The Insolvency (Amendment) Bill 2020
was tabled for its First Reading in the Dewan Rakyat on 12 August 2020. Its provisions are in addition to the temporary increase of the minimum debt threshold for presentation of a bankruptcy petition pursuant to Clause 20 of the Temporary Measures For Reducing The Impact Of Coronavirus Disease 2019 (Covid-19) Bill 20201
(‘Temporary Measures Bill’).
Minimum debt threshold
The Insolvency (Amendment) Bill 2020 seeks to increase the minimum debt threshold required before a bankruptcy petition can be filed from the current minimum of RM50,000 to RM100,0002
. In contrast to the amendment pursuant to Clause 20 of the Temporary Measures Bill which covers both section 2O3
and section 5(1)(a)4
of the Insolvency Act 1967 and which will only remain in operation until 31 August 2021 (subject to certain prescribed extensions), the amendment pursuant to the Insolvency (Amendment) Bill 2020 is intended to become a permanent provision of the Insolvency Act 1967.
The Insolvency (Amendment) Bill 2020 also seeks to empower the Minister5
, after consultation with the Finance Minister, to amend the minimum debt threshold in section 5(1)(a) of the Insolvency Act 1967 for a specific time period (‘specific time period’), if the Minister is satisfied that there are special circumstances and that it would not be contrary to public interest to do so6
. This will be made by an order published in the Government Gazette (‘amending order’).
It is intended that any bankruptcy petition presented within the specific time period shall be continued or concluded in accordance with the amended amount of debt prescribed for that period even after the amending order ceases or expires. Any bankruptcy petition presented after the amending order ceases or expires will be continued or concluded in accordance with the amount of debt as specified in section 5(1)(a) of the Insolvency Act 1967.
Any bankruptcy presented and still pending immediately before the coming into operation of the Insolvency (Amendment) Bill 2020 will be continued or concluded under the Insolvency Act 1967 as if the Insolvency Act 1967 had not been amended by the Insolvency (Amendment) Bill 20207
It appears that the amendment to section 5(1)(a) is intended to increase the current minimum debt threshold under the Insolvency Act 1967 to RM100,000 on a permanent basis, unless amended by the Minister for a specific time period.
The Temporary Measures Bill provides that in the event of any conflict or inconsistency between the provisions of that Bill and any other written law, including the Insolvency (Amendment) Bill 2020, the provisions of Temporary Measures Bill shall prevail and the conflicting provision shall be deemed to be superseded to the extent of the conflict8
. In light of this overriding provision in the Temporary Measures Bill, it would appear that the Minister may not be able to exercise his right to vary the minimum debt threshold pursuant to the proposed new section 5(1A) of the Insolvency Act 1967 while the insolvency-related provisions in the Temporary Measures Bill remain in force.
Alert prepared by Trevor Jason Mark Padasian (Partner) of Skrine