LAWS OF MALAYSIA REPRINT Act 360 BANKRUPTCY ACT 1967 Incorporating all amendments up to 1 January 2006 PUBLISHED BY THE COMMISSIONER OF LAW REVISION, MALAYSIA UNDER THE AUTHORITY OF THE REVISION OF LAWS ACT 1968 IN COLLABORATION WITH PERCETAKAN NASIONAL MALAYSIA BHD 2006 2 Laws of Malaysia ACT 360 BANKRUPTCY ACT 1967 First enacted ... ... ... ... ... ... 1967 (Act 55 of 1967) Revised ... ... ... ... ... ... ... 1988 (Act 360 w.e.f. 31 December 1988) PREVIOUS REPRINT First Reprint ... ... ... ... ... 2001 3 Bankruptcy LAWS OF MALAYSIA Act 360 BANKRUPTCY ACT 1967 ARRANGEMENT OF SECTIONS PRELIMINARY Section 1. Short title and application Interpretation 2. Interpretation PART I PROCEEDINGS FROM ACT OF BANKRUPTCY TO DISCHARGE Acts of Bankruptcy 3. Acts of bankruptcy Receiving Order 4. Jurisdiction to make receiving order 5. Conditions on which creditor may petition 6. Proceedings and order on creditor's petition 7. Debtor 's petition and order thereon 8. Effect of receiving order 9. Court may detain or order arrest of debtor and commit him to prison unless he gives security not to leave Malaysia 10. Discretionary powers as to appointment of interim receiver and stay of proceedings 11. Service of order staying proceedings 12. Power to appoint special manager 4 Laws of Malaysia ACT 360 Section 13. Advertisement of receiving order 14. Power of court to rescind receiving order in certain cases Proceedings consequent on Receiving Order 15. First and other meetings of creditors 16. Debtor 's statement of affairs Public Examination of Debtor 17. Public examination of debtor Composition or Scheme of Arrangement 18. Power for creditors to accept and court to approve composition or arrangement 19. Effect of composition or scheme 20. No deed of arrangement valid except under section 18 or 26 unless registered 21. Penalty for collusive preference 22. Power of Minister to make rules 23. Rectification of registers Adjudication of Bankruptcy 24. Adjudication of bankruptcy 25. Consultative committee 26. Power to accept composition or scheme after bankruptcy adjudication Control over Person and Property of Debtor 27. Duties of debtor as to discovery and realization of property 28. Arrest of debtor under certain circumstances 29. Release of debtor on security 30. Re-direction of letters and telegrams 31. Discovery of debtor's property 32. Director General of Insolvency to settle list of debtors to the estate Discharge of Bankrupt 33. Discharge of bankrupt by order of court 33A. Discharge of bankrupt by Certificate of Director General of Insolvency 5 Bankruptcy Section 33B. Objection by creditor to discharge of bankrupt under section 33A 34. Fraudulent settlements 35. Effect of discharge 35A. Discharged bankrupt to give assistance PART II DISQUALIFICATION AND DISABILITIES OF BANKRUPT 36. Disqualification of bankrupt 37. Vacating offices by bankruptcy Undischarged Bankrupt 38. Consequences of refusal of discharge 38A. Power to prevent bankrupt from leaving Malaysia 39. List of undischarged bankrupts to be kept PART III ADMINISTRATION OF PROPERTY Proof of Debts 40. Description of debts provable in bankruptcy 41. Mutual credit and set-off 42. Rules as to proof of debts 43. Priority of debts 44. Preferential claim in case of apprenticeship and in respect of passage money 45. Power to landlord to distrain for rent 46. Postponement of husband's or wife's claims Property Available for Payment of Debts 47. Relation back of Director General of Insolvency's title 48. Description of bankrupt's property divisible amongst creditors 49. Provisions as to second bankruptcy Effect of Bankruptcy on Antecedent Transactions 50. Restriction of rights of creditor under execution or attachment 6 Laws of Malaysia ACT 360 Section 51. Property taken in execution 52. Avoidance of voluntary settlement 53. Avoidance of preferences in certain cases 53A. Avoidance of assignment of book debts 53B. Property or proceeds therefrom deemed to be property of Director General of Insolvency 53C. Fair market value may be fixed on review Protection of bona fide transactions without notice 54. Realization of Property 55. Possession of property by assignee 56. Seizure of property of bankrupt 57. Appropriation of portion of pay or salary to creditors 58. Vesting and transfer of property 59. Disclaimer of onerous property 60. Powers of Director General of Insolvency to deal with property 61. Powers exercisable by Director General of Insolvency subject to orders of court Distribution of Property 62. Declaration and distribution of dividends 63. Joint and separate dividends Provision for creditors residing at a distance, etc. 64. 