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In June 2023, Parliament amended the Insolvency Act 1967 (“IA 1967“) via the Insolvency (Amendment) Act 2023 (“Amendment Act“). 

Amongst others, Section 33C of the IA 1967 was amended as follows (with the amendments in red):

Automatic discharge and suspension of automatic discharge

(1) A bankrupt shall be discharged from bankruptcy under this section on the expiration of three years from the date of the submission of the statement of affairs under subsection 16(1)—

(a) if the bankrupt has achieved amount of target contribution of his provable debt; and

(b) if the bankrupt has complied with the requirement to render an account of moneys and property to the Director General of Insolvency under paragraph 38(1)(b).

(1) A bankrupt shall be—

(a) discharged automatically from bankruptcy on the expiration of three years from the
date of the submission of the statement of affairs under subsection 16(1)—

(i) if the bankrupt has paid the sum of money determined by the Director General of Insolvency, for the purposes of the administration of the bankrupt’s estate, having regard to the financial ability of the bankrupt; and

(ii) if the bankrupt has complied with the requirement to render an account of moneys and property to the Director General of Insolvency under paragraph 38(1)(b); or

(b) suspended from the automatic discharge on the expiration of three years from the date of the submission of the statement of affairs under subsection 16(1) for a period not exceeding two years if the bankrupt has failed to comply with his duties and obligations under the Act.

(2) Contribution of the bankrupt’s provable debt referred to in paragraph(1)(a) shall be determined by the Director General of Insolvency and For the purposes of subparagraph (1)(a)(i), in determining the sum of money to be paid by the bankrupt the Director General of Insolvency shall take into account—

(a) the provable debt of the bankrupt;

(b) the current monthly income of the bankrupt;

(c) the extent to which the current monthly income of the bankrupt’s spouse may contribute to the maintenance of the bankrupt’s family;

(d) the monthly income that the bankrupt may reasonably be expected to earn over the duration of the bankruptcy, taking into account—

(i) the previous and current monthly income of the bankrupt;

(ii) the educational and vocational qualifications, age and work experience of the bankrupt;

(iii) the range of monthly income earned by persons who are employed in occupations, positions or roles similar to that in which the bankrupt is, or can be expected to be, employed

(iv) the effect which the bankruptcy may have on the bankrupt’s earning capacity or other income;

(v) the prevailing economic conditions; and

(vi) the period of time during which the bankrupt is likely to be capable of earning a meaningful income;

(e) the reasonable expenses for the maintenance of the bankrupt and the bankrupt’s family; or

(f) the property of the bankrupt under paragraph 48(1)(b) which may be realized during the period of three years.; and

(g) the debt provable in bankruptcy.

(2A) For the purposes of subsection (2) and the administration of the bankrupt’s estate, the Director General of Insolvency may request the bankrupt to provide such further information as may be determined by the Director General of Insolvency including information in respect of the income, expected income and properties of the bankrupt.

(3) For the purposes of a discharge under this section an automatic discharge under paragraph 1(a), the Director General of Insolvency shall serve a notice of the discharge to each of his creditors automatic discharge on each creditor who has filed a proof of debts not less than six months before the expiration of the period referred to in subsection (1) paragraph 1(a), but such notice shall not be served earlier than a year before the expiration of such period.

(4) A creditor who wishes to object to the discharge under this section automatic discharge under paragraph 1(a) shall, within twenty-one days from the date the notice in subsection (3) is served on him, make an application as prescribed to the court for an order to suspend the discharge under this section, but no objection shall be made except on the following grounds:

(a) that the bankrupt has committed any offence under this Act or under section 421, 422, 423 or 424 of the Penal Code;

(b) that the discharge under this section would prejudice the administration of the bankrupt’s estate; or

(c) that the bankrupt has failed to co-operate in the administration of estate.

(5) A creditor who fails to file an application in accordance with subsection (4) is deemed to have no objection to the discharge. 

(6) A notice of application under subsection (4) shall be served on the Director General of Insolvency and the bankrupt at least fourteen days before the date of hearing of the application and the court shall hear the Director General of Insolvency and the bankrupt before making an order on the application.

(7) Upon an application made under subsection (4), the court may, if it thinks just and expedient—

(a) dismiss the application and approve the discharge under this section; or

(b) suspend the discharge under this section for a period of two years.

(8) Where the court makes an order under paragraph (7)(b), the bankrupt shall—

(a) continue to fulfil his duties and obligations under this Act during that period; and

(b) be discharged automatically at the end of the two years’ period.

(8A) For the purposes of suspension of an automatic discharge under paragraph (1)(b), the Director General of Insolvency shall serve a notice of the suspension of the automatic discharge on the bankrupt and on each creditor who has filed a proof of debts not less than six months before the expiration of the period referred to in paragraph (1)(b), but such notice shall not be served earlier than a year before the expiration of such period.

(8B) The suspension of the automatic discharge shall be effective on the date stated in the notice under subsection (8A).

(8C) Where the Director General of Insolvency suspends the automatic discharge under paragraph (1)(b), the bankrupt shall—

(a) continue to fulfil his duties and obligations under this Act during that period; and

(b) be discharged automatically at the end of the period of suspension.”

(9) The Director General of Insolvency shall, upon the application of any interested person and payment of the prescribed fee, issue a certificate of automatic discharge to the applicant—

(a) upon the making of an order under paragraph(7)(a); or

(b) where there is no objection under subsection (4), on the expiration of the period referred to in paragraph(1)(a).; or

(c) on the expiration of the period referred to in paragraph (8c)(b)

On 5th October 2023, via P.U. (B) 437/2023, the Minister in the Prime Minister’s Department (Law and Institutional Reforms) appointed 6th October 2023 as the date for the provisions of the Amendment Act to come into force. 

Section 33C of the IA 1967 (as amended in red above) would apply retrospectively subject to Section 16 of the Amendment Act. 

Disclaimer: The contents of this article are intended for information dissemination and academic discussion only and should not be construed as legal advice on a specific set of facts or circumstances. Should you require legal assistance, you may contact us via email (liti@pelim.my) or via WhatsApp/telephone call (+6011-5672 7813).