INSOLVENCY cases in Hongkong, already on the rise, will escalate as recession-ridden countries shun the territory's cheaper goods in the years ahead, a leading firm of insolvency experts warns. This warning comes as Hongkong legal experts work to hammer out an equivalent of the US Chapter 11 or British administration order to provide an alternative to outright liquidation. Ferrier Hodgson and Marfan partner John Lees said his firm had handled more bankruptcies and windings up over the past six months as Hongkong's biggest customers - America, Europe and Japan - remained entrenched in recession. Mr Lees said: ''Hongkong, I think, has been sheltered in that a lot of the products we are selling have been cheaper lines, when people have stopped buying expensive goods. ''It has also been sheltered by the enormous expansion of China, but now that's showing warning signs too, with that economy overheating. Hongkong itself is suffering through very high inflation.'' Ferrier Hodgson, which in Australia acted as scheme administrator for the Bond empire, will host an insolvency and banking law seminar next month at the Furama Hotel, to be addressed by Mr Justice Peter Millett. Mr Lees cited Cathay Pacific's decision to shift its data centre to Sydney as part of a trend that showed inflation taking jobs away from Hongkong and ripping into the competitive pricing of Hongkong products. He said the worst-hit companies would be those in the textiles and clothing fields and those that had drifted out of core businesses into areas where they had less expertise, such as property development. ''Certainly smaller companies, the traditional family owned companies that may not have the depth of management which larger companies have, and do not always maintain adequate financial records, are going to be more susceptible,'' he said. He urged company chiefs to maintain adequate financial records and to seek professional assistance once difficulties started to surface. Insolvency cases in the territory surged 27 per cent in 1991, but rose only 1.27 per cent to 637 last year. This is 91 per cent of the record 699 tally chalked up in 1985. The most notorious were Bank of Credit and Commerce Hongkong and BCCI Finance International. But behind these were firms involved in garment and knitwear, importers and exporters, and restaurants and canteens. Mr Robin Hearder, the Official Receiver, said there was a slight increase in the number of petitions to be heard during the next month. But he added that this was not necessarily significant. He said the trend over the past two years had been for more corporate insolvencies and fewer personal bankruptcies. Judge Edward Tyler, chairman of the insolvency committee which is on the verge of making its recommendations on bankruptcy, said: ''Our next stage is to look at the possibility of administration orders, because we are fully aware that, while Hongkong hasbeen very lucky as regards recession in the rest of the world, we have got to be prepared for the worst. ''Five years ago, when the shipping industry was in considerable difficulty, people began to appreciate the problems and the need for proper law and administration orders - otherwise, unless you can get a private agreement, you have no alternative but liquidation.'' A rehabilitation administrative order allows breathing space, without immediately liquidating assets. Under it, about half of the Britain's potential collapses had survived in some form, he said. The difficulty of securing agreement among creditors - crucial when a company was being wound up - was compounded in Hongkong, where banks were more likely to band together to make unsecured loans, Mr Lees said. Judge Tyler said: ''We need some alternative, some sort of rehabilitation, and everyone accepts that. We should start to look at administration orders and other alternatives, either this month or next month.''