Azalina: Govt to amend Insolvency Act

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The Insolvency Department is in the midst of drafting several amendments to the Insolvency Act 1967 to improve the bankruptcy administration system, including the adoption of the amendments in previous bankruptcy cases.

Minister in the Prime Minister’s Department (Law and Institutional Reform) Azalina Othman Said said among the proposed amendments is the setting of time limits for the filing of proof of debt forms by creditors (section 42 and schedule C of the act) to avoid the issue of late filing, which could make it difficult to discharge bankrupt individuals.

Another suggestion is to make improvements to the automatic discharge provisions under section 33C of the act so that bankrupt individuals can be discharged from bankruptcy in a shorter time.

“Also being considered is enabling the use of information technology and long-distance communication in the administration of bankruptcy cases to facilitate the customers, stakeholders and the department,” she said in a statement today.

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Azalina said another suggestion is to make improvements to section 42 and schedule C of the act by abolishing the obligation to hold the first meeting of creditors so that the bankruptcy administration can continue immediately.

She said the government is also mulling the possibility of adding a category of cases that can be discharged through the insolvency director-general’s (IDG) certificate of discharge without objection by creditors to bankrupt individuals aged 70 and above.

The category of cases that can be discharged using the certificate is also proposed for bankrupt individuals who are incapacitated because they have been diagnosed as mentally ill under the Mental Health Act 2001.

Azalina said an engagement session with stakeholders to discuss the proposed amendments will be held on February 7.

“The proposed amendments are expected to be tabled to the cabinet soon after the engagement session with the stakeholders,” she said.

Azalina also said 49,133 bankruptcy cases were registered from 2018 to 2022, of which 5,695 were in 2022 alone.

A total of 87,427 cases were discharged by the IDG certificate in the same period.

“Based on 2022 statistics, an average of 16 bankruptcy cases are registered every day. However, the number of bankruptcy cases discharged through the IDG certificate for the same period is 27 per day,” she said.

Azalina said the economy, finance, legislation and society are important elements in the formulation of the Malaysia Madani policy and the government is aware of the challenges faced by bankrupt individuals and the stigma of bankruptcy in society.