INSOLVENCY ACT 1967

Insolvency LAWS OF MALAYSIA REPRINT Act 360 INSOLVENCY ACT 1967 As at 1 November 2024 PUBLISHED BY THE COMMISSIONER OF LAW REVISION, MALAYSIA UNDER THE AUTHORITY OF THE REVISION OF LAWS ACT 1968 2024 1 2 Act 360 Laws of Malaysia INSOLVENCY ACT 1967 First enacted … … … … … … 1967 (Act 55 of 1967) Revised … … … … … … 1988 (Act 360 w.e.f. 31 December 1988) Latest amendment made by Act A1695 which came into operation on … … … … … … 6 October 2023 Previous Reprints First Reprint … … … … 2001 Second Reprint … … … … 2006 Third Reprint … … … … 2017 Insolvency LAWS OF MALAYSIA Act 360 INSOLVENCY ACT 1967 ARRANGEMENT OF SECTIONS PRELIMINARY Section 1. Short title and application Interpretation 2. Interpretation Part I VOLUNTARY ARRANGEMENT AND PROCEEDINGS IN BANKRUPTCY Voluntary Arrangement 2a. Voluntary arrangement 2b. Non-application 2c. Intention to propose voluntary arrangement 2d. Interim order 2e. Effect of interim order 2f. Nominee 2g. Registration of nominee 2h. Register of nominees 2i. Meeting of creditors to approve debtor’s proposal 2j. Report of decisions to court 2k. Effect of approval 3 4 Laws of Malaysia Act 360 Section 2l. Review of meeting’s decision 2m. Replacement of nominee before voluntary arrangement concludes 2n. Implementation and supervision of approved voluntary arrangement 2o. Consequence of failure by debtor to comply with voluntary arrangement 2p. Cessation of voluntary arrangement 2q. Fees of nominee Acts of Bankruptcy 3. Acts of bankruptcy Bankruptcy Order 4. Bankruptcy order 5. Conditions on which creditor may petition 6. Proceedings and order on creditor’s petition 7. Debtor’s petition and order thereon 8. Effect of bankruptcy order 9. (Deleted) 10. Discretionary powers as to appointment of interim receiver and stay of proceedings 11. Service of order staying proceedings 12. Power to appoint special manager 13. Advertisement of bankruptcy order 14. (Deleted) Proceedings Consequent on Bankruptcy Order 15. Meeting of creditors 16. Bankrupt’s statement of affairs Public Examination of Bankrupt 17. Public examination of bankrupt Insolvency 5 Composition or Scheme of Arrangement Section 18. 19–23. Power for creditors to accept and court to approve composition or arrangement (Deleted) Consultative Committee 24. (Deleted) 25. Consultative committee 26. (Deleted) Control over Person and Property of Debtor 27. Duties of bankrupt as to discovery and realization of property 28. Arrest of debtor under certain circumstances 29. Release of debtor on security 30. Redirection of letters 31. Discovery of bankrupt’s property 32. Director General of Insolvency to settle list of debtors to the estate Discharge of Bankrupt 33. Discharge of bankrupt by order of court 33a. Discharge of bankrupt by Certificate of Director General of Insolvency 33b. Objection by creditor to discharge of bankrupt under section 33a 33c. Automatic discharge and suspension of automatic discharge 34. Fraudulent settlements 35. Effect of discharge 35a. Discharged bankrupt to give assistance Part II DISQUALIFICATION AND DISABILITIES OF BANKRUPT 36. Disqualification of bankrupt 37. Vacating offices by bankruptcy 6 Laws of Malaysia Act 360 Undischarged Bankrupt Section 38. Duties and disabilities of bankrupt 38a. Power to prevent bankrupt from leaving Malaysia 39. List of undischarged bankrupts to be kept Part III ADMINISTRATION OF PROPERTY Proof of Debts 40. Description of debts provable in bankruptcy 41. Mutual credit and set-off 42. Rules as to proof of debts 43. Priority of debts 44. Preferential claim in case of apprenticeship and in respect of passage money 45. Power to landlord to distrain for rent 46. Postponement of husband’s or wife’s claims Property Available for Payment of Debts 47. Relation back of Director General of Insolvency’s title 48. Description of bankrupt’s property divisible amongst creditors 49. Provisions as to second bankruptcy Effect of Bankruptcy on Antecedent Transactions 50. Restriction of rights of creditor under execution or attachment 51. Property taken in execution 52. Avoidance of voluntary settlement 53. Avoidance of preferences in certain cases 53a. Avoidance of assignment of book debts 53b. Property or proceeds therefrom deemed to be property of Director General of Insolvency Insolvency 7 Section 53c. Fair market value may be fixed on review 54. Protection of bona fide transactions without notice Realization of Property 55. Possession of property by assignee 56. Seizure of property of bankrupt 57. Appropriation of portion of pay or salary to creditors 58. Vesting and transfer of property 59. Disclaimer of onerous property 60. Powers of Director General of Insolvency to deal with property 61. Powers exercisable by Director General of Insolvency subject to orders of court Distribution of Property 62. Declaration and distribution of dividends 63. Joint and separate dividends 64. Provision for creditors residing at a distance, etc. 65. Right of creditor who has not proved debt before declaration of a dividend 66. Final dividend 67. No action for dividend 68. Power to allow bankrupt to manage property 69. Right of bankrupt to surplus Part IV DIRECTOR GENERAL OF INSOLVENCY Appointment 70. Appointment of Director General of Insolvency and other officers Duties 71. Status of Director General of Insolvency 72. Duties of Director General of Insolvency as regards the bankrupt’s conduct 8 Laws of Malaysia Act 360 Section 73. Duties of Director General of Insolvency as to bankrupt’s estate 74. Protection of Director General of Insolvency and person acting under his direction or control Costs 75. Allowance and taxation of costs Receipts, Payments, Accounts, Audit 76. Bankruptcy Estates Account 77a. Insolvency Assistance Fund 79. Director General of Insolvency to furnish list of creditors 77. 