Bankruptcy Discharge (s.33 IA 1967) and Annulment of Bankruptcy (s.105 IA 1967) What is the difference and applications.

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asked on Jan 12, 2022 at 00:06
edited on Jan 12, 2022 at 00:21
by   jeff005
For the purpose of this article, I will focus on " Annulment " which is mostly misunderstooded by Bankrupts. Application of Discharge of Bankruptcy is straight forward as per s.33 IA1967.
Section 105(1) IA 1967 reads:-
Where in the opinion of the court a debtor ought not to have been adjudged bankrupt, or where it is proved to the satisfaction of the court that the debts of the bankrupt are paid in full, or …  the court may annul the bankruptcy order.
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answered on Jan 12, 2022 at 00:07
Narration in my personal perspective
The purpose of Insolvency Act 1967 is to deal with debtors who are unable to repay their debts (any type)  to creditors. To make a debtor bankrupt, the creditor must prove in court that it must be proven “beyond reasonable doubt” that the debtor is insolvent and unable to pay. That is the function of the Bankruptcy Court.
If the debtor has been adjudicated as a bankrupt (usually in absentia – did not attend the bankruptcy proceedings), the bankrupt can file in the High Court for Annulment of the Bankruptcy Order issued to him/her, if can be proven in court that the bankrupt is not in a insolvent state but in a solvent state of financial affairs. It is stated under s.105 IA1967.
Some of the recourse a bankrupt might want to consider include appealing the bankruptcy order, applying to the court for an order of discharge, applying to the court to annul his/her bankruptcy, etc.

Now, there are various differences in the various provisional recourse available to a bankrupt but for the purposes of this article I will be focusing on the application to annul a bankruptcy order governed under Section 105 Insolvency Act 1967 (“IA 1967”), specifically applying to annul a bankruptcy order on the basis that the bankrupt has sufficient funds to satisfy the debt which the bankruptcy order was made upon.

Before moving into the substantive law, keep in mind that there is a stark difference between a discharge of a bankruptcy order and an annulment of a bankruptcy order to be highlighted. An annulment has the effect of terminating the bankruptcy order made against you, as if the bankruptcy order was never made in the first place, whereas a discharge relieves you from all of your debts provable in the bankruptcy but your record will still reflect that you were previously a bankrupt. 

Comparatively, it is more ideal for a bankrupt to have his bankruptcy annulled as its effect is that the bankruptcy never happened. However the basis for annulment as seen above can be difficult to prove
Substantive Grounds

Common grounds raised for such a basis typically include the fact that the (a) debtor is no longer domicile in Malaysia, the debtor did not owe such a debt, the fact that the (b) creditor’s petition was premature.
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answered on Jan 12, 2022 at 00:11
Further Notes :

The bankruptcy threshold have been amend to RM 100,000


An Act to amend the Insolvency Act 1967.

ENACTED by the Parliament of Malaysia as follows:

Short title and commencement
1. (1) This Act may be cited as the Insolvency (Amendment)
Act 2020.
(2) This Act comes into operation on a date to be appointed
by the Minister by notification in the Gazette.

Amendment of section 5
2. The Insolvency Act 1967 [Act 360], which is referred to as
the “principal Act” in this Act, is amended in section 5

(a) in paragraph (1)(a), by substituting for the words “fifty
thousand ringgit” the words “one hundred thousand
Lawyerment Knowledge Base Articles
(Annulment and Discharge of Bankruptcy)
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