On Wednesday, 24 May 2023, the Malaysian Dewan Rakyat had by a voice vote unanimously passed the Insolvency (Amendment) Bill 2023 (“said Bill”) that seeks to bring about various proposed amendments to the Insolvency Act 1967.
According to the Explanatory Statement of the said Bill, the purpose of the proposed amendments include, among other things, ensuring a more efficient administration of a bankrupt’s estate, enabling bankrupts to be discharged sooner (under certain conditions), strengthening the provisions, and enlarging powers of the Director General of Insolvency (“DGI”) relating to automatic discharge of bankrupts.
The key takeaways from these proposed amendments are as follows: –
1) The addition of two new categories of bankrupts eligible for a discharge of bankruptcy by Certificate of the DGI without objection by the Creditors being:-
a) persons with mental illness certified by a government hospital psychiatrist; and
b) persons who are above 70 years old and incapable of contributing to the administration of their estate.
2) Automatic discharge for a bankrupt on expiration of 3 years from the submission of his statement of affairs provided that he has paid the sum of money determined by the DGI having regard to the bankrupt’s financial capability and has rendered an account of moneys and property to the DGI.
3) The DGI is empowered to suspend an automatic discharge for a period not exceeding 2 years if the bankrupt fails to comply with his duties and obligations under the Insolvency Act 1967.
4) The DGI may summon the creditors who have filed proof of debts (be it under debtor’s petition or creditor’s petition) to attend meeting of creditors with notice of not less than 7 days and such meeting can be carried out using remote communication technology.
With the advent of these proposed amendments, the following can be expected: –
1) It will be easier for bankrupts with mental illness or those aged 70 and above to apply for discharge of bankruptcy.
2) For other cases, the DGI will have wider powers to allow a discharge of bankruptcy if the bankrupt has submitted his statement of affairs and 3 years has lapsed since submission (subject to relevant conditions).
3) A bankrupt person who has submitted his statement of affairs to the DGI and has complied with the DGI’s directions will be able to take advantage of this more lenient way of getting a discharge of bankruptcy.
4) More flexibility in the conduct of creditors’ meeting which will save time and costs for all parties.
Do note that despite the passing of the said Bill at the Dewan Rakyat, the proposed amendments are not yet in force until the Dewan Negara has also approved it and the said Bill is gazetted.
It would be interesting to see if these proposed amendments would bring about positive changes in bankruptcy law as intended by Parliament. And we anticipate further legal jurisprudence by court decisions to develop this area of the law.
For now, we hope that the administration of bankruptcy cases in Malaysia can be conducted as effectively as possible, taking into consideration the interest of all parties, be it the bankrupts, the creditors and the Malaysian public.
Should you wish to find out more about the latest bankruptcy law in Malaysia, feel free to contact us.
[Disclaimer: The above Article is merely for general informational purposes only as at the date of publication, on 25 May 2023, and is not conclusive. Readers should seek proper legal advice especially where the law, rules and practices will change from time to time.]
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