Discharge, Disqualification, Annulment.
Discharge after full settlement with Creditors Assisted by Lawyers
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SOCIAL GUARANTOR AND AUTOMATIC DISCHARGE
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Discharge & Annulment with Assistance of Lawyers
The article below sets out some general information in relation to Bankruptcy in Malaysia, including the Act of Bankruptcy, Disqualification and Discharge from Bankruptcy.
Bankruptcy in Malaysia General Information
1 In Malaysia the law provides that the minimum sum of debt owing by a debtor is RM30,000 before a creditor may commence bankruptcy proceedings against the debtor. The creditor normally takes a course of legal action and obtains a judgment upon the debt.
2 One of the possible modes of execution of judgment is a Writ of Seizure and Sale or the creditor may issue a bankruptcy notice and serve the same on the debtor. Upon the failure of the debtor to settle the debt in compliance with the said notice, the debtor commits an act of bankruptcy, the creditor may commence a bankruptcy action against the debtor.
The Act of Bankruptcy
Ways in which an act of bankruptcy is committed
3 The act of bankruptcy is required prior to the commencement of any bankruptcy proceedings. The debtor may commit an act of bankruptcy in a number of situations. The categories of acts of bankruptcy set out in section 3(1) of the Bankruptcy Act are as follows:
3(1) A debtor commits an Act of bankruptcy in each of the following cases:
(a) if in Malaysia or elsewhere he makes a conveyance or assignment of his property to a trustee or trustees for the benefit of his creditors generally;
(b) if in Malaysia or elsewhere he makes a fraudulent conveyance, gift, delivery or transfer of his property or of any part thereof;
(c) if in Malaysia or elsewhere he makes any conveyance or transfer of his property or of any part thereof, or creates any charge thereon which would under this or any other written law for the time being in force be void as a fraudulent preference if he were adjudged bankrupt;
(d) if with intent to defeat or delay his creditors he does any of the following things;
(i) departs out of Malaysia or being out of Malaysia remains out of Malaysia, or
(ii) departs from his dwelling-house or otherwise absents himself, or begins to keep house or closes his place of business, or
(iii) submits collusively or fraudulently to an adverse judgment or order for the payment of money;
(e) if execution issued against him has been levied by seizure of his property under process in an action or in any civil proceeding in the High Court, Sessions Court or Magistrates Court where the judgment, including costs, is for an amount of one thousand ringgit or more;
(f) if he files in the court a declaration of his inability to pay his debts or presents a bankruptcy petition against himself;
(g) if he gives notice to any of his creditors that he has suspended or that he is about to suspend payment of his debts;
(h) if he makes to any two or more of his creditors, not being partners, an offer of composition with his creditors or a proposal for a scheme of arrangement of his affairs, and such offer or proposal is not followed by the registration within fourteen days thereafter of a deed of arrangement with his creditors, in accordance with the rules for the time being in force for the registration of deeds of arrangement under this Act;
(i) if a creditor has obtained a final judgment or final order against him for any amount and execution thereon not having been stayed has served on him in Malaysia, or by leave of the court elsewhere, a bankruptcy notice under this Act requiring him to pay the judgment debt or sum ordered to be paid in accordance with the terms of the judgment or order with interest quantified up to the date of issue of the bankruptcy notice, or to secure or compound for it to the satisfaction of the creditor or the court; and he does not within seven days after service of the notice in case the service is effected in Malaysia, and in case the service is effected elsewhere then within the time limited in that behalf by the order giving leave to effect the service, either comply with the requirements of the notice or satisfy the court that he has a counter-claim, set off or cross demand which equals or exceeds the amount of the judgment debt or sum ordered to be paid and which he could not set up in the action in which the judgment was obtained or in the proceedings in which the order was obtained:
Provided that for the purposes of this paragraph and of section 5 any person who is for the time being entitled to enforce a final judgment or final order shall be deemed to be a creditor who has obtained a final judgment or final order;
(j) if the officer charged with the execution of a writ of attachment or other process makes a return that the debtor was possessed of no property liable to seizure; and for the purposes of this paragraph the date when the writ is lodged with the officer shall be deemed to be the date of the act of bankruptcy.
