KUALA LUMPUR (July 28): The Cross-Border Insolvency Bill 2025, which deals with insolvency cases involving foreign creditors and cross-border proceedings, was tabled for its first reading in the Dewan Rakyat on Monday.

The Bill, tabled by Minister in the Prime Minister’s Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said, broadly aims to govern access to Malaysian courts by foreign representatives and foreign creditors, the recognition of foreign insolvency proceedings, and the granting of relief in relation to such recognition.

Meanwhile, the Bill states that foreign creditors shall have the same rights as local creditors when initiating or participating in proceedings, subject to certain exceptions under local law.

However, the proposed law also provides for a public policy exception, where Malaysian courts may refuse to take actions under the Act if such actions are deemed manifestly contrary to public policy in Malaysia.

Among other provisions, the Bill allows a foreign representative to apply directly to Malaysian courts to seek relief or participate in a proceeding under the local insolvency framework. 

A foreign representative can commence a local insolvency proceeding if certain conditions are met, and the bill provides a mechanism for the recognition of either a foreign "main proceeding" or a "non-main proceeding" based on where the debtor’s centre of main interests is located.

Once recognised as a foreign main proceeding, the Bill allows for an automatic stay on proceedings against the debtor and suspends the right to transfer, encumber, or dispose of assets. The court may also grant additional discretionary relief to assist the administration of foreign proceedings.

The Bill outlines that cooperation between Malaysian courts and foreign courts or representatives may be carried out directly or through an appointed person, and may include coordination in managing concurrent proceedings.

It also provides for cooperation with foreign courts and representatives, as well as coordination of concurrent insolvency proceedings in accordance with the principles of the Model Law on Cross-Border Insolvency adopted by the United Nations Commission on International Trade Law (UNCITRAL), according to the explanatory statement of the Bill released on Monday. 

All in all, the Bill comprises six parts and 35 clauses. 

The Cross-Border Insolvency Bill is now scheduled for second and third readings, which are set to take place during the current parliamentary session, according to Azalina.

For more Parliament stories, click here.