Yew Huoi, How & Associates | Leading Malaysia Law Firm

INSOLVENCY ACT 1967 – A FRESH FINANCIAL START: THE EVOLUTION OF BANKRUPTCY PROVISIONS IN MALAYSIA’S INSOLVENCY ACT

The main intent of the recent amendment to Insolvency Act which came into force on 6.10.2023 is to provide individuals with a chance for a new beginning. Everyone can encounter financial difficulties and these updated provisions aim to ensure that a person facing bankruptcy is not perpetually weighed down by prior financial missteps or unexpected hurdles.

Introduction

  • Bankruptcy in Malaysia is governed by the Insolvency Act 1967 which recent amendment has come into force on 6.10.2023.
  • A person can be made a bankruptcy by a court order if they are unable to pay their debts of RM100,000.00 and above.
  • There are several ways a bankruptcy may be discharged as follows:
  • Annulment;
  • Application to court;
  • Discharge by Director General of Insolvency (“DGI”); and
  • Completion of Bankruptcy Duration of 3 Years from the Date of Submission of Statement of Affairs (Automatic Discharge)

Annulment

  • Happens when the bankruptcy order should not have been made in the first place or when the debt is paid in full.

Application to Court

  • An application to court can be filed at any time after he is being adjudged bankrupt.
  • The application must be supported by a report from the DGI as to the bankrupt’s conduct and affairs.
  • When considering the application, the court will weigh between the rights of creditors to recover their debt with the bankrupt individual’s opportunity for a fresh start, taking into account the broader interest of public commercial reality.
  • Several key factors will be taken into consideration:
    • The bankrupt’s age and earnings;
    • Health conditions;
    • Length of time of the bankruptcy;
    • Reason leading to bankruptcy;
    • The proportion of debt settled;
    • Behaviour of the bankrupt;
    • Actions of the creditors; and/or
    • The count of creditors in opposition.

    Discharge through DGI

    • Starting 1.10.2003, the DGI is granted the authority to discharge when there is an application by the bankrupt.
    • This application can be submitted after a duration of 5 years after the date of the bankruptcy order.

    Completion of Bankruptcy Duration of 3 Years from the Date of Submission of Statement of Affairs (Automatic Discharge)

    • This is introduced in the Insolvency (Amendment) Act 2023 (Act A1695) which came into force on 6.10.2023.
    • A bankrupt is automatically discharge on the expiration of 3 years from the date of the submission of the Statement of Affairs if the bankrupt has complied with all obligations and there is no objection from the creditors.
    • Application for objection by the creditor(s) must be filed in the court.

    Recent Post

    REGULATIONS – GENERAL AGREEMENT ON TARIFFS AND TRADE (GATT 1947 ) – ARTICLE I

    This legal update explores key provisions of the General Agreement on Tariffs and Trade (GATT 1947), focusing on Article I (Most-Favoured-Nation Treatment), Article II (Schedules of Concessions), Article XX (General Exceptions), and Article XXI (Security Exceptions). Article I mandates that any trade advantage granted by one contracting party to another must be extended unconditionally to all other parties. Article II ensures that imported goods from contracting parties receive treatment no less favourable than that outlined in agreed schedules, while also regulating permissible taxes and charges. Articles XX and XXI provide exceptions for measures necessary to protect public morals, health, security interests, and compliance with domestic laws. The provisions reflect the foundational principles of non-discrimination, transparency, and fair trade, while allowing for limited, well-defined exceptions. This summary is intended to provide a concise reference for businesses and legal practitioners involved in international trade law.

    Read More »

    ROAD ACCIDENT – INSURANCE COMPANY STRIKES BACK: HIGH COURT OVERTURNS ROAD ACCIDENT CLAIM

    When a motorcyclist claimed he was knocked down in an accident, the Sessions Court ruled in his favor, holding the other rider fully liable. But the insurance company wasn’t convinced. They appealed, arguing that there was no proof of a collision and even raised suspicions of fraud. The High Court took a closer look – and in a dramatic turn, overturned the decision, dismissed the claim, and awarded RM60,000 in costs to the insurer. This case is a stark reminder that in court, assumptions don’t win cases – evidence does.

    Read More »

    CHARTERPARTY – LIEN ON SUB-FREIGHTS: CLARIFYING OWNERS’ RIGHTS AGAINST SUB-CHARTERERS

    In Marchand Navigation Co v Olam Global Agri Pte Ltd and Anor [2025] 1 Lloyd’s Rep 92, the Singapore High Court upheld the owners’ right to enforce a lien on sub-freights under Clause 18 of the NYPE 1946 charterparty, ruling that the phrase ‘any amounts due under this charter’ was broad enough to cover unpaid bunker costs. Despite an arbitration clause between the owners and charterers, the sub-charterer was obligated to honor the lien, as it was not a party to the arbitration agreement. This decision reinforces that a properly exercised lien on sub-freights can be an effective tool for owners to recover unpaid sums, even in the presence of disputes between charterers and sub-charterers.

    Read More »

    SHIP SALE – LOSING THE DEAL, LOSING THE DAMAGES? THE LILA LISBON CASE AND THE LIMITS OF MARKET LOSS RECOVERY

    In “The Lila Lisbon” [2025] 1 Lloyd’s Rep 101, the court ruled that a buyer cancelling under Clause 14 of the Norwegian Salesform Memorandum of Agreement is not automatically entitled to loss of bargain damages unless the seller is in repudiatory breach. The case clarifies that failing to deliver by the cancellation date does not constitute non-delivery under the English Sale of Goods Act 1979, as the clause grants the buyer a discretionary right rather than imposing a firm obligation on the seller. This decision highlights the importance of precise contract drafting, particularly in ship sale agreements, where buyers must ensure that compensation for market loss is explicitly provided for.

    Read More »

    CRIMINAL – KIDNAPPING – NO ESCAPE FROM JUSTICE: COURT UPHOLDS LIFE SENTENCE IN HIGH-PROFILE KIDNAPPING CASE

    A 10-year-old child was abducted outside a tuition center, held captive, and released only after a RM1.75 million ransom was paid. The appellants were arrested following investigations, with their statements leading to the recovery of a portion of the ransom money. Despite denying involvement, they were convicted under the Kidnapping Act 1961 and sentenced to life imprisonment and ten strokes of the whip. Their appeal challenged the identification process, the validity of the charge, and the admissibility of evidence, but the court found the prosecution’s case to be strong, ruling that the appellants had acted in furtherance of a common intention and were equally liable for the crime.

    Read More »
    zh_TWZH
    × 联系我们