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Debt Repayment for the 'Unsecured Creditor' through Insolvency Process

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asked on Apr 14, 2020 at 15:33
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edited on Jan 21, 2021 at 04:09
 
I am in currently in charge of the bankruptcy file against a former employee for breach of contract. The case is currently pending at Malaysia Department of Insolvency (MDI).
 
Highlights fact of the case: Company has initiated execution proceedings by way of bankruptcy against a former employee (called as ‘debtor’). Adjudication and Receiving Order was recorded. Proof of Debt filed at Malaysia Department of Insolvency. Creditors Meetings was held subsequent to that. As to date, debtor has made monthly commitment. The debtor owned a property (townhouse) which will be used as debt repayment. This property will be sold by way of public auction.  As the creditor, the Company aware that the property needs to be transferred to Director General of Insolvency (DGI) first before the public auction to take place. Last update was on November 2019. I made an effort to call the MDI officer and was informed that the transfer of property under the DGI still work in progress. The delay may due to the late submission of relevant documents to the MDI office to affect the transfer.
 
I have few enquiries in relation to the insolvency procedure:

1. Normally how long does it take for the MDI to transfer property under DGI till final stage of distribution of the dividends to the creditors?
 
2. If the case prolong or pending at MDI office for quite some time, is there any way / necessary action that can be taken by creditors to expedite the repayment of the debt?
 
3. Is there a guarantee that creditors may recover full amount of debt through insolvency process? The company is unsecured creditor. In such circumstance, is there any option that company may resort to recover the full amount of debt?
 
4. What are the relevant Acts or regulations that might be useful for reference in to this case?
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4 Answers

answered on Apr 15, 2020 at 09:48
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edited Jan 21, 2021 at 04:10
 
1. There is no time frame.

2. The bankruptcy proceeding is the final stage of debt recovery. Therefore there will be no more other execution.

3. There is never a guarantee. 

It is the prerogative of Director General of Insolvency to auction or not to auction property belonging to the bankrupt property to fulfill the unsecured creditors.

4. The Insolvency or Bankruptcy Act.
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answered on Apr 17, 2020 at 13:53
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edited Jan 21, 2021 at 04:11
 
Thanks so much for the answers @_rara. 

If that the case @_rara, would you mind to share any proposal to speed up the settlement of the debt by the debtor? 
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answered on Apr 17, 2020 at 21:09
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edited Jan 21, 2021 at 04:13
 
1. Normally how long does it take for the MDI to transfer property under DGI till final stage of distribution of the dividends to the creditors?
It could take 5 to 10 years or more depending on how fast MDI works and how cooperative is the bankrupt.
 
2. If the case prolong or pending at MDI office for quite some time, is there any way / necessary action that can be taken by creditors to expedite the repayment of the debt?
Possibly via application to the High Court but it rarely makes any difference.

3. Is there a guarantee that creditors may recover full amount of debt through insolvency process? The company is unsecured creditor.
Of course no guarantee to recover full debt or even 10% of the debt.
This is because many other creditors may surface ( for example debtor sister may say that he owes her RM 500k ) and the total debt may be much larger than the total assets.

In such circumstance, is there any option that company may resort to recover the full amount of debt?
Your company wants more than other creditors? Is that fair?
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answered on Apr 20, 2020 at 23:33
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edited Jan 21, 2021 at 04:14
 
@william chan,

Thanks for your answers.

If possible can you further elaborate on this:

2. If the case prolong or pending at MDI office for quite some time, is there any way / necessary action that can be taken by creditors to expedite the repayment of the debt?
Possibly via application to the High Court but it rarely makes any difference.

Thanks.
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