Malaysia Bankruptcy Law

The bankruptcy process in Malaysia is very similar to other countries.

Malaysian bankruptcies are very similar to those in many other countries, with a few key differences. Malaysia focuses on insolvency as the main qualifier for approving bankruptcies. Once a bankruptcy is filed, creditors are identified and lay their claims on the amount that they are owed. The claim process revolves around judgments from the assignee that the court has appointed in the case.

Insolvency

The government of Malaysia grants bankruptcies based on insolvency, which is identified as a debtor's lack of ability to pay off his debts. This is different than many other countries in that they will allow an individual to file some form of bankruptcy regardless of his debt-to-income ratio. Malaysia measures every debtor's case individually for insolvency.

Qualifications

A debtor who wishes to file a bankruptcy in Malaysia must prove that he is insolvent and be more than RM30,000 in debt. Once these facts are proven by mandate, the debtor may begin the process of bankruptcy. He will need to relinquish all of his operating reports and cash flow reports to the director who is investigating his case. Once all fact finding is completed, the debtor will be able to finalize the filing of his petition for bankruptcy

Disqualifications

There are several groups of people that are disqualified from filing a bankruptcy in Malaysia. Debtors cannot be a magistrate or sessions judge or have been nominated for any councilor or local authority positions, they cannot be a trustee by any right, and they cannot be a member of parliament. Owners or directors of limited corporations are disqualified from filing bankruptcy. These disqualifications are final unless the individual received a court order stating otherwise.

Restrictions While in Bankruptcy

Once a bankruptcy is filed, a debtor is held to several restrictions. He may not leave the country while in an active bankruptcy without express sanction of the official assignee of the court. He must report assets and funds that come into his possession that are in excess of RM5,000. He will be required to submit an accounting of his finances at least once every six months. He also will need the written permission of the official assignee to enter into any business transactions or manage any businesses or trade.

Types of Claims

Much like American bankruptcies, there are three main claim types in Malaysian bankruptcies: ordinary creditors, preferential creditors and secured creditors. All creditors are required to obtain a judgment for the amount that they are owed.

References

• Yee, Nantham, Leong & Partners: Bankruptcy & Insolvency
• Malyasia.gov: Bankruptcy