Malaysia: Insolvency (Amendment) Bill 2023

In brief

The Insolvency (Amendment) Bill 2023 ("Amendment") was passed in the Dewan Rakyat on 24 May 2023. The Amendment seeks to provide for a more effective bankruptcy administration system which is in line with the Government's intention to preserve the welfare of bankrupt individuals. The Insolvency Act 1967 ("Act") was last amended on 1 September 2021 vide the Insolvency (Amendment) Act 2020.


Key takeaways

The critical suggested amendments to the Act are as follows:

  1. Sub-Section 33B (2A) of the Act: Additional Categories of Bankrupt Individuals to be Discharged.

The Amendment introduces two (2) further categories where bankrupt individuals may be able to qualify for a discharge of bankruptcy, namely:

  • Individuals incapable of managing their affairs due to any mental disorder, as certified by a psychiatrist from any government hospital
  • Individuals aged 70 and above incapable of managing their affairs based on the opinion of the Director General of Insolvency
  1. Section 33C of the Act: Shorter Discharge Period & New Powers for Director General.

The Amendment seeks to enable bankrupt individuals to be discharged automatically in a shorter period of time, of three (3) years from the date of the submission of the Statement of Affairs, provided that the bankrupt individual has complied with his obligations under the Act and paid the sum of money determined by the Director General of Insolvency for the purposes of the administration of the bankrupt's estate.

As a safeguard, the suggested amendment introduces new powers for the Director General of Insolvency to suspend the automatic discharge of a bankrupt for a period of not more than two (2) years if the bankrupt individual does not fulfill his obligations under the Act. The Director General of Insolvency may also ask the bankrupt individual to provide further information on his income, expected income as well as properties.

  1. Section 130 of the Act: Service by Electronic Communication.

The Amendment proposes for deemed service of all notices and other documents by electronic communication, provided the person has given consent for use of electronic communication.

  1. Section 15 of the Act and Schedule A: Meeting of Creditors

The Amendment seeks to provide that a meeting of creditors may be held as soon as may be after the making of a Bankruptcy Order. This suggests that a meeting of creditors is no longer mandatory and will only be held upon request and where necessary.

The suggested amendment further clarifies who the Director General of Insolvency is required to summon in the case of a debtor's petition (the bankrupt and all creditors mentioned in the bankrupt's statement of affairs and creditors who have filed the proof of debts) and a creditor's petition (the petitioner, the bankrupt and all creditors mentioned in the bankrupt's statement of affairs and creditors who have filed the proof of debts) for such meeting of creditors. Additionally, the Director General of Insolvency will also be allowed to use remote communication technology to hold the meeting of the creditors.


The amendments to the Act have long been contemplated and would be a welcomed change to improve the bankruptcy administration in Malaysia. As most individuals all around the world are still reeling from the after-effects of the COVID-19 pandemic, this is an important step towards addressing some of the challenges faced by bankrupt individuals.

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Contact Information
Rachel Tey
Senior Associate
Kuala Lumpur
Yao Huang Yeoh
Senior Associate
Kuala Lumpur

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