Insolvency Act 1967 [Act 360]

6 Proceedings and order on creditor's petition   cite [+]

(1) A creditor's petition shall be verified by affidavit of the creditor or of some person on his behalf having knowledge of the facts, and shall be served personally to a debtor.

(1A) Notwithstanding subsection (2), the court may make an order for substituted service of a creditor's petition as prescribed if the creditor can prove to the satisfaction of the court that the debtor, with intent to defeat, delay or evade personal service-

(a) departs out of Malaysia or being out of Malaysia remains out of Malaysia; or

(b) departs from his dwelling house or otherwise absents himself, or secludes himself in his house or closes his place of business.


(1B) An application for an order for substituted service shall state the facts on which the application is founded.

(1C) A substituted service of a creditor's petition, in relation to which an order is made under this section, is effected by taking such steps as the court may direct to bring the creditor's petition to the person to be served.

(2) At the hearing the court shall require proof of-

(a) the debt of the petitioning creditor;

(b) the act of bankruptcy or, if more than one act of bankruptcy is alleged in the petition, some one of the alleged acts of bankruptcy; and

(c) if the debtor does not appear, the service of the petition, and if satisfied with the proof may make a bankruptcy order in pursuance of the petition.


(3) If the court is not satisfied with the proof of the petitioning creditor's debt or of the act of bankruptcy or of the service of the petition, or is satisfied by the debtor that he is able to pay his debts, or that for other sufficient cause no order ought to be made, the court may dismiss the petition.

(4) When the act of bankruptcy relied on is non-compliance with a bankruptcy notice to pay, secure or compound for a judgment debt, the court may if it thinks fit stay or dismiss the petition on the ground that an appeal is pending from the judgment.

(5) Where the debtor appears on the petition and denies that he is indebted to the petitioner, or that he is indebted to such an amount as would justify the petitioner in presenting a petition against him, the court, on such security, if any, being given as the court may require for payment to the petitioner of any debt which may be established against the debtor in due course of law and of the costs of establishing the debt, may, instead of dismissing the petition, stay all proceedings on the petition for such time as may be required for trial of the question relating to the debt.

(6) Where proceedings are stayed the court may, if by reason of the delay caused by the stay of proceedings or for any other cause it thinks just, make a bankruptcy order on the petition of some other creditor, and shall thereupon dismiss, on such terms as it thinks just, the petition in which proceedings have been stayed as aforesaid.

(7) A creditor's petition shall not after presentation be withdrawn without the leave of the court.

7 Debtor's petition and order thereon   cite [+]

(1) A debtor's petition shall allege that the debtor is unable to pay his debts, and the presentation thereof shall be deemed an act of bankruptcy without the previous filing by the debtor of any declaration of inability to pay his debts, and the court shall thereupon make a bankruptcy order.

(1A) Where a debtor's petition is presented on behalf of a firm in the firm's name, the court shall not adjudge a person who is a member of the firm bankrupt unless such person is proved to the satisfaction of the court to be a partner by his admission or by evidence on oath.

(2) A debtor's petition shall not after presentation be withdrawn without the leave of the court.

8 Effect of bankruptcy order   cite [+]

(1) On the making of a bankruptcy order-

(a) except as provided by this Act, no creditor to whom the bankrupt is indebted in respect of any debt provable in bankruptcy shall have any remedy against the property or person of the bankrupt in respect of the debt, or shall proceed with or commence any action or other legal proceeding in respect of such debt unless with the leave of the court and on such terms as the court may impose; and

(b) all the property of the bankrupt shall become divisible among his creditors and shall vest in the Director General of Insolvency and the Director General of Insolvency shall be the receiver, manager, administrator and trustee of all properties of the bankrupt.


(2) This section shall not affect the power of any secured creditor to realize or otherwise deal with his security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed-nor shall it operate to prejudice the right of any person to receive any payment under or by virtue of section 31 of the Employment Act 1955 [Act 265] of the States of *Peninsular Malaysia or any corresponding provisions in Sabah and Sarawak.

