Insolvency Act to cut bankruptcy cases

The Insolvency Act 1967, which takes effect beginning last Friday, is expected to assist in reducing the number of bankruptcy cases by 50% to 10,000 cases a year.

Minister in the Prime Minister’s Department Datuk Seri Azalina Othman Said said the figure was based on the average estimate of 20,000 cases annually administered by the Insolvency Department currently.

“The reduction was due to several amendments introduced under the Act, namely the minimum level for bankruptcy which was raised from RM30,000 to RM50,000, social guarantor is not made a bankrupt, and the introduction of the voluntary arrangement,” she said in her speech when launching the Insolvency Act 1967 Enforcement Date in Bangi, Selangor, last Friday.

In addition, she said the automatic release, which was introduced for the first time in the bankruptcy law in Malaysia, is in line with the government’s aspiration for bankrupts to return and contribute to the economy.

“Under this automatic release, bankrupts can be released after three years if they file their personal statements, and fulfil the targeted contribution stipulated in line with international standards practised in developed nations such as the UK, Hong Kong and Australia,” she said.

Azalina said the automatic release also reduced the time required to administer bankruptcy cases, and benefitted the creditors as the dividend could be obtained within a period of three years.

She said it would also enable bankruptcy cases involving four categories, namely social guarantors, those who had died, disabled persons and those suffering from chronic diseases to be released.

From 2013 until August 2017, there were 23,036 bankrupts aged between 25 to 34 years, while there were 1,109 bankrupts aged 25 and below. — Bernama