65. Right of creditor who has not proved debt before declaration of a dividend 66. Final dividend 67. No action for dividend 68. Power to allow bankrupt to manage property 69. Right of bankrupt to surplus PART IV DIRECTOR GENERAL OF INSOLVENCY Appointment 70. Appointment of Director General of Insolvency and other officers 7 Bankruptcy Duties Section 71. Status of Director General of Insolvency 72. Duties of Director General of Insolvency as regards the debtor's conduct 73. Duties of Director General of Insolvency as to debtor's estate 74. Protection of Director General of Insolvency and person acting under his direction or control Costs 75. Allowance and taxation of costs Receipts, Payments, Accounts, Audit 76. Bankruptcy Estates Account 77. Investment of surplus funds 78. Inspection and audit of Director General of Insolvency's accounts 79. Director General of Insolvency to furnish list of creditors 80. Books to be kept by Director General of Insolvency 81. Official examination of Director General of Insolvency's records Release 82. Release of Director General of Insolvency Official Name 83. Official name of Director General of Insolvency Vacation of Office on Insolvency 84. Office of Director General of Insolvency vacated by insolvency Additional Powers 84A. Additional powers of Director General of Insolvency Control 85. Discretionary powers of Director General of Insolvency and control thereof 86. Appeal to court against Director General of Insolvency 87. Control of court over Director General of Insolvency 8 Laws of Malaysia ACT 360 PART V CONSTITUTION, PROCEDURE AND POWERS OF COURT Jurisdiction Section 88. High Court to be the court having jurisdiction in bankruptcy 89. Exercise in Chambers of jurisdiction 90. Jurisdiction in bankruptcy of Registrar 91. General power of bankruptcy courts Appeals 92. Appeals in bankruptcy Procedure 93. Discretionary powers of the court 94. Consolidation of petitions 95. Power to change carriage of proceedings 96. Continuance of proceedings on death of debtor 97. Power to stay proceedings 98. Power to present petition against one partner 99. Power to dismiss petition against some respondents only 100. Consolidation of bankruptcy proceedings by or against partners 101. Actions by Director General of Insolvency and bankrupt's partners 102. Actions on joint contracts 103. Proceedings in partnership name 104. Reciprocal provisions relating to Singapore and designated countries Annulment of Adjudication 105. Power of court to annul adjudication in certain cases PART VI SMALL BANKRUPTCIES 106. Summary administration in small cases 107. Wage-earner 9 Bankruptcy Section 108. No public examination in small cases PART VII FRAUDULENT DEBTORS AND CREDITORS 109. Punishment of fraudulent debtors 110. Bankrupt failing to keep proper account 111. Bankrupt incurring debt without reasonable ground of expectation of paying it 112. Penalty for absconding with property 113. Penalty for absconding in order to avoid service of bankruptcy process or embarrass bankruptcy proceedings Penalty on fraudulently obtaining credit, etc. 114. Penalty on false claims, etc. 115. 116. Debts incurred by fraud (Deleted) 117. 117A. Sessions Court to have full jurisdiction to try offences 118. Criminal liability after discharge or composition 119. Form of charge PART VIII SUPPLEMENTAL PROVISIONS Application of Act 120. Application to married women 121. Exclusion of corporations and companies 122. Administration in bankruptcy of estate of person dying insolvent General Rules 123. Power to make rules Fees 124. Fees Evidence Gazette to be evidence 125. 10 Laws of Malaysia ACT 360 Section 126. Evidence of proceedings at meetings of creditors 127. Evidence of proceedings in bankruptcy 128. Swearing of affidavits 129. Death of witness Notices 130. Service of notices Formal Defects 131. Formal defect not to invalidate proceedings Stamp Duty Exemption of deeds, etc., from stamp duty 132. Corporations, Firms and Mentally Disordered Persons 133. Acts of corporations, firms and mentally disordered persons Unclaimed Funds or Dividends 134. Unclaimed or undistributed money Debtor's Books 135. Access to debtor's books Repeals and Special Provisions (Omitted) 136. 