BANGI: The Insolvency Act 1967 which took effect yesterday is expected to help in reducing the number of bankruptcy cases by 50% to 10,000 cases a year.
Minister in the Prime Minister’s Department Azalina Othman said the figure was based on the average estimate of 20,000 cases annually administered by the insolvency department at present.
“The reduction is due to several amendments introduced under the Act, namely the minimum level for bankruptcy which had been raised from RM30,000 to RM50,000, that social guarantors can no longer be declared bankrupt, and the introduction of the voluntary arrangement,” she said in her speech when launching the Insolvency Act 1967 Enforcement Date, here yesterday.
In addition, she said, the automatic release, which was introduced for the first time in the country’s bankruptcy laws, was in line with the government’s aspiration for bankrupts to return and contribute to the economy.
“Under this automatic release, bankrupts can be released after three years if they file their personal statements and fulfill the targeted contribution stipulated in line with international standards practised in countries such as the United Kingdom, Hong Kong and Australia,” she said.
Azalina said the automatic release also reduced the time required to administer bankruptcy cases, and benefited creditors as the dividend could be obtained within a period of three years.
She explained that the act would also enable bankruptcy cases involving four categories namely social guarantors, those who had died, disabled persons and those suffering from chronic diseases, to be released.
“The insolvency department has made an application to release 10,000 bankruptcy cases involving the four categories next year with the aid of 65 temporary workers for filing work with an expenditure of RM1.2 million.
“After scrutinising the other cases together with the insolvency department, I will make a proposal paper to the cabinet to seek the release of 40,000 bankruptcy cases more next year which will incur an additional expenditure of about RM4 million for filing work,” she added.
She said that those declared bankrupt before the date of enforcement of the act could also be considered to be given the release letter from the insolvency department’s director-general without objection from creditors if they fell into the four categories concerned.
From 2013 until August 2017, there were 23,036 new bankrupts aged 25 to 34, while there were 1,109 bankrupts aged 25 and below.