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.