137. Transitional provisions for States of Malaya 138. Jurisdiction of District Officers, Sarawak and Sabah 139. Transitional provisions for Sarawak and Sabah SCHEDULE A SCHEDULE B SCHEDULE C 11 Bankruptcy LAWS OF MALAYSIA Act 360 BANKRUPTCY ACT 1967 An Act relating to the law of bankruptcy. [30 September 1967] BE IT ENACTED by the Seri Paduka Baginda Yang di-Pertuan Agong with the advice and consent of the Dewan Negara and Dewan Rakyat in Parliament assembled, and by the authority of the same, as follows: PRELIMINARY Short title and application 1. (1) This Act may be cited as the Bankruptcy Act 1967. (2) This Act shall apply throughout Malaysia. Interpretation Interpretation 2. In this Act, unless the context otherwise requires-- "advocate" means any person entitled to practise as an advocate or as a solicitor or as an advocate and solicitor under any law in any part of Malaysia; "affidavit" includes attestation on honour; "available act of bankruptcy" means any act of bankruptcy available for a bankruptcy petition at the date of the presentation of the petition on which the receiving order is made; "bankruptcy petition" includes a petition for a receiving order; 12 Laws of Malaysia ACT 360 "Chief Judge" means the Chief Judge of the High Court in Malaya or of the High Court in Sabah and Sarawak, as the case may require; "consultative committee" means the committee appointed under section 25; "the court" means the court having jurisdiction in bankruptcy under this Act; "debt provable in bankruptcy" or "provable debt" includes any debt or liability by this Act made provable in bankruptcy; "deed of arrangement" includes any of the following instruments, whether under seal or not, made by, for, or in respect of the affairs of a debtor for the benefit of his creditors generally: (a) an assignment of property; (b) a deed or agreement for a composition; and in cases where creditors of a debtor obtain any control over the property or business-- (c) a deed of inspectorship entered into for the purpose of winding-up or carrying on a business; (d) a letter of licence authorizing the debtor or any other person to manage, carry on, realize or dispose of a business with a view to the payment of debts; and (e) any agreement or instrument entered into for the purpose of carrying on or winding up the debtor's business, or authorizing the debtor or any other person to manage, carry on, realize or dispose of the debtor's business with a view to the payment of his debts; "Director General of Insolvency" includes any officer appointed under section 70 and authorized to exercise the powers of the Director General of Insolvency; "gazetted" means published in the official Gazette of Malaysia or of any State (as the case may require) including any supplement or Extraordinary Gazette; "general rules" includes forms; 13 Bankruptcy "goods" includes all chattels personal; "liability" includes any compensation for work or labour done, any obligation or possibility of an obligation to pay money or money's worth on the breach of any express or implied covenant, contract, agreement or undertaking, whether the breach does or does not occur or is or is not likely to occur or capable of occurring before the discharge of the debtor, and generally it shall include any express or implied engagement, agreement or undertaking to pay, or capable or resulting in the payment of money or money's w o r t h , whether the payment is as respects amount fixed or unliquidated or as respects time, present or future, certain or dependent on any one contingency or on two or more contingencies, or as to mode of valuation capable of being ascertained by fixed rules or as matter of opinion; "oath" includes attestation on honour; "ordinary resolution" means a resolution decided by a majority in value of the creditors present personally or by proxy at a meeting of creditors and voting on the resolution; "property" includes money, goods, things in action, land and every description of property, whether real or personal and whether situate in Malaysia or elsewhere, also obligations, easements and every description of estate, interest and profit, present or future, vested or contingent, arising out of or incident to property as above defined; "Registrar" means the Registrar of the High Court and includes a Deputy Registrar, a Senior Assistant Registrar or an Assistant Registrar of the High Court; "resolution" means ordinary resolution; "secured creditor" means a person holding a mortgage, charge or lien on the property of the debtor or any part thereof as a security for a debt due to him from the debtor but shall not include a plaintiff in any action who has attached the property of the debtor before judgement; "social guarantor" means a person who provides, not for the purpose of making profit, the following guarantees: (a) a guarantee for a loan, scholarship or grant for educational or research purposes; 14 Laws of Malaysia ACT 360 (b) a guarantee for a hire-purchase transaction of a vehicle for personal or non-business use; and (c) a guarantee for a housing loan transaction solely for personal dwelling; "special resolution" means a resolution decided by a majority in number and at least three-fourths in value of the creditors