(2A) Notwithstanding subsection (2), no secured creditor shall be entitled to any interest in respect of his debt after the making of a bankruptcy order if he does not realize his security within twelve months from the date of the bankruptcy order.

(3) On a bankruptcy order being made against a debtor he shall, within twenty-four hours after such order has been served upon him file an affidavit in the office of the Director General of Insolvency, containing a true and correct statement of the names and residences of all the partners, if any, in his business and of his principal assets and liabilities. Such statement shall for the purposes of this Act be deemed to be part of the debtor's statement of his affairs referred to in section 16.

(4) On such order as aforesaid being made against a debtor the Director General of Insolvency shall forthwith take possession of all books of account and other papers and documents in the possession, custody or control of the debtor relating to his property or affairs, and may take into his possession all or any deeds, books, documents and other property of the debtor.
*NOTE-All references to "West Malaysia" shall be construed as reference to "Peninsular Malaysia"-see the Interpretation (Amendment) Act 1997 [Act A996], subsection 5(2).

9 ............................   cite [+]

Section 9 deleted by Act A1534.

10 Discretionary powers as to appointment of interim receiver and stay of proceedings   cite [+]

(1) The court may, if it thinks it advisable for the protection of the estate, at any time after the presentation of a bankruptcy petition and before a bankruptcy order is made, appoint the Director General of Insolvency to be interim receiver of the property of the debtor or of any part thereof, and direct him to take immediate possession thereof or of any part thereof, including all books of account and other papers and documents belonging to the debtor and relating to his business.

(2) The court may at any time after the presentation of a bankruptcy petition stay any action, execution or other legal process against the property or person of the debtor.

11 Service of order staying proceedings   cite [+]

Where an order is made under section 10, staying any action or proceeding or staying proceedings generally, the order may be served by sending a copy thereof, under the seal of the court, by prepaid registered post to the address for service of the plaintiff or other party prosecuting such proceeding.

12 Power to appoint special manager   cite [+]

(1) The Director General of Insolvency may, if satisfied that the nature of the debtor's estate or business or the interests of the creditors generally require the appointment of a special manager of the estate or business other than the Director General of Insolvency, appoint a manager to act accordingly and with such powers, including any of the powers of a receiver, as are entrusted to him by the Director General of Insolvency.

(2) (Deleted by Act A1534).

(3) The special manager shall give security and account in such manner as the Director General of Insolvency, subject to the control of the court, directs.

(4) The special manager shall receive such remuneration as the Director General of Insolvency, within the prescribed limits and subject to such control as aforesaid, determines.

13 Advertisement of bankruptcy order   cite [+]

Notice of every bankruptcy order, stating the name, address and description of the debtor, the date of the order and the date of the petition, shall be gazetted and advertised in a local paper as prescribed.

14 ............................   cite [+]

Section 14 deleted by Act A1534.

Proceedings Consequent on Bankruptcy Order

15 First and other meetings of creditors   cite [+]

(1) As soon as may be after the making of a bankruptcy order against a debtor a general meeting of his creditors, in this Act referred to as the first meeting of creditors, shall be held for the purpose of considering whether a proposal for a composition or scheme of arrangement shall be entertained and generally as to the mode of dealing with the bankrupt's property.

(1A) Any creditor who has tendered a proof of debts, or his representative duly authorized in writing, may question the bankrupt concerning his affairs and the causes of his failure.

(2) With respect to the summoning of and proceedings at the first and other meetings of creditors the rules in Schedule A shall be observed.


Important Notice: Legislation from this website is not a copy of the Gazette printed by the Government Printer, Percetakan Nasional Malaysia Berhad, for the purposes of section 61 of the Interpretation Acts 1948 and 1967 [Act 388] and does not constitute prima facie evidence of the contents of the Gazette by virtue of the section.

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