BANKRUPTCY ORDER

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BANKRUPTCY ORDER by Mind Map: BANKRUPTCY ORDER

1. SECTION 38 (1) INSOLVENCY ACT 1967

1.1. NOTE: when the bankrupt person receives any money, property or proceeds the value of RM 500 and which does not form part of his usual income, he must then immediately report to the DGi and must pay or make over the same as soon as he may be required by the DGi

2. SECTION 8 (2) INSOLVENCY ACT 1967

2.1. the making of bankruptcy order will not affect the power of any secured creditor to realize or deal with his security

3. effect of a bankruptcy order

3.1. debtor becomes a bankrupt

3.2. SECTION 8 (1)(b) INSOLVENCY ACT 1967

3.2.1. his property is vested in DGi and become divisible among his creditors

3.3. automatic vesting

3.4. property becomes property of creditors and DG acts as trustees to creditors

4. SECTION 8 INSOLVENCY ACT 1967

4.1. SECTION 8(1) INSOLVENCY ACT 1967

4.1.1. a bankrupt is immune from legal proceedings relating to claims that are provable in bankruptcy the moment a bankruptcy order is made against him

4.2. SECTION 8 (2) INSOLVENCY ACT 1967

4.3. HOWEVER, undischarged bankrupt is not protected from criminal proceedings, committal proceedings or proceeding by secured creditor to realize assets

5. SECTION 16 (1) INSOLVENCY ACT 1967

5.1. he shall submit to the DGi a statement of and in relation to his affairs - in the prescribed form, verified by affidavit, showing the particulars of his assets, debts and liabilities, the names, residences and occupations of his creditors, the securities held by them respectively given ... and such further and other information the DGi requires

5.1.1. SECTION 16 (2) INSOLVENCY ACT 1967

5.1.1.1. the statement shall be submitted within the following times

5.1.1.1.1. a) if the order is made on the petition of the debtor, within seven (7) days from the date of the order

5.1.1.1.2. b) if the order is made on the petition of a creditor, within twenty-one (21) days from the date of the order

6. SECTION 16 INSOLVENCY ACT 1967

6.1. upon the Bankruptcy Order, the bankrupt is subjected to the control of his personal affairs and property to DGi. He will be required to produce documents relating to his affairs

6.2. SECTION 16(1)

6.2.1. he shall submit to DGi a statement of and in relation to his affairs in the prescribed form, verified by affidavit, showing the particulars of his assets, debts and liabilities, the names, residences and occupations of his creditors, the securities he;d by them respectively, the dates when the securities were respectively given ... and such further and other information the DGi requires.

6.3. SECTION 16(2)

6.3.1. the statement shall be so submitted within the following times:

6.3.1.1. a) if the order is made on the petition of the debtor, within seven (7) days from the date of the order;

6.3.1.2. b) if the order is made on the petition of a creditor, within twenty-one (21) days from the date of the order,

6.3.1.3. but the DGi may in either case for special reasons extend the time by order made under his hand, to be forthwith filed, recording the reasons therefor.

7. SECTION 36 INSOLVENCY ACT 1967

7.1. 1) where a debtor is adjudged bankrupt, he shall subject to this Act, be disqualified for:

7.1.1. a) being appointed or acting as a Sessions Court Judge or Magistrate;

7.1.2. b) being nominated or elected to or holding or exercising the office of Councillor of a local authority

7.2. 2) the disqualifications to which a bankrupt is subject under this section shall be removed and cease if and when -

7.2.1. a) the bankruptcy order against him is annulled; or

7.2.2. b) he obtains from the court his discharge with a certificate to the effect that his bankruptcy was caused by misfortune without any misconduct on his part

8. disqualifications of a bankrupt

8.1. a) holding the office of a Member of Parliament Article 48 (1) (b) of the Federal Constitution

8.2. b) holding public office SECTION 36 (1)(a) of INSOLVENCY ACT 1967

8.3. c) holding or exercising the office of Councillor of a local authority

8.4. d) holding certain position in statutory bodies

8.4.1. Governor or a director of the Central Bank Malaysia - SECTION 11 (2)(c) of the Central Bank of Malaysia Act

8.4.2. the Chairman or a director of Bank Simpanan Nasional - SECTION 8(5)(c) of the Bank Simpanan Nasional Act 1974

8.4.3. a member of Lembaga Tabung Haji - SECTION 6(3)(a) of the Tabung Haji Act 1995

8.4.4. a member of the Bar Council - SECTION 55(b) of the Legal Profession Act 1976

8.5. e) practicing in certain profession

8.5.1. an advocate and solicitor - SECTION 11(b)(ii) of Legal Profession Act - a solicitor cannot continue to enjoy the status of having a practicing certificate once declared bankrupt