present personally or by proxy at a meeting of creditors and voting on the resolution. PART I PROCEEDINGS FROM ACT OF BANKRUPTCY TO DISCHARGE Act of Bankruptcy Acts of bankruptcy 3. (1) A debtor commits an act of bankruptcy in each of the following cases: (a) if in Malaysia or elsewhere he makes a conveyance or assignment of his property to a trustee or trustees for the benefit of his creditors generally; (b) if in Malaysia or elsewhere he makes a fraudulent conveyance, gift, delivery or transfer of his property or of any part thereof; (c) if in Malaysia or elsewhere he makes any conveyance or transfer of his property or of any part thereof, or creates any charge thereon which would under this or any other written law for the time being in force be void as a fraudulent preference if he were adjudged bankrupt; (d) if with intent to defeat or delay his creditors he does any of the following things: (i) departs out of Malaysia or being out of Malaysia remains out of Malaysia; (ii) departs from his dwelling-house or otherwise absents himself, or begins to keep house or closes his place of business; or (iii) submits collusively or fraudulently to an adverse judgment or order for the payment of money; 15 Bankruptcy (e) if execution issued against him has been levied by seizure of his property under process in an action or in any civil proceeding in the High Court, Sessions Court or Magistrates Court where the judgment, including costs, is for an amount of *one thousand ringgit or more; (f) if he files in the court a declaration of his inability to pay his debts or presents a bankruptcy petition against himself; (g) if he gives notice to any of his creditors that he has suspended or that he is about to suspend payment of his debts; (h) if he makes to any two or more of his creditors, not being partners, an offer of composition with his creditors or a proposal for a scheme of arrangement of his affairs, and such offer or proposal is not followed by the registration within fourteen days thereafter of a deed of arrangement with his creditors, in accordance with the rules for the time being in force for the registration of deeds of arrangement under this Act; (i) if a creditor has obtained a final judgment or final order against him for any amount and execution thereon not having been stayed has served on him in Malaysia, or by leave of the court elsewhere, a bankruptcy notice under this Act requiring him to pay the judgment debt or sum ordered to be paid in accordance with the terms of the judgment or order with interest quantified up to the date of issue of the bankruptcy notice, or to secure or compound for it to the satisfaction of the creditor or the court; and he does not within seven days after service of the notice in case the service is effected in Malaysia, and in case the service is effected elsewhere then within the time limited in that behalf by the order giving leave to effect the service, either comply with the requirements of the notice or satisfy the court that he has a counterclaim, set off or cross demand which equals or exceeds the amount of the judgment debt or sum ordered to be paid and which he could not set up in the action in which the judgment was obtained or in the proceedings in which the order was obtained: Provided that for the purposes of this paragraph and of section 5 any person who is for the time being entitled to enforce a final judgment or final order shall be deemed to be a creditor who has obtained a final judgment or final order; *NOTE--Previously "five hundred ringgit"­see the Bankruptcy (Amendment) Act 1976 [Act A364]. 16 Laws of Malaysia ACT 360 (j) if the officer charged with the execution of a writ of attachment or other process makes a return that the debtor was possessed of no property liable to seizure; and for the purposes of this paragraph the date when the writ is lodged with the officer shall be deemed to be the date of the act of bankruptcy. (2) A bankruptcy notice under this Act shall be in the prescribed form and shall state the consequences of non compliance therewith and shall be served in the prescribed manner: Provided that a bankruptcy notice-- (i) may specify an agent to act on behalf of the creditor in respect of any payment or other thing required by the notice to be made to or done to the satisfaction of the creditor; and (ii) shall not be invalidated by reason only that the sum specified in the notice as the amount due exceeds the amount actually due unless the debtor within the time allowed for payment gives notice to the creditor that he disputes the validity of the notice on the ground of such mistake; but if the debtor does not give such notice he shall be deemed to have