How the New Bankruptcy Amendment Act Will Affect Existing Bankruptcy Matters

The new Bankruptcy Amendment Act 2017 has received Royal Assent on 10 May. The amendments will come into force once the Minister gazettes the effective date. In an earlier post, I have highlighted the 10 major changes we will see under these bankruptcy amendments.

As at early May 2017, it was reported that there are around 292,000 Malaysians declared bankrupt. How will the new bankruptcy law affect these existing individuals and will it make it easier for them to achieve a discharge of bankruptcy? I analyse the new law and explain why the amendments may have limited effect on existing bankruptcy cases.

When we read the Bankruptcy Amendment Act 2017, section 60(1) makes it clear that the amendments will not apply to any individual who has been made a bankrupt before this new Act comes into operation. Further, any ongoing bankruptcy proceedings must continue and be concluded under the existing Bankruptcy Act.

For existing bankruptcy matters, there is only one narrow exception. If you are a social guarantor, an individual with disabilities, deceased or suffering from a serious illness, then you can enjoy the new section that allows for a discharge from bankruptcy.

However, even this is quite limited. This particular section – the new section 33B(2A) – merely prevents creditors from objecting to the discharge of bankruptcy. The old discharge of bankruptcy provisions would still apply and where the discharge can only be sought 5 years after the bankruptcy order.

The upshot of all of this is that existing bankruptcies will not enjoy many of the relaxation of the restrictions under the new laws. For example, it does not appear that existing bankrupts can utilise the new automatic discharge provision that allows for a discharge of bankruptcy after 3 years. If there are already pending legal or bankruptcy proceedings against a social guarantor, then the social guarantor cannot utilise the protection under the new amendments.

In conclusion, the new changes may do little in assisting the more than 292,000 individuals who are presently bankrupt. The existing bankruptcy matters will have to seek relief under the existing laws.

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7 thoughts on “How the New Bankruptcy Amendment Act Will Affect Existing Bankruptcy Matters

  1. Fazlin Abu-Hassan 25 May 2017 / 9:53 am

    Hi,

    Just thought of dropping an email to say thank you for your time and effort in doing this write up on your website.

    I work as a legal counsel and these write up does help us in getting a better understanding on certain area and development of law.

    I will definitely link up your article to our MWLEC FB page 🙂

    Have a great day ahead!

    Warmest Regards, Fazlin

    On Thu, May 25, 2017 at 9:39 AM The Malaysian Lawyer wrote:

    > Lee Shih posted: “The new Bankruptcy Amendment Act 2017 has received Royal > Assent on 10 May. The amendments will come into force once the Minister > gazettes the effective date. In an earlier post, I have highlighted the 10 > major changes we will see under these bankruptcy am” >

    Like

    • Lee Shih 25 May 2017 / 2:34 pm

      Thank you very much for the kind words. I really appreciate it when I know that the articles we post up comes in useful for our readers.

      Like

  2. Cheng Kam Wor 18 June 2017 / 10:32 am

    Hello Mr.Lee

    Thanks for this very useful write up. Under normal circumstances or should I say based on past records after how long will the Minister ( of Law? ) gazette the date for the amendments to take effect from the date of obtaining Royal Assent?

    Is it correct to say that any new insolvency cases after the date of Royal Assent will come under the purview of the Amended Bankruptcy Act?

    Your reply will be much appreciated.

    Thank you.

    Cheng

    Like

    • Lee Shih 18 June 2017 / 5:09 pm

      There is normally no typical time period from Royal Assent to the effective date of it coming into force. One reason more time is needed before triggering the effective date is that the new Bankruptcy Rules must be finalised first. This is to take into account all these new changes and the introduction of voluntary arrangement as well.

      Only new insolvency cases after the effective date (i.e. the date the Amended Act actually comes into force) will come under the purview of the Amended Act.

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  3. Vivian 26 June 2017 / 12:19 pm

    Hi, regarding the automatic discharge of bankruptcy after 3years. May I know which is the government office to apply for the discharge? Thanks!

    Like

  4. chew 30 July 2017 / 3:30 am

    i have been a bankrupt since 2012 and also an oku status. can i qualify for discharge under the new act.

    Like

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