Insolvency Act 1967 [Act 360]

Part III   cite [+]

ADMINISTRATION OF PROPERTY

Proof of Debts

40 Description of debts provable in bankruptcy   cite [+]

(1) Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust shall not be provable in bankruptcy.

(2) A person having notice of any act of bankruptcy available against the debtor shall not prove under the bankruptcy order for any debt or liability contracted by the debtor subsequent to the date of his so having notice.

(3) Save as provided in subsections (1) and (2) all debts and liabilities present or future, certain or contingent, to which the debtor is subject at the date of the bankruptcy order, or to which he may become subject before his discharge by reason of any obligation incurred before the date of the bankruptcy order shall be deemed to be debts provable in bankruptcy.

(4) An estimate shall be made by the Director General of Insolvency of the value of any debt or liability provable under subsection (3) which, by reason of its being subject to any contingency or contingencies, or for any other reason, does not bear a certain value.

(5) Any person aggrieved by any such estimate may appeal to the court.

(6) If in the opinion of the court the value of the debt or liability is incapable of being fairly estimated the court may make an order to that effect, and thereupon the debt or liability shall for the purposes of this Act be deemed to be debt not provable in bankruptcy.

(7) If in the opinion of the court the value of the debt or liability is capable of being fairly estimated, the court may assess the same and may give all necessary directions for this purpose, and the amount of the value when assessed shall be deemed to be a debt provable in bankruptcy.

41 Mutual credit and set-off   cite [+]

(1) Where there have been mutual credits, mutual debts, or other mutual dealings between a debtor against whom a bankruptcy order is made under this Act and any other person proving or claiming to prove a debt under such order, an account shall be taken of what is due from the one party to the other in respect of such mutual dealings, and the sum due from the one party shall be set-off against any sum due from the other party, and the balance of the account and no more shall be claimed or paid on either side respectively.

(2) A person shall not be entitled under this section to claim the benefit of any set-off against the property of a debtor in any case where he had at the time of giving credit to the debtor notice of an act of bankruptcy committed by the debtor and available against him.

42 Rules as to proof of debts   cite [+]

The rules in Schedule C shall be observed with respect to the mode of proving debts, the right of proof by secured and other creditors, the admission and rejection of proofs and other matters.

43 Priority of debts   cite [+]

(1) In the distribution of the property of a bankrupt there shall be paid in priority to all other debts-

(a) all local rates and land tax due from the bankrupt at the date of the bankruptcy order and having become due and payable within twelve months next before that time;

(b) income tax and other assessed taxes assessed on the bankrupt up to 31 December next before the date of the bankruptcy order and not exceeding in the whole one year's assessment;

(c) all wages or salary of any clerk, servant, labourer or workman not exceeding one thousand ringgit for each whether payable for time or piece work or whether or not payable wholly or in part by way of commission in respect of services rendered to the bankrupt during the period of five months next before the date of the bankruptcy order or the date of the termination of his service if the latter occurs within twelve months of and precedes the date of the bankruptcy order:

Provided that, where any clerk, servant, labourer or workman has entered into a contract for the payment of his wages or any part thereof in a lump sum at the end of the year of hiring, the priority under this section shall extend to the whole of such sum, or a part thereof, as the court may decide to be due under the contract, proportionate to the time of service up to the date of the bankruptcy order;

(d) all amounts due in respect of contributions payable during the twelve months before the date of the bankruptcy order by the bankrupt as the employer of any person under any law relating to provident funds; and

(e) all amounts due in respect of workmen's compensation under any law relating to workmen's compensation accrued before the date of the bankruptcy order.


(2) The foregoing debts shall rank equally between themselves, and shall be paid in full unless the property of the bankrupt is insufficient to meet them, in which case they shall abate in equal proportions between themselves.

(3) In the case of partners the joint estate shall be applicable in the first instance in payment of their joint debts, and the separate estate of each partner shall be applicable in the first instance in payment of his separate debts. If there is a surplus of the separate estates it shall be dealt with as part of the joint estate. If there is a surplus of the joint estate it shall be dealt with as part of the respective separate estates in proportion to the right and interest of each partner in the joint estate.