8.5.2. an architect - SECTION 15A(2)(o) of the Architects Act 1967

8.5.3. an engineer

8.5.4. a housing developer

8.5.5. counsellor

8.6. f) SECTION 38(1)(c) of INSOLVENCY ACT 1967 - leaving Malaysia without permission of DGi or court

8.6.1. SECTION 38(1)(c) and SECTION 38A(1)

8.6.1.1. a bankrupt is not allowed to leave Malaysia without the previous permission of the DGi or of the court

8.6.2. SECTION 38A(3)

8.6.2.1. if he attempts to do so, his passport or travel document will be seized by the immigration officer and be delivered to the DGi

8.6.3. SECTION 38(2)

8.6.3.1. a bankrupt shall be deemed guilty of contempt of court if he does any of the prohibited acts and shall be punished accordingly on the application of the DGi

9. SECTION 38(1)(a)

9.1. maintaining any action without the previous sanction of the DGi other than an action for damages in respect of an injury to his person

9.2. as the bankrupt's estate vests in the DGi, he must be consulted as any action intended by the bankrupt may be detrimental to his creditors

9.3. RE CHUA TIN HONG [1997] 2 AMR 1253

9.3.1. the word "action" means civil proceedings in court

9.4. PERWIRA AFFIN BANK BERHAD v SARDAR MOHD ROSHAN KHAN

9.4.1. SECTION 38(1)(a) is intended, inter alia, to ensure that the bankrupt's affairs are properly regulated and supervised by the DGi - e.g by way of the DGi's previous sanction before the bankrupt is competent to maintain an action thereunder.

9.5. K ISMAIL GANEY ROWTHER v ABDUL KADER [1933] MLJ 98

9.5.1. the words "injury to person" have been defined to mean "any injury which the bankrupt suffers in mind or body, which might give rise to an action for damages, and which cause of, or chose in action, or right to sue remained in the bankrupt after the bankruptcy

9.6. MOHD AFSAR YUNUS v HANDAL UTAMA SDN BHD [1995] 1 AMR 224

9.6.1. HELD: the claims for arrears of salary does not come within 'injury to person' in SECTION 38(1)(a) of the Act. Therefore, the sanction of the DGi is required before the Appellant can bring action against the Respondent.

10. CHIN KON NAM & ANOR CHAI YUN PHIN DEVELOPMENT SDN BHD [1996] 1 CLJ 444, 4 MLJ 271

10.1. HELD: in an action based on breach of contract by the defendant (as opposed to an action in respect of an injury to the bankrupt's person), the bankrupt's estate and cause of action are vested in the DGi upon adjudication and unless the prior sanction of the DGi is obtained to maintain the action, the bankrupt is incompetent to do so in his own name or to employ an advocate and solicitor to act on his own behalf without the sanction.

10.2. right to legal representation?

10.2.1. where the sanction of the DGi is required before a bankrupt proceeds with an action, he is incompetent to employ an advocate and solicitor to act on his behalf unless a prior sanction of the DGi to do so is first secured.

11. these disqualifications may be removed if the bankruptcy order is annulled or rescinded

11.1. DATO HAJI MOHD MUSLIM BIN OTHMAN v SHUIB BIN LAZIM & ANOR [1993] 2 CLJ 177

11.1.1. HELD: the annulment of and adjudication order has the effect of wiping out the bankruptcy altogether and puts the bankrupt in the same position as if there had been no adjudication order.

12. SECTION 4 INSOLVENCY ACT 1967

12.1. the court may, on a bankruptcy petition being presented by a creditor or a debtor, make a bankruptcy order.

13. SECTION 6(2) INSOLVENCY ACT 1967

13.1. the High Court will proceed to make a Bankruptcy Order if:

13.1.1. a) debt of petitioning order

13.1.2. b) act of bankruptcy

13.1.3. service of petition

13.1.4. if ALL the above mentioned are proven

13.1.5. if the court is satisfied with the proof, the court may make a bankruptcy order in pursuance of the petition

14. HISHAM, SOBRI & KADIR v LIM CHAU SENG [1987] 2 MLJ 387

14.1. in this case, an application was made by the plaintiff to commit both first and second defendant to prison for contempt for failing to comply with the Order of Court dated December 10, 1986 whereby they were ordered to forthwith deliver to the plaintiff a continuing and irrecoverable Banker's Guarantee in favour of the plaintiff's clients.

14.2. one of the issue raised before the court was:

14.2.1. whether the present proceeding against the first defendant, a bankrupt, could be instituted without joining the DGi to replace him.

14.3. HELD: the present proceeding against the first defendant who is an undischarged bankrupt was properly instituted.

14.4. NOTE: Order of Committal is a method of enforcing judgment by obtaining an order that a person be committed to prison. it is usually sought when the person has committed contempt of the Court such as disobedience of an order of the court.