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Hire purchase

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asked on Feb 3, 2016 at 01:25
by   clermont
Our company has a MPV which is still under hire purchase with one more year before final payment. Currently, company is under financial crisis and has defaulted payment for 3 going to 4th monthly installment. We received a call from the bank officer asking how and when we can settle, we said we are trying to sell it off. The officer said if we cannot settle the payment, they can sue the company to wind up.
I thought bank will only repossess the vehicle and auction it off. Any balance still due, hirer has to pay or be sue.
Can anyone advise on this? Can they really sue the company to wind up? The balance of 80k+ is much lower than its market value, it can be sell off at 140k.
Please help to advise. Thank you.
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3 Answers

answered on Feb 3, 2016 at 03:00
by   Nick
Yes.

Read again what you have signed on the HP agreement. When lelong, the MPV can be sold for 50-60K.
The amount of 80K can snowball to 100K within months due to misc charges.

Just pay the 4 months default now.
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answered on Feb 4, 2016 at 15:35
by   vkpc
The officer said if we cannot settle the payment, they can sue the company to wind up.
Some banks sue the hirer even before the vehicle is repossessed or sold.
Although Bank Negara has advised banks to sell the car first before sueing, some banks are ignoring the advice.

You may think the car is worth RM 140k, but in an auction it can be sold for RM 40k.

Can they really sue the company to wind up?
Under Companies Act, a company can be wound up with debts as little as RM500.
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answered on Feb 15, 2016 at 19:42
by   Amarmekber
When you indicate to a bank or financier or any creditor in fact that you are unable to pay your debts as and when the fall due, you give rise to a presumption of insolvency on your part.

Before you become totally insolvent or before any other creditor decides to have you wound up, it is natural for the hire purchase company to want to protect its security which is the MPV. They will go ahead and wind you up because by doing that they stand before other creditors in preference to receive payment of their debt after the liquidator has sold off your assets.

If you can sell the van do it now and don't tell them yet till a transfer is required. Never tell your creditors you are in trouble. Always let them know that there may be a delay but don't give them details because they have a legal right to wind you up. And any opportunity to restructure your company back tosolvency will be lost.
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