(4) Subject to this Act all debts proved in the bankruptcy shall be paid pari passu.

(5) If there is any surplus after payment of the foregoing debts, the surplus shall not be applied in any payment of interest after the date of the bankruptcy order to any creditor on any debt proved in the bankruptcy, except for the payment of interest to a secured creditor under subsection 8(2A).

Interest on debts


(6) Where a debt has been proved upon a debtor's estate and such debt includes interest or any pecuniary consideration in lieu of interest, such interest or consideration shall for the purposes of dividend be calculated at a rate not exceeding six per centum per annum up to the date the bankruptcy order is granted by the court.

(7) This section shall have effect subject to any written law relating to partnership in force in any part of Malaysia.

(8) Where an interim receiver has been appointed before the making of the bankruptcy order the date of such appointment shall for the purposes of this section be deemed to be the date of the bankruptcy order.

44 Preferential claim in case of apprenticeship and in respect of passage money   cite [+]

(1) Where at the time of the presentation of the bankruptcy petition any person is apprenticed or is an articled clerk to the bankrupt, the adjudication of bankruptcy shall, if either the bankrupt or apprentice or clerk gives notice in writing to the Director General of Insolvency to that effect, be a complete discharge of the indenture of apprenticeship or articles of agreement.

(2) If any money has been paid by or on behalf of the apprentice or clerk to the bankrupt as a fee, the Director General of Insolvency may, on the application of the apprentice or clerk or of some person on his behalf, pay such sum as the Director General of Insolvency, subject to an appeal to the court, thinks reasonable out of the bankrupt's property to or for the use of the apprentice or clerk, regard being had to the amount paid by him or on his behalf and to the time during which he served with the bankrupt under the indenture or articles before the commencement of the bankruptcy and to the other circumstances of the case.

(3) Where it appears expedient to the Director General of Insolvency he may, on the application of any apprentice or articled clerk to the bankrupt, or of some person on his behalf, instead of acting under subsection (1) or (2) transfer the indenture of apprenticeship or articles of agreement to some other person.

(4) Where at the date of the bankruptcy order any person is in the employment of the bankrupt who came to Malaysia for the purpose of entering into such employment either-

(a) under any contract to serve the bankrupt for a period of not less than one year, which period has not elapsed three months before the date of such order; or

(b) under a contract either absolutely or conditionally that such person shall be provided with a passage to another country on the determination of his employment,


and such person has not obtained other employment and is desirous of leaving Malaysia, the court may, if it seems just and expedient under all the circumstances of the case, direct the Director General of Insolvency to provide for such person such passage as he is entitled to under the contract, or if he is not so entitled then a suitable passage to the country whence he came for the purpose of entering into such employment, or in either case any other not more costly passage which such person may desire.

45 Power to landlord to distrain for rent   cite [+]

(1) Subject to any law relating to the recovery of rent by way of distress, the landlord or other person to whom any rent is due from the bankrupt may, at any time either before or after the commencement of the bankruptcy, distrain upon the goods or effects of the bankrupt for the rent due to him from the bankrupt with this limitation, that if such distress for rent is levied after the commencement of the bankruptcy it shall be available only for three months' rent accrued due prior to the date of the bankruptcy order, but the landlord or other person to whom the rent is due from the bankrupt may prove under the bankruptcy for the surplus due for which the distress may not have been available.

(2) This section shall with the necessary modifications apply in the case of an order for the administration of the estate of a deceased person who died insolvent and for the purposes of this section the term "bankruptcy order" shall be deemed to include an order for such administration.

46 Postponement of husband's or wife's claims   cite [+]

(1) Where a married woman has been adjudged bankrupt her husband shall not be entitled to claim any dividend as a creditor in respect of any money or other property lent or entrusted by him to his wife for the purposes of her trade or business until all claims of the other creditors of his wife for valuable consideration in money or money's worth have been satisfied.

