Insolvency Act amendments take effect on Oct 6

PETALING JAYA: The Insolvency Act (Amended) 2023 (A1695) will come into force on Friday (Oct 6), says Datuk Seri Azalina Othman Said.

The Minister in the Prime Minister’s Department (Law and Institutional Reform) stated that the amendment was the result of discussions among several key stakeholders, including the Attorney General’s Department, Federal Court Chief Registrar, Finance Ministry, Bank Negara Malaysia, Inland Revenue Department, Employees Provident Fund, Credit Counselling and Management Agency, and Associations of Bank Malaysia.

In a statement on Thursday (Oct 5), Azalina explained that the main amendment strengthens the provision on bankruptcy release, specifically Section 33C of Act 360. This amendment aims to assist bankrupt individuals in becoming released from insolvency within three to five years after submitting their details.

Azalina further mentioned that two new categories have been included in subsection 33B(2A) of Act 360, which address the types of bankrupt individuals who can be released from bankruptcy through a certificate issued by the director-general of the Insolvency Department, without undergoing the creditors’ objection process.

The two new categories include individuals who are unable to manage their personal affairs due to mental illness, as outlined in the Mental Health Act 2001 (Act 615), and those who are 70 years old and above, as determined at the discretion of the Insolvency Department director-general, and are unable to contribute to their bankruptcy administration.

Azalina emphasized that Section 33C will be applied retrospectively and aligns with the government’s second chance policy. The objective of this policy is to release around 130,000 bankrupt individuals annually after the amendment to Act A1695 takes effect. This number represents half of the current cases managed by the Insolvency Department.

In addition, the amendment eliminates the requirement for creditors to meet with the Insolvency Department director-general, simplifying the administration process.

Azlina also pointed out that the Act includes measures to protect the welfare of bankrupt individuals by assessing the value of assets exempted from division by creditors and establishing the criteria for a case to qualify for summary management.

She concluded by stating that the enforcement of Act A1695 demonstrates the government’s commitment to ensuring that no segment of the population is marginalized from the country’s development. This move also reflects the government’s dedication to providing a second chance to bankrupt individuals, allowing them to continue their lives and contribute to the country’s economic progress.