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Bankruptcy Law Malaysia
85 Views  ⚫  Asked 7 Years Ago
asked on Aug 14, 2008 at 14:41
by   Richard Tan
Bankruptcy

The Malaysian Bankruptcy Act 1967 was amended in the year 2003 and came into force on 1 October 2003.

Changes brought about by the new amendment include:

    * A change in the title of the Official Assignee Malaysia to the Director-General of Insolvency Malaysia (DGI);
    * Inclusion of a definition of 'social guarantor';
    * A requirement for a petitioning creditor to prove to the Court that he or she had exhausted all avenues to recover 
      debts owed to him or her by the debtor before he or she can commence any bankruptcy action against a 'social
      guarantor'.
    * An increase in the minimum debt which enables a person to be declared bankrupt from RM10,000 to RM30,000;
    * Enabling the DGI to give the creditor/s a notice of his or her intention to issue a certificate of discharge to a
      bankrupt without having to give any reason;
    * Stopping the calculation of the rate of interest on the date of the receiving order granted by the court in cases
      where the interest is not reserved or agreed upon;
    * Conferring powers of a Commissioner of Police to the DGI and the powers of a police officer on the investigation
      officers to facilitate investigation, prosecution and enforcement;
    * An increase from RM100 to RM1000 as the minimum amount that cannot be borrowed by an undischarged bankrupt without
      informing the person who gives the credit or loan that he or she is an undischarged bankrupt.

Corporate Insolvency

The DGI and the Ministry of Domestic Trade and Consumer Affairs are in the process of setting up a committee to work together on reviewing Part 10 of the Companies Act 1965.

Key Legislation

    * Bankruptcy Act 1967
    * Parts 7,8, 10 of the Companies Act 1967

Insolvency Procedures

Personal Insolvency Procedures
The personal insolvency procedures that apply in Malaysia are contained in the Bankruptcy Act 1967. A debtor can become bankrupt through either a debtor's petition or a creditor's petition. There is a summary administration available for small bankruptcies. A debtor can also avail himself/herself of a composition or a scheme as an alternative to bankruptcy. The Official Assignee administers all personal insolvency administrations.
Corporate Insolvency Procedures

The following insolvency procedures are available under the Companies Act 1965:

    * Pt 7 Arrangements and Reconstructions
    * Pt 8 Receivers and Managers
    * Pt 10 Winding Up.

Winding-up can be a court procedure or a voluntary procedures (under the control of members for a solvent company or under the control of creditors for an insolvent company).

Private practitioners can be appointed by, in windings-up, for instance, the Official Receiver can act as a liquidator and is a default liquidator if no other liquidator is acting.

Part 10 of the Act will be reviewed in the near future.

Roles

Role played by Government

The Official Assignee (a government official) is responsible for administering all personal insolvency procedures.
The Official Receiver (a government official) can act as a liquidator of companies being wound-up and is appointed by default if no other liquidator is acting. The Official Receiver also supervises the activities of private sector liquidators appointed by the court.

Role played by private sector practitioners

Private sector practitioners are not appointed to personal insolvencies.

Private sector practitioners may take on corporate insolvency appointments although the Official Receiver may also act as a liquidator.

Role played by the Court

The general powers of the Court in Bankruptcy are included in s91 of the Bankruptcy Act 1967.

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