Bankruptcy and the Management of Debtors and Creditors in Malaysia

According to a recent news item in the New Straits Times, creditors will not be able to present bankruptcy petitions against debtors unless they can prove that all avenues were made to trace the latter for repayments, and delivery of any notices actually reached them. This is under a planned reform of the Bankruptcy Act 1967.

Currently, under the act, only social guarantors are given this sort of protection as it required creditors to exhaust all avenues to recover debts owed to them by debtors.

Insolvency Department deputy director-general Haini Hassan said the reform would also see the end of creditors easily passing the bulk of work to the department to do retrieval of monies from debtors by liquidating their assets. “There is also a proposal for creditors to be given two to three years to do that before filing the petition,” she said in an interview.

The department is also planning to make it a punishable offence (in addition to the current citation for contempt of court) for bankrupts, who failed to file their Statement of Affairs to the department within 21 days after being declared so.

Haini said these reform plans would not only enable better management by both creditors and the department but would also keep the number of bankrupts in the country under control.

Haini also said it was worrying that out of the 218,561 bankrupts in the country, 60 percent were not even aware that they had been declared bankrupt.