The Bankruptcy Act in Malaysia

The Bankruptcy Act in Malaysia was passed in 1967. Besides clearly defining what bankruptcy is in Malaysia, the act established the procedures of the bankruptcy court and created a new government position to oversee bankruptcy-related issues.

Types

Malaysia has both voluntary and involuntary bankruptcies. Individuals may choose to file for bankruptcy. However, they are also forced into bankruptcy if they leave the country for an extended period of time while having outstanding debts, if they transfer their debts to a trustee or if they intentionally mislead one of their creditors.

Time Frame

The act defines the role of the bankruptcy court and the steps involved in getting an individual out of bankruptcy:

1) A receiving order is issued that declares an individual bankrupt.
2) There is a meeting of the bankrupt individual's creditors and his assets are examined by the court.
3) The judge creates a plan by which the bankrupt individual or his trustee (someone who agrees to pay a bankrupt individual's debt) agrees to pay back a percentage of the debts over a period of time, as determined by the court.
4) Upon completion of payment to the creditor, the bankrupt individual's bankruptcy is officially discharged.

Effects

The act created the position of Director General of Insolvency, which oversees bankruptcy procedures in Malaysia in the role of a go-between for creditors and debtors. The Director General of Insolvency is underneath the Minister of Finance.

References

• Malaysia Department of Insolvency: Bankruptcy Act 1967