Defending A Bankruptcy Proceeding Under The Insolvency Act 1967

How can I defend against any bankruptcy proceedings filed against me?

Generally, you can defend and/or resist the bankruptcy proceedings against you at any stage. However, under the Insolvency Act 1967, it is stated expressly that you can only resist such application by the creditor during the bankruptcy stage, that is within seven days upon receipt of the bankruptcy notice by the creditors.

It is important all bankruptcy documents (court documents) have to be served upon you personally. The method of service engaged by the creditors may be a good technical defence for the bankrupt to defend and to even strike out the case filed by the creditors. Consult a solicitor for more details on this. The court takes a very strict approach in bankruptcy proceedings as it is viewed by the court to have serious consequences on the bankrupt and it is very common that the court may strike out cases filed in by creditors irrespective of the merits of the cases but purely on technical defect in the document (e.g.: failure or non-proper service of documents resulting in bankrupt having no knowledge of documents filed in court) as it is viewed that such actions would greatly prejudice the bankrupt.

During the time which the bankruptcy proceedings filed against you, you have to be a resident or domicile within Malaysia otherwise you can apply to set aside any order granted by the court against you.


Who can be made a bankrupt in Malaysia?

An individual who:

  • was present in Malaysia; or
  • ordinarily resided or had a place of residence in Malaysia; or
  • was carrying on a business in Malaysia either personally or by means of an agent; or
  • was a member of a firm of partnership which was carrying on a business in Malaysia.

Whenever you defend any bankruptcy proceedings, as stated above, it is not necessary to argue the case based on merits (as sometimes, you may think and admit that you owe the money to the creditor but only that you don’t have any funds to pay him), you can argue the case based on a number of technical issues, namely:

(a) the interest calculated is incorrect as it is very important that the creditor gets the figure exactly right; and

(b) non-compliance with the Insolvency Act; and (c) non-proper service of court documents and etc.