Akta Insolvensi 1967
Applies to: Federal Act — see s 1 (Short title and application) · Official text ↗
- Defines key terms such as 'bankruptcy petition', 'property', and 'secured creditor' (s 2).
- Lists specific actions that constitute an act of bankruptcy, such as fraudulent transfers or suspending payments (s 3).
- Allows the court to make a bankruptcy order based on a creditor's or debtor's petition (s 4).
- Specifies that a debtor's petition is deemed an act of bankruptcy and results in a bankruptcy order (s 7).
- Transfers the bankrupt's property to the Director General of Insolvency for distribution to creditors (s 8).
- Outlines the duties of an undischarged bankrupt, including reporting income and restrictions on leaving Malaysia (s 38).
- Prescribes penalties for fraudulent debtors, including imprisonment or fines (s 109).
- Allows appeals to the court against decisions made by the Director General of Insolvency (s 86).
What this law is
The Insolvency Act 1967 (Akta Insolvensi 1967) is numbered Act 360 in the Laws of Malaysia. Where it applies is set out in section 1 (Short title and application).
Its long title, as printed in the official text: An Act relating to the insolvency and bankruptcy of an individual and a firm and for connected matters.
Read every section, the amendment history and the official copy on our law library page for this Act.
How the Act is arranged
- Part I — Voluntary arrangement and proceedings in bankruptcy (ss 2A–35A)
- Part II — Disqualification and disabilities of bankrupt (ss 36–39)
- Part III — Administration of property (ss 40–69)
- Part IV — Director general of insolvency (ss 70–87)
- Part V — Constitution, procedure and powers of court (ss 88–105)
- Part VI — Small bankruptcies (ss 106–108)
- Part VII — Fraudulent debtors and creditors (ss 109–119)
- Part VIII — Supplemental provisions (ss 120–139)
Part titles are from the official arrangement of sections.
Time limits in this Act
| What | Limit | Section |
|---|---|---|
| Comply with a bankruptcy notice or satisfy the court of a counterclaim | seven days after service of the notice | s 3(1)(i) |
| File an affidavit containing a statement of partners, assets, and liabilities | within twenty-four hours after the order has been served | s 8(3) |
| Realize security to retain interest in the debt | within twelve months from the date of the bankruptcy order | s 8(2a) |
| Render an account of moneys and property received | once in every six months | s 38(1)(b) |
Offences and penalties
| Offence | Penalty (as written in the Act) | Section |
|---|---|---|
| Failing to fully and truly discover property, delivering up property, or making material omissions in statements | imprisonment, which may extend to two years, or with fine or with both | s 109(1) |
| Incurring debt provable in bankruptcy within twelve months before a petition without reasonable ground of expectation of paying it | imprisonment which may extend to two years or with fine or with both | s 111 |
| Obtaining credit under false pretences or concealing property to defraud creditors | imprisonment, which may extend to one year, or with fine or with both | s 114(1) |
Laws cited on this page
| Act 360 | Insolvency Act 1967 Akta Insolvensi 1967 | PDF · Official ↗ |
Each law links to our mirror page: a copy of the official text captured on a known date, its version history, and the official source. Law library →
Key sections
| Provision | What it says, in plain words |
|---|---|
| s 1 | The Act applies throughout Malaysia. |
| s 2 | Defines terms like 'property' to include money, goods, and land, and 'secured creditor' as someone holding a mortgage or charge on the debtor's property. |
| s 3 | Lists acts of bankruptcy, including making fraudulent transfers, departing Malaysia to avoid creditors, or failing to comply with a bankruptcy notice within seven days. |
| s 4 | The court may make a bankruptcy order if a petition is presented by a creditor or a debtor. |
| s 7 | A debtor's petition alleging inability to pay debts is deemed an act of bankruptcy, and the court must make a bankruptcy order. |
| s 8 | Upon a bankruptcy order, the bankrupt's property vests in the Director General of Insolvency, who becomes the receiver and trustee of that property. |
| s 35 | A discharge does not release the bankrupt from debts due to the Government of Malaysia or of any State, debts chargeable for offences under public-revenue laws or on certain bail bonds, or provable debts incurred by fraud (s 35(2)). |
| s 38 | Until discharged, a bankrupt needs the Director General of Insolvency's sanction to bring most actions, must account every six months for money and property received, must not leave Malaysia without permission of the Director General or the court, and must not carry on business or manage a company without that permission (s 38(1)). Default is deemed contempt of court (s 38(2)). |
| s 86 | A person aggrieved by a decision of the Director General of Insolvency may apply to the court to confirm, reverse, or modify that decision. |
| s 109 | A bankrupt who conceals property, makes false statements, or obtains credit without disclosing their status may be punished with imprisonment up to two years or a fine. |
| s 111 | A bankrupt who incurs debt within twelve months before a petition without reasonable expectation of paying it may be punished with imprisonment up to two years or a fine. |
| s 114 | A bankrupt who obtains credit under false pretences or conceals property to defraud creditors may be punished with imprisonment up to one year or a fine. |
Worked examples
Facts. Ahmad, a resident of Kuala Lumpur, owes money to a supplier. He packs his bags and flies to Singapore without telling his creditors, intending to hide from them.
