On September 2020, the Insolvency (Amendment) Bill 2020 (“Insolvency Bill”) was passed with a simple voice majority in the Dewan Rakyat without any amendments. The Bill seeks to amend the Insolvency Act 1967.
Aim of Amendment
The amendment is intended to mitigate the financial ramifications of the unprecedented COVID-19 pandemic and to provide individuals with additional protection from the threat of bankruptcy.
Amendments
- Minimum Debt Threshold – Section 5(1A) of the Act
- The minimum debt threshold is increased from the RM50,000 to RM100,000. This means that a person would need to have a debt of RM100,000, minimum, before they can be said to be bankrupt, and it would be harder for debtors to start bankruptcy proceedings against them.
- The Minister will be empowered after consultation with the Minister of Finance, to amend the minimum threshold in section 5(1A) of the act for a specific time period, if the Minister is satisfied that there are special circumstances and that it would not be contrary to public interest to do so.
- Saving Provision
- Any bankruptcy presented and still pending immediately before the coming into operation of the Insolvency (Amendment) Bill 2020 will be continued or concluded under the Insolvency Act 1967 as if the Insolvency Act 1967 had not been amended by the Insolvency (Amendment) Bill 2020.
The Temporary Measures Bill provides that in the event of any conflict or inconsistency between the provisions of that Bill and any other written law, including the Insolvency (Amendment) Bill 2020, the provisions of Temporary Measures Bill shall prevail and the conflicting provision shall be deemed to be superseded to the extent of the conflict. In light of this overriding provision in the Temporary Measures Bill, it would appear that the Minister may not be able to exercise his right to vary the minimum debt threshold pursuant to the proposed new section 5(1A) of the Insolvency Act 1967 while the insolvency-related provisions in the Temporary Measures Bill remain in force.
