(1) This Act may be cited as the Bankruptcy (Amendment) Act 2017.
(2) This Act comes into operation on a date to be appointed by the Minister by notification in the Gazette and the Minister may appoint different dates for the coming into operation of different provisions of this Act.
Subsection 1(1) of the principal Act is amended by substituting for the word "Bankruptcy" the word "Insolvency".
All references to the Bankruptcy Act 1967 in any written law or document shall, when this Act comes into operation, be construed as references to the Insolvency Act 1967.
The principal Act is amended by inserting after the heading of Part I the following sections:
2A. Voluntary arrangement
For the purposes of sections 2A to 2Q, "voluntary arrangement" means a composition in satisfaction of a debtor's debt or a scheme of arrangement of a debtor's affairs.
Sections 2A to 2Q shall not apply to an undischarged bankrupt and a limited liability partnership within the meaning of the Limited Liability Partnerships Act 2012 [Act 743].
2C. Intention to propose voluntary arrangement
(1) A debtor may propose a voluntary arrangement to his creditors at any time before he is adjudged bankrupt.
(2) A debtor who intends to propose a voluntary arrangement shall-
(a) appoint a nominee to act in relation to the voluntary arrangement or for the purpose of supervising the implementation of the voluntary arrangement; and
(b) make an application as prescribed to the court for an interim order of voluntary arrangement and submit a copy of the application to the Director General of Insolvency.
(3) A firm shall not propose to his creditors a voluntary arrangement, unless the firm or a partner of the firm has obtained the consent from all or majority of the partners to enter into a voluntary arrangement.
2D. Interim order
(1) Upon receiving the application referred to in paragraph 2C(2)(b), the court shall make an interim order for voluntary arrangement.
(2) Before the making of an interim order under subsection (1), the court shall satisfy itself that-
(a) during the period of twelve months immediately preceding the date of the filing of such application, no previous application has been filed by the debtor; and
(b) the nominee appointed under paragraph 2C(2)(a) is willing to act in relation to the proposal.
(3) An interim order referred to in subsection (1) shall be valid for a period of ninety days from the date the order is made and such period shall not be extended.
(4) The debtor shall notify the nominee the commencement date of the period within seven days from the date of the interim order.
(5) After being notified under subsection (4), the nominee shall, within seven days from such notification, notify all of the debtor's creditors of the fact of the commencement of the interim order.
2E. Effect of interim order
An interim order made under subsection 2D(1) shall have the following effects:
(a) no bankruptcy petition may be made or proceeded with against the debtor; and
(b) no other proceedings, execution or other legal process may be commenced or continued against the debtor without leave of the court.
(1) No person shall act as a nominee unless he is registered with the Director General of Insolvency.
(2) Notwithstanding subsection (1), an officer of a body corporate established under the Central Bank of Malaysia Act 2009 [Act 701] for the purposes of providing financial counselling, debt management services and education on financial management may act as a nominee but is not required to register with the Director General of Insolvency under subsection (1).
(3) The nominee shall have the powers and duties as prescribed.
2G. Registration of nominee
(1) For the purposes of subsection 2F(1), the Director General of Insolvency may approve an application for registration of a nominee subject to the following conditions:
(a) the applicant is-
(i) a registered chartered accountant under the Accountants Act 1967 [Act 94];
(ii) an advocate and solicitor; or
(iii) such other person as the Minister may, on the recommendation of the Director General of Insolvency, prescribe by order published in the Gazette;
(b) the applicant is not an undischarged bankrupt;
(c) the applicant does not assign his estate for the benefit of his creditors or is not under a voluntary arrangement with his creditors;
(d) the applicant has not been convicted in Malaysia or elsewhere of a criminal offence as would render him unfit to be a nominee under this Part, and in particular, but not limited to, an offence involving fraud or dishonesty; and
(e) the applicant is not suffering from any mental disorder under the Mental Health Act 2001 [Act 615].
