Written by Richard Wee and Sai Ganesh
The Insolvency Act is “one of eight steps” that a debtor could engage in to give a creditor a good enough basis to file for enforced sequestration or taking over the assets of the debtor. A creditor must be able to demonstrate that the debtor committed an act of insolvency in order to file a court application for the forced sequestration of the debtor.
The Insolvency Act 1967
A bill has recently been passed to amend the Insolvency Act 1967.
- Section 2 of the Act is amended to introduce a new definition on “remote communication technology” which means a live video link, a live television link or any other electronic means of communication. This definition is the same meaning as assigned in the Courts of Judicature act;
- Clause 3 aims to amend subsection 15(1) to give that “a meeting of creditors may be held as soon as after the making of a bankruptcy order against a bankrupt for the purpose of considering whether a proposal for a composition or scheme of arrangement shall be entertained. With the proposed modification, creditors meetings will only be convened upon request and if necessary, saving time and money during the bankruptcy administration process.
- While on the other hand, clauses 4, 5, 6, 7 and 14 aims to amend sections 17(2), 18, 25(1) and 27(1) and Schedule A due to there being significant amendments.
- Besides that, clause 8 seeks to amend section 33b(2a) of the Act to include two new bankruptcy discharge eligibility categories that can be granted by the Director General of Insolvency without the creditors’ opposition.
- In addition, clause 9 aims to amend section 33c to strengthen the automatic discharge laws and give the Director General of Insolvency the authority to halt a bankrupt’s automatic discharge. Besides that, an announcement of the automatic discharge must be provided on creditors who have filed proofs of debt, and this section also states that a notice of the suspension of an automatic discharge must be placed on both the bankrupt and the creditors who have done so.
- Moreover, in clause 10, it aims to amend sub-paragraph 48(1)(a)(ii) of the Act, to give the Minister the authority to determine the value of any tools used by the bankrupt in the course of his business, as well as the clothing, bedding, and other necessities that the bankrupt, wife, and children will need but which will not be divided among the creditors.
- On the other hand, clause 11 aims to amend section 106 of the Act, which could then give the Minister the authority to specify the amount of the bankrupt’s assets, less any payments made to secured creditors in relation to their securities, at which the bankruptcy proceedings can be handled quickly.
- Plus, clause 12 seeks to amend sub-section 107(1), to give the Minister the authority to specify the amount of the pay and other income.
- Lastly, clause 13 aims to amend to introduce the electronic communication of notices and other documents for service in compliance with the established rules.
In conclusion, with the upcoming amendments it is believed that this act will be much more effective and interpreted easier for everyone.
Published on 20 July 2023