Insolvency Act Amendments 2023
Insolvency Act Amendments 2023

Insolvency Act Amendments 2023

Latest Development on Insolvency Malaysia

The Insolvency Act (Amended) 2023 will come into force on Friday (Oct 6), says Datuk Seri Azalina Othman Said.

The Minister in the Prime Minister's Department (Law and Institutional Reform) said the amendment resulted from discussions between the Attorney General's Department, Federal Court Chief Registrar, Finance Ministry, Bank Negara Malaysia, Inland Revenue Department, Employees Provident Fund, Credit Counselling and Management Agency and Associations of Bank Malaysia.

Key Summarise

Here's a summary of the key points from the Insolvency (Amendment) Act 2023

Discharge from Bankruptcy

The Insolvency (Amendment) Act 2023, effective from 06.10.2023, brings changes to bankruptcy regulations.

It expands the categories of bankrupt individuals who are protected from objections by creditors when a certificate of discharge from bankruptcy is issued by the Director General of Insolvency (DGI).

The existing Insolvency Act 1967 prohibits creditors from objecting to discharge for certain categories, including social guarantors, persons with disabilities, deceased individuals, and those with serious illnesses.

The Amending Act adds two new groups: bankrupts with mental disorders certified by a psychiatrist from a government hospital and bankrupts aged 70 or older, deemed incapable of contributing to estate administration by the DGI.

Automatic Discharge from Bankruptcy

The Amending Act revises Section 33C of the Act regarding a bankrupt's right to automatic discharge.

Previously, automatic discharge occurred after three years if the bankrupt met certain criteria.

Post-amendment, automatic discharge happens three years from the submission of the statement of affairs if the bankrupt pays a sum determined by the DGI for estate administration purposes.

This change is expected to benefit a significant number of bankrupt individuals in Malaysia, with an estimated 130,000 people being discharged from bankruptcy.

Suspension of Automatic Discharge from Bankruptcy

The Amending Act introduces the concept of suspending automatic discharge for up to two years if the bankrupt fails to comply with their obligations under the Act.

The suspension is effective upon notice from the DGI to creditors who filed a proof of debt within six months before the original three-year mark.

Remote Communication Technology and Electronic Communications:

Section 14 of the Amending Act allows the DGI to hold creditor meetings using remote communication technology, reflecting a transition to remote hearings due to the COVID-19 pandemic.

Previously, meetings were held at locations deemed convenient for the majority of creditors.

Section 13 of the Amending Act amends Section 130 of the Act to permit electronic means for serving notices when consent is obtained.

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Published : 12-Oct-2023

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