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The Insolvency Act 

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Words: 645 |

Page: 1|

4 min read

Published: Jan 29, 2019

Words: 645|Page: 1|4 min read

Published: Jan 29, 2019

Prior to the amendment, section 3(2) of Bankruptcy Act 1967 states that bankruptcy notices have to be served in a “prescribed manner”. This could lead to an undesirable situation where a person could be a bankrupt without realising it. The reason why this situation could happen is due to the fact that the bankruptcy notices were not delivered personally to the debtor but were delivered through a substitute service. However, this odd situation can be avoided after the amendment of section 9 (b) and (c) of Bankruptcy (Amendment) Act 2017. Furthermore, Section 3 (2A) of Insolvency Act 1967 provides that bankruptcy notices need to be served personally to a debtor. [1] This means that substituted service is still possible but with stricter requirements.

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Referring to Section 3 (2A) of Insolvency Act 1967, a substitute service will only be allowed when the creditors manage to prove to the courts that the debtor had tried to avoid getting served the bankruptcy notice. The creditor must be able to prove to the satisfaction of the court that the debtor, with intent to defeat, delay or evade personal service, departs out of Malaysia or being out of Malaysia remains out of Malaysia; or departs from his dwelling house or otherwise absents himself, or secludes himself in his house or closes his place of business to avoid the personal service of the bankruptcy notice. This new provision imposes a duty on the creditors to prove that the debtor is intended to avoid getting served the bankruptcy notice.

In the Insolvency Rules 2017, rule 94 also provides that a bankruptcy notice is valid for 3 months from the issue of the bankruptcy notice. This subject to the power of the court to extend the time for the bankruptcy notice. In the case of Yap Heng Cheong v CitiBank Bhd, the court held that if the judgment creditor is unable to serve the bankruptcy notice within 3 months, he may apply for extension of bankruptcy notice.

Rule 95 of Insolvency Rules 2017 provides that a bankruptcy notice shall be served and the service shall be proved in the same manner prescribed for the service of creditor’s petition. (Rule 108). Referring to Rule 108, a creditor’s petition shall be personally served and the service shall be effected by an officer of the court or by the creditor or his solicitor or a person in their employment. However, if the personal service cannot be effected as the debtor is keeping out to avoid service of the petition, the court may order substantial service. This can be seen in the case of Kamaruddin v United Motor, where the court held that the modes of substituted service included: post the bankruptcy notice on the notice board at High Court; advertise the bankruptcy notice in 2 largest daily newspaper; and post the bankruptcy notice to judgment debtor’s last known address.

The main purpose of substituted service is to bring to the bankruptcy notice to the knowledge of debtor. The service of bankruptcy notice must be deemed good and sufficient if that object is achieved.

In Australia, the service of Bankruptcy Notice must take place within 6 months of the date the notice was issued. Regulation 16.01 of the Bankruptcy Regulations 1996 provides that the Bankruptcy Notice may be sent by post; by courier service; personally delivery to the person; sent by facsimile or electronic transmission; or by substituted service. Same as Malaysia, the substitute service is a method of delivery on a person other than in-person and subject to the courts permission. The substituted service applications are not appropriate where service in the ordinary course is merely inconvenient or less efficient. When the personal service is impracticable or delivery cannot be effected and the proposed alternative means of service are effective in bringing the bankruptcy notice to the attention of the debtor, then only the substituted service is allowed. [2]

[1] https://asklegal.my/p/5-changes-to-malaysia-s-bankruptcy-law-that-makes-it-harder-to-become-a-bankrupt

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[2] http://www.fedcourt.gov.au/law-and-practice/guides/guides-bankruptcy/information-sheet-5

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The Insolvency Act . (2019, January 28). GradesFixer. Retrieved May 29, 2024, from https://gradesfixer.com/free-essay-examples/the-insolvency-act/
“The Insolvency Act .” GradesFixer, 28 Jan. 2019, gradesfixer.com/free-essay-examples/the-insolvency-act/
The Insolvency Act . [online]. Available at: <https://gradesfixer.com/free-essay-examples/the-insolvency-act/> [Accessed 29 May 2024].
The Insolvency Act  [Internet]. GradesFixer. 2019 Jan 28 [cited 2024 May 29]. Available from: https://gradesfixer.com/free-essay-examples/the-insolvency-act/
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