low last month, which an academic described as a sign that the economy was recovering.

Figures released by the Official Receiver's Office yesterday showed that there were 677 bankruptcy petitions last month, down nearly 55 per cent on a year ago and about 17 per cent lower when compared to January. This was the lowest monthly figure since February 2005 when there were 640 petitions.

'It's a very low figure, because there were more than 1,000 cases per month previously,' Terence Chong Tai-leung, associate professor of economics at Chinese University, said. 'Firstly, [the decline] is because flat prices have rebounded significantly hence the number of people with negative equity is small. ... home loans are the largest type of personal debt since it involves a lot of money.'

Other contributing factors include the declining jobless rate, which fell to 4.6 per cent last month, as well as the relatively stable stock market. The Hang Seng Index has been trading between 20,000 and 22,000 points recently, up from its lows of around 12,000 points a year ago.

There were nearly 1,500 bankruptcy petitions in the first two months of this year, a drop of 45 per cent on the same period last year.

The number of bankruptcy petitions rose to over 1,000 per month from November 2008 after the global financial crisis.

The number of companies winding up remained stable. The Official Receiver's Office said there were 51 petitions last month, compared to 50 in January.

A spokeswoman for the receiver's office noted that bankruptcy figures fluctuate a lot and declined to give a reason for the decline.