The law. Departing Malaysia with the intent to defeat or delay creditors is an act of bankruptcy (s 3(1)(d)(i)).
Outcome. Ahmad has committed an act of bankruptcy, which can lead to a bankruptcy order being made against him (s 4).
Facts. Siti has a final judgment against her for a debt. A bankruptcy notice is served on her in Malaysia and she does nothing.
The law. A debtor commits an act of bankruptcy if, after service in Malaysia of a bankruptcy notice based on a final judgment, he does not within seven days either comply with it or satisfy the court that he has a counterclaim, set-off or cross demand (s 3(1)(i)).
Outcome. Siti has committed an act of bankruptcy on which a creditor's petition may be based, and the court may make a bankruptcy order (ss 3, 4). Once adjudged bankrupt, failing to disclose or deliver up her property to the Director General of Insolvency is an offence (s 109(1)).
Facts. Ravi is an undischarged bankrupt. He starts a small online shop selling electronics without telling anyone about his bankruptcy status and without getting permission from the Director General of Insolvency.
The law. An undischarged bankrupt shall not carry on any business without the previous permission of the Director General of Insolvency or the court (s 38(1)(d)). Obtaining credit or engaging in business without disclosing status is an offence (s 109(1)(m)).
Outcome. Ravi is in breach of his duties as a bankrupt and may be punished for obtaining credit or engaging in business without disclosure (s 109(1)(m)).
Examples are simplified illustrations with invented names; real cases turn on their own facts.
Questions & answers
What happens to my property when I am declared bankrupt?
All your property becomes divisible among your creditors and vests in the Director General of Insolvency (s 8(1)(b)). The Director General of Insolvency becomes the receiver, manager, administrator, and trustee of all your properties (s 8(1)(b)).
Can I leave Malaysia if I am an undischarged bankrupt?
No, you shall not leave Malaysia without the previous permission of the Director General of Insolvency or of the court (s 38(1)(c)).
Does discharge clear all my debts?
No. A discharge does not release you from debts due to the Government of Malaysia or of any State, debts chargeable for offences under public-revenue laws, certain bail-bond debts, or provable debts incurred by fraud (s 35(2)).
What are the consequences of not reporting my income as a bankrupt?
You must render an account of all moneys and property received every six months (s 38(1)(b)). Making default in performing this duty is deemed guilty of a contempt of court and shall be punished accordingly (s 38(2)).
Can I appeal a decision made by the Director General of Insolvency?
Yes, if you are aggrieved by any act or decision of the Director General of Insolvency, you may apply to the court (s 86). The court may confirm, reverse, or modify the act or decision complained of (s 86).
What is a 'secured creditor'?
A secured creditor is a person holding a mortgage, charge, or lien on the property of the debtor as security for a debt (s 2). This does not include a plaintiff who has attached property before judgment (s 2).
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Sources
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