Transcription

1 Insolvency Law LAD5093 DR. ZULKIFLI HASAN

2 Bankruptcy Winding-up CONTENTS

3 Introduction Insolvency law is concerned with companies and individuals who are debtors and who are unable to repay their debts. Personal Insolvency Corporate Insolvency

4 Relevant Laws Bankruptcy Act 1967 Bankruptcy Rules 1969 Companies Act 1965 Companies (Winding-up) Rules 1972

5 What is bankruptcy? Bankruptcy is a process where a debtor is declared a bankrupt pursuant to an Adjudication Order made by the High Court against the debtor if he is unable to pay his debts of at least RM30,

6 Who is a debtor? A debtor is a person subject to the bankruptcy jurisdiction of the court under S 3(3) of the Bankruptcy Act 1967, and at the time the act of bankruptcy is committed: Was personally present in Malaysia; or Ordinarily resided or had a place of residence in Malaysia; or Was carrying on business in Malaysia either personally or by means of an agent; or Was a member of a firm of partnership which was carrying on business in Malaysia.

7 How? The High Court makes a Receiving Order and Adjudication Order after a bankruptcy petition has been presented. 1. Creditor s petition 2. Debtor s Petition

8 Creditor s Petition An act of bankruptcy (S 3(1) of the BA 1967) by the D must have taken place within 6 months prior to the presentation. BN against the debtor: Is domiciled in Malaysia; or Within 1 year b4 the date of the presentation of the petition has: Ordinarily resided in Malaysia; or Had a dwelling house in Malaysia; or Had a place of business in Malaysia; or Carried on business in Malaysia personally or by means of an agent; or Is, or has been within 1 year before the date of the presentation of the petition, a member of a firm or partnership which has carried on business in Malaysia by means of a partner or partners or an agent or manager.

9 Debtor s Petition A DP is by itself an act of bankruptcy. To make himself a bankrupt in order to protect himself from his creditors claim. No requirement that a minimum amount of debt must be owed before a debtor s petition can be presented. After its presentation, a debtor s petition cannot be withdrawn without the leave of the court. The petition (Form 3 of Bankruptcy Rules 1969) is to be filed at the court of the State in which the debtor resides. Deposit with the DGI RM1, The court will not accept the petition for filing unless the receipt of the DGI for the deposit is produced. A sealed copy of the debtor s petition must then be served on the DGI by post. On the hearing of the debtor s petition, the Court will make a Receiving Order as well as an Adjudication Order.

10 Factors to Consider In monetary claims, JD is the person against whom the judgment or order is made or given. To consider if it is worth to commence a bankruptcy action. The total judgment debt must be more than RM30, Where the judgment debtor has not complied with the judgment or order made, may commence bankruptcy proceedings against the judgment debtor to recover the same.

11 Cont Judgment debtor could be in debt to several other individuals or companies. Once a debtor has been adjudged a bankrupt, other creditors will file in the Proof of Debt form and Proxy to be entitled to share in any distribution from the estate of the bankrupt. The distribution of the estate is according to the priority of the creditors' claim.

12 Bankruptcy Rules 1969 Bankruptcy Proceedings 1. Judgment Serve to Debtor 2. BN & Request to Issue BN BN valid for 3 90 days 7 days notice in BN Serve to the JD by personal service by substituted service 3. Filing Affidavit of Service of the BN 4. Filing Creditors Petition & Affidavit verifying the Petition Must be filed within 6 months from the date of filing BN

13 Cont.. 5. Serve to Insolvency Department RM2, deposit Copy of sealed Judgment; Copy of BN and Request to issue BN Copy of Affidavit of Service BN Copy of Creditors Petition & Affidavit verifying the Petition 6. Serve Creditors Petition & Affidavit verifying the Petition to the JD

14 Cont days b4 hearing of CP Petitioner must serve to DGI: Original sealed Judgment; Original BN, Copy of Request to issue BN, Copy of Affidavit of Service BN, Original CP, Copy of Affidavit verifying the Petition and all other pleadings and cause paper such as copy of Affidavit of Service 8. Hearing of CP before Registrar Hearing will not be heard until the expiration of 8 days from the service of CP to the JD JD is allowed to file Notice of intention to show cause 9. Registrar will issue Adjudication Order and Receiving Order (Perintah Penghukuman & Perintah Penerimaan)

15 Restrictions Restriction to go abroad, Acting as a director, Carrying on business and requirement to contribute to your bankruptcy estate regularly for the benefit of the creditors. To give up assets including your home and cars. There is no automatic discharge from bankruptcy in Malaysia. May be discharged either by the Court or the DGI subject to any creditor s objection.

16 Winding-Up Winding up is also known as "liquidation". Where a company cannot pay its debt as and when it falls due, a company is insolvent. Winding up means where under the companies law, an insolvent company in order to discharge its liabilities, the control of the company's affairs will be undertaken by a form of external administration under a person called a "liquidator" who will prepare for the company's dissolution.

17 Corporate Insolvency The CA 1965 S 218(2): a company shall be deemed insolvent if a creditor to whom a company owes more than RM$ and such sum is due for payment, serves a written notice is given or to secure or compound such sum to the satisfaction of the creditor. A company that is insolvent will cease business and go into liquidation after being wound up by the Court. The company will be struck-off from the register of companies and the assets of the company will be liquidated or sold off. The proceeds of sales will be distributed according to law.

18 Modes of Winding-up Winding up of a company is the process whereby its life is ended and its property administered for the benefit of its creditors and members. Modes of Winding up - (I) compulsory winding up ie., by Court (s 218) (Ii) voluntary winding up; (s 254)

19 Winding-up Procedure Companies (Winding-up Rules) 1972de 1. Issue of Statutory Notice of Demand 2. lapse of 3 weeks and no payment made 3. Winding-up Petition Form 2 4. File Affidavit in F7 to verify the petititon 5. service of petition and affidavit 6. file affidavit of service

20 Cont 7. to advertise in 2 local dailies twice 7 clear days b4 hearing 8. File of affidavit of compliance 9. Petitioner/Solicitor to appear on hearing date 10. Debtor may oppose the petition by filing and servicing affidavit in opposition (AIO) 7 days b4 hearing 11. Petitioner may file and serve affidavit in reply within 3 days upon receipt of AIO.

21 Cont 12. any person who intends to appear during hearing, must file notice of intention to appear F8 13. The ct may dismiss the petition or grant an order. 14. Notice of winding-up must be gazzetted and advertized in F Service of the notice on appointed liquidator or CCM, debtor. Must inform the liquidator in F10 within 14 days of the order.