(2) Where the husband of a married woman has been adjudged bankrupt any money or other property of such woman lent or entrusted by her to her husband for the purpose of any trade or business carried on by him or otherwise shall be treated as assets of his estate and the wife shall not be entitled to claim any dividend as a creditor in respect of any such money or other property until all claims of the other creditors of her husband for valuable consideration in money or money's worth have been satisfied.

Property Available for Payment of Debts

47 Relation back of Director General of Insolvency's title   cite [+]

(1) The bankruptcy of a debtor, whether the same takes place on the debtor's own petition or upon that of a creditor, shall be deemed to have relation back to and commence at the time of the act of bankruptcy being committed on which a bankruptcy order is made against him, or if the bankrupt is proved to have committed more acts of bankruptcy than one to have relation back to and to commence at the time of the first of the acts of bankruptcy proved to have been committed by the bankrupt within six months next preceding the date of the presentation of the bankruptcy petition.

(2) No bankruptcy petition or bankruptcy order shall be rendered invalid by reason of any act of bankruptcy anterior to the debt of the petitioning creditor.

48 Description of bankrupt's property divisible amongst creditors   cite [+]

(1) The property of the bankrupt divisible among his creditors, and in this Act referred to as the property of the bankrupt-

(a) shall not comprise the following:

(i) property held by the bankrupt on trust for any other person;

(ii) the tools, if any, of his trade and the necessary wearing apparel and bedding and other like necessaries of himself, his wife and children to a value inclusive of tools and apparel and the other things aforesaid not exceeding *five thousand ringgit in the whole;

(b) shall comprise the following:

(i) all such property as belongs to or is vested in the bankrupt at the commencement of the bankruptcy or is acquired by or devolves on him before his discharge;

(ii) the capacity to exercise and to take proceedings for exercising all such powers in or over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of his bankruptcy or before his discharge; and

(iii) subject to the law for the time being in force relating to bills of sale, all goods being at the commencement of the bankruptcy in the possession, order or disposition of the bankrupt by the consent and permission of the true owner under such circumstances that he is the reputed owner thereof.


(2) Things in action other than debts due or growing due to the bankrupt in the course of his trade or business shall not be deemed goods within the meaning of this section.
*NOTE-Previously "five hundred ringgit"-see the Bankruptcy (Amendment) Act 1992 [Act A827].

49 Provisions as to second bankruptcy   cite [+]

(1) Where a second or subsequent bankruptcy order is made against a bankrupt, or where an order is made for the administration in bankruptcy of the estate of a deceased bankrupt, then for the purposes of any proceedings consequent upon any such order, the Director General of Insolvency shall be deemed to be a creditor in respect of any unsatisfied balance of the debts provable in the last preceding bankruptcy against the property of the bankrupt in the subsequent bankruptcy.

(2) In the event of a second or subsequent bankruptcy order made against a bankrupt or in the event of an order being made for the administering in bankruptcy of the estate of a deceased bankrupt, any property acquired by him since he was last adjudged bankrupt, which at the date when the subsequent petition was presented had not been distributed amongst the creditors in such last preceding bankruptcy, shall (subject to any disposition thereof made by the Director General of Insolvency in that bankruptcy, without knowledge of the presentation of the subsequent petition) vest in the Director General of Insolvency on account of the subsequent bankruptcy or administration in bankruptcy as the case may be.

(3) Where the Director General of Insolvency in any bankruptcy receives notice of a subsequent petition in bankruptcy against the bankrupt or after his decease of a petition for the administration of his estate in bankruptcy, the Director General of Insolvency shall hold any property then in his possession which has been acquired by the bankrupt since he was adjudged bankrupt until the subsequent petition has been disposed of, and, if on the subsequent petition a bankruptcy order or an order for the administration of the estate in bankruptcy is made, he shall hold all such property or the proceeds thereof (after deducting his costs and expenses) to the account of the subsequent bankruptcy or administration in bankruptcy, as the case may be.


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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