78. 80. 81. Investment of surplus funds Inspection and audit of Director General of Insolvency’s accounts Books to be kept by Director General of Insolvency Official examination of Director General of Insolvency’s records Release 82. Release of Director General of Insolvency Official Name 83. Official name of Director General of Insolvency Vacation of Office on Insolvency 84. Office of Director General of Insolvency vacated by insolvency Additional Powers 84a. Additional powers of Director General of Insolvency Control 85. Discretionary powers of Director General of Insolvency and control thereof 86. Appeal to court against Director General of Insolvency 87. Control of court over Director General of Insolvency Insolvency 9 Part V CONSTITUTION, PROCEDURE AND POWERS OF COURT Jurisdiction 88. High Court to be the court having jurisdiction in bankruptcy 89. Exercise in Chambers of jurisdiction 90. Jurisdiction in bankruptcy of Registrar 91. General power of bankruptcy courts Appeals 92. Appeals in bankruptcy Procedure 93. Discretionary powers of the court 94. Consolidation of petitions 95. Power to change carriage of proceedings 96. Continuance of proceedings on death of debtor 97. Power to stay proceedings 98. Power to present petition against one partner 99. Power to dismiss petition against some respondents only 100. Consolidation of bankruptcy proceedings by or against partners 101. Actions by Director General of Insolvency and bankrupt’s partners 102. Actions on joint contracts 103. Proceedings in partnership name 104. Reciprocal provisions relating to Singapore and designated countries Annulment of Bankruptcy Order 105. Power of court to annul bankruptcy order in certain cases Part VI SMALL BANKRUPTCIES 106. Summary administration in small cases 10 Laws of Malaysia Act 360 Section 107. Wage-earner 108. No public examination in small cases Part VII FRAUDULENT DEBTORS AND CREDITORS 109. Punishment of fraudulent debtors 110. Bankrupt failing to keep proper account 111. Bankrupt incurring debt without reasonable ground of expectation of paying it 112. Penalty for absconding with property 113. Penalty for absconding in order to avoid service of bankruptcy process or embarrass bankruptcy proceedings 114. Penalty on fraudulently obtaining credit, etc. 115. Penalty on false claims, etc. 116. Debts incurred by fraud 117. (Deleted) 117a. Sessions Court to have full jurisdiction to try offences 118. Criminal liability after discharge or composition 119. Form of charge Part VIII SUPPLEMENTAL PROVISIONS Application of Act 120. Application to married women 121. Exclusion of corporations and companies 122. Administration in bankruptcy of estate of person dying insolvent General Rules 123. Power to make rules Insolvency Fees Section 124. Fees Evidence 125. Gazette to be evidence 126. Evidence of proceedings at meetings of creditors 127. Evidence of proceedings in bankruptcy 128. Swearing of affidavits 129. Death of witness Notices 130. Service of notices Formal Defects 131. Formal defect not to invalidate proceedings Stamp Duty 132. Exemption of deeds, etc., from stamp duty Corporations, Firms and Mentally Disordered Persons 133. Acts of corporations, firms and mentally disordered persons Unclaimed Funds or Dividends 134. Unclaimed or undistributed money Bankrupt’s Books 135. Access to bankrupt’s books 11 12 Laws of Malaysia Repeals and Special Provisions Section 136. (Omitted) 137. Transitional provisions for States of Malaya 138. Jurisdiction of District Officers, Sarawak and Sabah 139. Transitional provisions for Sarawak and Sabah Schedule A Schedule B (Deleted) Schedule C Act 360 13 Insolvency LAWS OF MALAYSIA Act 360 * INSOLVENCY ACT 1967 An Act relating to the insolvency and bankruptcy of an individual and a firm and for connected matters. [30 September 1967] BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in Parliament assembled, and by the authority of the same, as follows: PRELIMINARY Short title and application 1. (1) This Act may be cited as the *Insolvency Act 1967. (2) This Act shall apply throughout Malaysia. Interpretation Interpretation 2. In this Act, unless the context otherwise requires— “advocate” means any person entitled to practise as an advocate or as a solicitor or as an advocate and solicitor under any law in any part of Malaysia; “affidavit” includes attestation on honour; “available act of bankruptcy” means any act of bankruptcy available for a bankruptcy petition at the date of the presentation of the petition on which the bankruptcy order is made; *NOTE—see sections 4 and 5 of the Bankruptcy (Amendment) Act 2017 [Act A1534]. 14 Laws of Malaysia Act 360 “bankruptcy petition” means a creditor’s petition or a debtor’s petition for bankruptcy; “Chief Judge” means the Chief Judge of the High Court in Malaya or of the High Court in Sabah and Sarawak, as the case may require; “consultative committee” means the committee appointed under section 25; “the court” means the court having jurisdiction in bankruptcy under this Act; “debt provable in bankruptcy” or “provable debt” includes any debt or liability by this Act made provable in bankruptcy; “Director General of Insolvency” includes any officer appointed under section 70 and authorized to exercise the powers of the Director General of Insolvency; “gazetted” means published in the official Gazette of Malaysia or of any State (as the case may require) including any supplement or Extraordinary Gazette; “general rules” includes forms; “goods” includes all chattels personal; “liability” includes any compensation for work or labour done, any obligation or possibility of an obligation to pay money or money’s worth on the breach of any express or imp