(2) The Minister may prescribe the procedures and fees for the registration of nominees.
(3) Any person who acts as a nominee without being registered with the Director General of Insolvency shall be guilty of an offence and shall be liable on conviction to imprisonment for a term not exceeding two years or to a fine not exceeding fifteen thousand ringgit or to both.
(4) Any person who continues to act as a nominee after the expiry of his registration as nominee shall be guilty of an offence and shall be liable on conviction to imprisonment for a term not exceeding one year or to a fine not exceeding five thousand ringgit or to both.
2H. Register of nominees
The Director General of Insolvency shall keep and maintain a register of nominees registered under section 2G.
2I. Meeting of creditors to approve debtor's proposal
(1) Where an interim order has been made, the nominee shall, before the expiry of the interim order referred to in subsection 2D(3), summon every of the debtor's creditor to a meeting by giving a prescribed notice to such creditors as to approve the debtor's proposal for a voluntary arrangement.
(2) For the purposes of enabling the nominee to prepare the debtor's proposal, the debtor shall submit to the nominee-
(a) where the debtor is an individual, a statement of his affairs which contains-
(i) the particulars of the debtor's assets, creditors, debts and other liabilities; and
(ii) such other information as may be prescribed; or
(b) where the debtor is a firm, a statement of the firm's affairs which contains-
(i) the particulars of the assets, creditors, debts and other liabilities of the firm and of each partner of the firm; and
(ii) such other information as may be prescribed.
(3) The meeting summoned under subsection (1) or any subsequent meeting may, by special resolution, resolve to approve the proposed voluntary arrangement with or without modification but-
(a) no modification shall be made to alter the proposal to such extent that the proposal ceases to be a proposal for a voluntary arrangement by the debtor;
(b) the meeting shall not approve the proposed voluntary arrangement with any modification unless the debtor has consented to such modification;
(c) the meeting shall not approve any proposal or any modification to the proposal which affects the right of a secured creditor of the debtor to enforce his security, except with the concurrence of the secured creditor concerned; and
(d) the meeting shall not, without the concurrence of the preferential creditor concerned, approve any proposal or any modification to the proposal under which-
(i) any debt of the debtor, not being a preferential debt, is to be paid in priority to any preferential debt of the debtor; or
(ii) any preferential debt of the debtor is to be paid in relation to any other preferential debt of the debtor other than in accordance with section 43.
(4) Every meeting shall be conducted in accordance with the prescribed rules.
(5) Any debtor who makes any false representation or commits any other fraud for the purpose of obtaining the approval of his creditors to a proposal for a voluntary arrangement shall be guilty of an offence and shall be liable on conviction to imprisonment for a term not exceeding two years or to a fine not exceeding five thousand ringgit or to both.
2J. Report of decisions to court
(1) After the conclusion of the meeting of creditors summoned under section 2I, the nominee shall, as soon as may be, report the decision of the meeting to the court and serve a copy of the report containing the terms of the voluntary arrangement under the seal of the court to the debtor and creditors.
(2) Where the meeting of creditors has declined to approve the debtor's proposal, the court may set aside any interim order which is in force in relation to the debtor.
2K. Effect of approval
(1) Where the meeting of creditors summoned under section 2I has approved the proposed voluntary arrangement with or without modifications, the approved voluntary arrangement shall-
(a) take effect as if made by the debtor at the meeting; and
(b) bind every person who had notice of and was entitled to vote at the meeting, whether or not he was present or represented at the meeting, as if he were a party to the arrangement.
(2) Subject to section 2L, the interim order in force in relation to the debtor shall cease to have effect at the end of thirty days from the date the report was sealed by the court under section 2J.
(3) Where proceedings on a bankruptcy petition have been stayed by an interim order which ceases to have effect under subsection (2), that petition shall be deemed to have been dismissed, unless the court orders otherwise.
(4) During the effective period of a voluntary arrangement, the debtor shall not enter into a credit facility, unless all the creditors in the voluntary arrangement agree and the person giving the credit is informed that the debtor has entered into a voluntary arrangement under this Act.