4 After the act of bankruptcy is committed, the creditor files a Bankruptcy Petition.
Receiving and Adjudicating Orders
5 The Receiving and Adjudicating Orders, generally known as the AORO may be granted after hearing the Bankruptcy Petition if the creditor makes out sufficient ground against the debtor.
Disqualifications of Bankrupt
6 The Disqualifications of Bankrupt are set out in section 36 of the Bankruptcy Act as follows:
36(1) Where a debtor is adjudged bankrupt he shall subject to this Act, be disqualified for-
(a) being appointed or acting as a Sessions Court Judge or Magistrate;
(b) being nominated or elected to or holding or exercising the office of Councillor of a local authority.
36(2) The disqualifications to which a bankrupt is subject under this section shall be removed and cease if and when-
(a) the adjudication of bankruptcy against him is annulled; or
(b) he obtains from the court his discharge with a certificate to the effect that his bankruptcy was caused by misfortune without any misconduct on his part.
36(3) The court may grant or withhold such certificate as it thinks fit, but any refusal of such certificate shall be subject to appeal.
Consequences of refusal of discharge
7 The Consequences of refusal of discharge of Bankrupt are set out in section 38 of the Bankruptcy Act as follows:
38(1) Where a bankrupt has not obtained his discharge-
(a) the bankrupt shall be incompetent to maintain any action (other than an action for damages in respect of an injury to his person) without the previous sanction of the Director General of Insolvency;
(b) the bankrupt shall once in every six months render to the Director General of Insolvency an account of all moneys and property which have come to his hands for his own use during the preceding six months, and shall pay and make over to the Director General of Insolvency so much of the same moneys and property as have not been expended in the necessary expenses of maintenance of himself and his family;
(ba) notwithstanding paragraph (b), the bankrupt shall immediately report to the Director General of Insolvency the receipt of any moneys, property or proceeds in any form from property the value of which exceeds five hundred ringgit and which moneys, property or proceeds do not form part of his usual income and the bankrupt shall, as soon as may be required by the Director General of Insolvency, pay or make over such moneys, property or proceeds to the Director General of Insolvency;
(bb) the bankrupt shall immediately inform the Director General of Insolvency if there is any change of his home address;
(c) the bankrupt shall not leave Malaysia without the previous permission of the Director General of Insolvency or of the court;
(d) the bankrupt shall not, except with the previous permission of the Director General of Insolvency or of the court, enter into or carry on any business either alone or in partnership, or become a director of any company or otherwise directly or indirectly take part in the management of any company;
(e) the bankrupt shall not, except with the previous permission of the Director General of Insolvency or of the court, engage in the management or control of any business carried on by or on behalf of, or be in the employment of, any of the following persons, namely-
(i) his spouse;
(ii) a lineal ancestor or a lineal descendant of his or a spouse of such ancestor or descendant; or
(iii) a sibling of his or a spouse of such sibling.
(1A) In granting permission under paragraph (1)(c), (d) or (e), the Director General of Insolvency or the court may impose such conditions as he or it may think fit.
(2) A bankrupt who makes default in performing or observing this section or a condition imposed pursuant to subsection (1A) shall be deemed guilty of a contempt of court, and shall be punished accordingly on the application of the Director General of Insolvency.
Disqualification as Director and Bank Signatory
Generally a bankrupt may not be a company director and bank signatory, it will be embarrassing if the bankers should write a letter to inform the respective companies that cheques issued by a particular person is no longer valid.
Discharge as a Bankrupt With Assistance of Lawyer
If you would like to find out about getting a Discharge as a Bankrupt please click on the article below to fill up a form.