KUALA LUMPUR (May 22): Lawmakers are set to debate and vote this week on a Bill that would see at least 130,000 people freed from bankruptcy if passed.

The government has proposed to amend the Insolvency Act 1967 to include improvements to the automatic bankruptcy discharge mechanism, as it looks to give bankrupt individuals a second chance to rebuild their lives.

Minister in the Prime Minister’s Department (Law and Institutional Reforms) Datuk Seri Azalina Othman said the Insolvency (Amendment) Bill 2023 will be tabled for second reading sometime this week, after the first reading was tabled in Parliament on Monday (May 22).

The current Dewan Rakyat meeting will sit until June 15, and then resume on Oct 9 to Nov 30. 

At the second reading, the Bill is discussed and debated by the 222 members of Parliament. At the third reading, the minister or his deputy will formally submit it to a vote for approval. A simple majority is usually required to pass the Bill. Should the Bill pass, it is sent to the Dewan Negara, where the three readings are carried out again.

Previously in March, Azalina said at least 130,000 people of the total 260,000 bankruptcy cases recorded as of early this year, would be freed from bankruptcy when the amendments are passed.

“The proposed amendment to the Insolvency Act seeks to strengthen the provisions relating to automatic discharge, provide for a more effective administration of the estate of the bankrupts in Malaysia and to discharge the bankrupts within a short period of time for better contribution to the nation’s economic development,” Azalina said in a statement.

She added that the proposed amendments to the Act also includes the use of technology in the administration of insolvency cases, a mandatory requirement of holding the first meeting of creditors and the review of valuations for matters related to bankruptcy.

“These amendments are also a commitment by the government to provide effective insolvency legislation in Malaysia, to meet the current needs and challenges by taking into account the interests of the public, bankrupts and creditors,” said Azalina.

The Insolvency Department has listed three conditions to discharge bankrupt individuals. First, a bankruptcy declaration that exceeded five years from the date of the acceptance order and the bankruptcy order. Second is an amount of outstanding debt not exceeding RM50,000, and third is no court order, proceeding and/or investigation being carried out on the insolvent under the Act.

The government’s intent to amend the law was first shared by Prime Minister Datuk Seri Anwar Ibrahim during the tabling of Budget 2023 in February.

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