Covid-19: Insolvency Department announces mitigation measures

The Malaysian Department of Insolvency (‘MdI’) issued three press releases1 on 31 March 2020 which announced initiatives (‘MdI Initiatives’) to assist persons who have been adjudicated bankrupt during the economic turmoil caused by the Covid-19 pandemic. The MdI Initiatives follow similar initiatives in respect of the Employees Provident Fund and the banking industry announced by the Prime Minister of Malaysia on 23 and 25 March 2020 respectively.
 
A summary of the MdI Initiatives is set out below:
 
Moratorium on repayments to MdI
 
  1. A six months moratorium (similar to that granted to individuals and small and medium enterprises on their monthly repayments to financial institutions) will automatically be granted to bankrupts for the repayment of monthly instalments payable to the Director General of Insolvency (‘DGI’) under the Insolvency Act 1967 from 1 April 2020 until 30 September 2020.

  2. Bankrupts who do not wish to avail themselves of the automatic moratorium may apply to continue payment at the MdI branch which administers their respective bankruptcy cases.
 
Suspension of agreement to purchase property
 
  1. Individuals who have signed agreements with the DGI or Official Receiver and Liquidator (‘ORL’) to purchase properties of bankrupts or companies that have been wound up may apply to the DGI or ORL respectively for a suspension of six months of the agreement.

  2. The suspension is subject to the approval of the DGI or ORL.
 
Withdrawal from Employees Provident Fund account
 
  1. Bankrupts below the age of 55 are allowed to withdraw a sum of up to RM500 from their Employees Provident Fund (‘EPF’) Account 2 for 12 months.

  2. For this purpose, the i-Lestari withdrawal facility given to non-bankrupt EPF contributors which was announced by the Prime Minister on 23 March 2020 was extended to bankrupts.

  3. The bankrupt’s application to withdraw the funds from their EPF accounts must be made directly to EPF.
 
If you have any queries on the above, please contact Trevor Padasian (Partner) at tjp@skrine.com.