Insolvency Act - Changes (part 4 of 5)

Welcome to part 4 (of 5) about the amendments to the Insolvency Act 1967 (“IA”).

This week’s article shall touch on Part 6 of the IA namely Small Bankruptcies. This occurs when a bankruptcy order is made and the Director General of Insolvency (“DGI”) reports to the court that the assets (after deducting any sums paid to secured creditors regarding their securities) are unlikely to be more than RM10,000.00.

In such a situation, the court may make an order that bankrupt’s estate be administered in a summary manner wherein the provisions of the IA are subject to the following modifications:-

(a) no appeal can be made from any order of the court (unless with permission);

(b) the bankrupt’s estate if practicable shall be distributed in a single dividend; and

(c) other forms of modifications as may be prescribed by rules made by the Minister with the objective of saving expense and simplifying procedure.

There is a point to note regarding the modifications as set out above. The modifications cannot touch on the examination or discharge of the bankrupt. 

The amendments to the IA bring about change from RM10,000.00 (as referred to above) to now “the value as may be prescribed”.

As for the definition of a wage-earner, it was previously a person who is or has been employed on a salary / wage of not more than RM500.00 per month (excluding temporary allowance and other income not exceeding RM50.00 per month.  

After amendments, there are no specific figures but rather it’s “an amount as may be prescribed”.

Wage-earner comes into play and becomes relevant for public examinations and if there is no bankruptcy order, to attend before the DGI (instead of facing court orders to pay the debt or committal of the person).

In next week’s article, we will look at the remaining amendments to the IA.

The earlier articles on the amendments to the IA:-

Part 1 about the meeting of creditors and remote communication technology be found here.

Part 2 about the discharge of bankruptcy via Certificate of the Director General of Insolvency can be found here.

Part 3 about the automatic discharge of bankruptcy can be found here.