21st May 2022 – (Hong Kong) The COVID-19 epidemic has hit Hong Kong hard. Yesterday, the Official Receiver’s Office announced last month’s petitions for personal bankruptcy and compulsory liquidation of enterprises, and found that both numbers have risen sharply and hit a new high in the past two years.
Among them, 930 bankruptcy petitions were filed, an increase of more than 6.15 times compared with the 130 in March and nearly double the 495 in February. Compulsory liquidation against companies has also risen sharply and many are queuing up to apply for liquidation. Some economists said that most of the bankruptcy applicants are middle-class citizens such as small and medium-sized business owners. It is expected that their businesses will be affected by the epidemic. Most of them have lost money and they can only apply for bankruptcy protection after they have exhausted their wealth. Some scholars believe that the sharp increase in the two sets of data is related to the rigidity of the government’s epidemic prevention policy and the lag in support measures.
They urge the government to review the epidemic prevention measures in a timely manner to avoid excessive actions to impact more small and medium-sized enterprises. The latest data from the Official Receiver’s Office shows that 930 people filed for bankruptcy in April, a year-on-year increase of more than 40% compared with the 640 cases in April last year, and a 6.15-fold increase compared with the previous month. The latest bankruptcy filing has hit a record high since 2020. A new high of 2,079 cases in May.
In the first four months of this year, there have been 2,120 bankruptcy petitions. As for receivership or bankruptcy orders issued in April, there were 389 cases, which was also 2.7 times higher than the 105 cases in March. In terms of enterprises, there were 68 compulsory winding-up petitions last month, which also surged by more than 8.7 times compared with 7 in March, and doubled year-on-year, returning to the level in May 2020. In the first four months of the year, there were 143 petitions for compulsory winding up of companies.
Regarding the sharp increase in the two sets of data, the Official Receiver’s Office also explained that due to the impact of the epidemic, the Judiciary implemented special work arrangements from March to April, resulting in fluctuations in the number of petitions filed and the number of bankruptcy and winding-up orders issued during the period. The related data in April were thus affected.
Many SMEs do not operate as private companies. The finances of companies and individuals are “integrated”. When faced with adversity, operators often sell their personal assets to support their businesses, while many SMEs in Hong Kong are mostly engaged in retail business. catering premises, these industries are also the most affected by the epidemic and the government’s epidemic prevention measures. In addition, the government’s social distancing measures remained in place for most of April, so some operators were unable to obtain loans and failed to survive.