Thursday 28 Mar 2024
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This article first appeared in The Edge Financial Daily, on March 30, 2017.

 

KUALA LUMPUR: Dewan Rakyat yesterday passed the Bankruptcy (Amendment) Bill 2016, which has been hailed as more borrower-friendly, after the second and third readings that took place on the same day.

Under the amended law, debtors will be granted an automatic discharge from bankruptcy after three years, though they may still have to settle part of the debt termed target contribution, which is an amount set by the Insolvency Department’s director-general (DG) based on the total debt, which the DG has the power to order the debtor to repay.

The third reading took place after Minister in the Prime Minister’s Department Datuk Seri Azalina Othman Said satisfied Beruas member of parliament (MP) Ngeh Koo Ham’s query on whether granting debtors automatic discharge from bankruptcy would compromise creditors’ positions.

Earlier, Azalina also highlighted that though the discretion to not impose bankruptcy on an individual lies with the Insolvency Department DG, creditors have the right to file their opposition to such an act through the court, even under the current law.

“Therefore, the DG’s decision will still have to depend on the court’s decision,” she said in response to Pandan MP Mohd Rafizi Ramli’s concern about possible abuse of power by civil servants to rescue an individual from bankruptcy.

Meanwhile, among the amendments to the original Bankruptcy Act 1967 that were passed under the bill were the prevention of bankruptcy actions against social guarantors and raising the minimum debt threshold for the initiation of bankruptcy proceedings to RM50,000 from the present RM30,000.

“From the government’s point of view, we are trying to protect social guarantors because these people are guaranteeing for things like education loans. I agree that we need to teach our youth the responsibility to repay their debts, but social guarantors are innocent — they are not doing it (guaranteeing the loan) for a profit,” Azalina explained.

She also revealed that Malaysia had recorded 169,927 bankruptcy cases since the economic crisis in 2008, until end-2016.

The bill was passed after a majority vote on completion of the third reading.

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