Nature Of Bankruptcy Proceedings

Bankruptcy proceedings are commenced by the presentation of a bankruptcy petition to the court by the creditors. Prior to the presentation of the petition, the debtor must have committed an ‘act of bankruptcy’ as provided for by section 3(1) of the Bankruptcy Act 1967. Under the said section 3(1), the debtor commits an act of bankruptcy if :

(a) in Malaysia or elsewhere, he makes a conveyance or assignment of his property to a trustee or trustees for the benefit of his creditors generally;

(b) in Malaysia or elsewhere, he makes a fraudulent conveyance, gift, delivery or transfer of his property or of any part thereof;

(c) in Malaysia or elsewhere, he makes any conveyance or transfer of his property or of any part thereof, or creates any charge thereon which would under the Bankruptcy Act or any other written law be void as a fraudulent preference if he were adjudged bankrupt;

(d) with intent to defeat or delay his creditors he does any of the following things:

(aa) departs from, or remains out of, Malaysia, or

(bb) departs from, or absents himself from, his house or begins to keep house or closes his place of business, or

(cc) submits collusively or fraudulently to an adverse judgment or order for the payment of money;

(e) execution issued against him has been levied by seizure of his property under process in an action or in any civil proceeding in the High Court, Sessions Court or Magistrates Court where the judgment, including costs, is for an amount of one thousand ringgit or more;

(f) he files in the court a declaration of his inability to pay his debts or presents a bankruptcy petition against himself;

(g) he gives notice to any of his creditors that he has suspended or that he is about to suspend payment of his debts;

(h) he makes to any two or more of his creditor, not being partners, an offer of composition with his creditors or a proposal is not followed arrangement of his affairs, and such offer or proposal is not followed by the registration within fourteen days thereafter of a deed of arrangement with his creditors;

(i) a creditor has obtained a final judgment or final order against him for any amount and execution thereon not having been stayed has served on him in Malaysia, or by leave court elsewhere, a bankruptcy notice under this Act requiring him to pay the judgment debt or sum ordered to be paid in accordance with the terms of the judgment or order, or to secure or compound for it to the satisfaction of the creditor or the court; and he does not within seven days after service of the notice either comply with the requirements of the notice or satisfy the court that he has a counter-claim, set-off or cross demand which equals or exceeds the amount of the judgment debt or sum ordered to be paid and which he could not set up in the action in which the judgment was obtained or in the proceedings in which the order was obtained;

(j) the officer charged with the execution of a writ of attachment or other process makes a return that the debtor was possessed of no property liable to seizure.