News on 19 June 2000

June 19, 2000

HEADLINE: Bankruptcy dips as economy picks up

BYLINE: Anna Teo

WITH the pick-up in the economy, insolvency -among both individuals and companies -appears to be dipping. But there is no real let-up yet in the number of petitions to wind up companies.

Figures from the Insolvency & Public Trustee's Office -the department in the Ministry of Law that administers bankruptcy and company winding-up matters -show there were 145 company liquidation petitions filed with the High Court during the first four months of this year. While this is a 2 per cent decrease compared with the corresponding period a year ago, it is 5 per cent higher than the number filed in the preceding four months from September to December 1999.

Actual company winding-up orders made have, however, fallen. The 102 winding-up orders made in the first four months this year is 4.7 per cent lower year-on-year, and 8.9 per cent lower compared with the preceding four months.

The individual bankruptcy figures have also improved, though this could be due as much to efforts by the authorities in recent years to foster a climate of greater tolerance of business failure, as to the economy's better health. Between January and April 2000, creditors filed a total of 1,124 bankruptcy petitions. This is a 24 per cent drop from the number filed in the same 1999 period, and 7 per cent lower compared with the preceding four months.

A total of 903 bankruptcy orders were made in the first four months of 2000, which is just over 6 per cent lower in both year-on-year and previous-period terms. A total of 964 bankruptcy orders were made in January-April 1999, and 963 in the September-December 1999 period. Changes have been made to the bankruptcy regime in recent years to promote entrepreneurship and responsible risk-taking. These include raising the minimum debt for bankruptcy petitions from $ 2,000 to $ 10,000, and measures to encourage debt settlement without resorting to bankruptcy.

By Anna Teo