2L. Review of meeting's decision
(1) Any debtor, nominee or person entitled to vote at a meeting of creditors summoned under section 2I may apply to the court for a review of the decision of the meeting on the ground that-
(a) the voluntary arrangement approved by the meeting unfairly prejudices the interests of the debtor or any of the debtor's creditors; or
(b) there has been some material irregularity at or in relation to the meeting.
(2) Upon hearing an application under subsection (1), the court may-
(a) revoke or suspend any approval given by the meeting; or
(b) direct any person to summon further meeting of the debtor's creditors to consider any revised proposal the debtor may make or, in a case falling under paragraph (1)(b), to reconsider the original proposal of the debtor.
(3) No application under this section shall be made after thirty days the decision of the meeting of creditors is reported to the court under section 2J.
(4) Where at any time after giving the direction under paragraph (2)(b) the court is satisfied that the debtor does not intend to submit a revised proposal, the court shall revoke the direction and revoke or suspend any approval given at the previous meeting.
(5) Upon giving a direction under paragraph (2)(b), the court may extend the validity of any interim order in relation to the debtor for such period not exceeding thirty days.
(6) Upon giving a direction or revoking or suspending an approval under this section, the court may give such supplemental directions as the court thinks fit and, in particular, directions with respect to-
(a) things done since the meeting under any voluntary arrangement approved by the meeting; and
(b) things done since the meeting as could not have been done if an interim order had been in force in relation to the debtor when the things were done.
(7) Except in pursuance of this section, no approval given at a meeting of creditors summoned under section 2I shall be invalidated by reason only of any irregularity at or in relation to the meeting.
2M. Replacement of nominee before voluntary arrangement concludes
(1) The debtor may, at any time before the voluntary arrangement is concluded, replace the nominee with another nominee.
(2) Where a nominee is replaced under this section, an interim order made under subsection 2D(1) shall continue to have effect and the validity period of the interim order referred to in subsection 2D(3) shall not be extended notwithstanding such replacement.
(3) A nominee who replaces another nominee shall have all the powers of the previous nominee and shall continue to carry out the duties of the previous nominee and the previous nominee shall give such assistance as may be required.
2N. Implementation and supervision of approved voluntary arrangement
(1) Where a voluntary arrangement approved by a meeting of creditors summoned under section 2I has taken effect, the nominee shall supervise the implementation of the voluntary arrangement.
(2) If the debtor or any of his creditors is dissatisfied by any act, omission or decision of the nominee in his supervision of the implementation of the voluntary arrangement, the debtor or creditor may apply to the court to review that act, omission or decision.
(3) Upon hearing of an application under subsection (2), the court may-
(a) confirm, reverse or modify any act or decision of the nominee; or
(b) give such directions to the nominee or make such order as the court thinks fit.
(4) The nominee may apply to the court for directions in relation to any particular matter arising under the voluntary arrangement.
(a) it is expedient to appoint a person to carry out the functions of the nominee; and
(b) it is inexpedient, difficult or impracticable for such an appointment to be made without the assistance of the court,
the court may make an order appointing a person who is qualified to act as a nominee, either in substitution for the existing nominee or to fill a vacancy.
2O. Consequence of failure by debtor to comply with voluntary arrangement
(1) Where a debtor fails to comply with any of his obligations under a voluntary arrangement, any creditor bound by the voluntary arrangement may file or proceed with a bankruptcy petition against the debtor.
(2) For the purposes of commencing or proceeding with the bankruptcy petition against the debtor, the amount of debt specified in the petition shall deduct any amount of debts that has been settled during voluntary arrangement.
2P. Cessation of voluntary arrangement
A voluntary arrangement under this Act shall cease upon the death of the debtor.
2Q. Fees of nominee
The Minister may prescribe the scale of fees to be charged by nominees in respect of voluntary arrangement.".