complied with the bankruptcy notice, if within the time allowed he takes such steps as would have constituted compliance with the notice had the actual amount due been correctly specified therein. (3) The word "debtor" in this Act shall be deemed to include any person who at the time when the act of bankruptcy was done or suffered by him-- (a) was personally present in Malaysia; (b) ordinarily resided or had a place of residence in Malaysia; (c) was carrying on business in Malaysia either personally or by means of an agent; or (d) was a member of a firm or partnership which carried on business in Malaysia. Receiving Order Jurisdiction to make receiving order 4. Subject to the conditions hereinafter specified, if a debtor has committed an act of bankruptcy, the Court may on a bankruptcy 17 Bankruptcy petition being presented, either by a creditor or by the debtor make an order for the protection of the estate, which order is in this Act called a receiving order. Conditions on which creditor may petition 5. (1) A creditor shall not be entitled to present a bankruptcy petition against a debtor unless-- (a) the debt owing by the debtor to the petitioning creditor, or if two or more creditors join in the petition the aggregate amount of debts owing to the several petitioning creditors, amounts to *thirty thousand ringgit; (b) the debt is a liquidated sum payable either immediately or at some certain future time; (c) the act of bankruptcy on which the petition is grounded has occurred within six months before the presentation of the petition; and (d) the debtor is domiciled in Malaysia or in any State or within one year before the date of the presentation of the petition has ordinarily resided or had a dwelling house or place of business in Malaysia or has carried on business in Malaysia personally or by means of an agent or is or has been within the same period a member of a firm or partnership which has carried on business in Malaysia by means of a partner or partners or an agent or manager. (2) If the petitioning creditor is a secured creditor he must in his petition either state that he is willing to give up his security for the benefit of the creditors in the event of the debtor being adjudged bankrupt or give an estimate of the value of his security. In the latter case he may to the extent of the balance of the debt due to him, after deducting the value so estimated, be admitted as a petitioning creditor in the same manner as if he were an unsecured creditor. (3) A petitioning creditor shall not be entitled to commence any bankruptcy action against a social guarantor unless he proves to the satisfaction of the court that he has exhausted all avenues to recover debts owed to him by the debtor. *NOTE--Previously "ten thousand ringgit"­see the Bankruptcy (Amendment) Act 2003 [Act A1197]. 18 Laws of Malaysia ACT 360 Proceedings and order on creditor's petition 6. (1) A creditor's petition shall be verified by affidavit of the creditor or of some person on his behalf having knowledge of the facts, and shall be served as prescribed. (2) At the hearing the court shall require proof of-- (a) the debt of the petitioning creditor; (b) the act of bankruptcy or, if more than one act of bankruptcy is alleged in the petition, some one of the alleged acts of bankruptcy; and (c) if the debtor does not appear, the service of the petition, and if satisfied with the proof may make a receiving order in pursuance of the petition. (3) If the court is not satisfied with the proof of the petitioning creditor 's debt or of the act of bankruptcy or of the service of the petition, or is satisfied by the debtor that he is able to pay his debts, or that for other sufficient cause no order ought to be made, the court may dismiss the petition. (4) When the act of bankruptcy relied on is non-compliance with a bankruptcy notice to pay, secure or compound for a judgment debt, the court may if it thinks fit stay or dismiss the petition on the ground that an appeal is pending from the judgment. (5) Where the debtor appears on the petition and denies that he is indebted to the petitioner, or that he is indebted to such an amount as would justify the petitioner in presenting a petition against him, the court, on such security, if any, being given as the court may require for payment to the petitioner of any debt which may be established against the debtor in due course of law and of the costs of establishing the debt, may, instead of dismissing the petition, stay all proceedings on the petition for such time as may be required for trial of the question relating to the debt. (6) Where proceedings are stayed the court may, if by reason of the delay caused by the stay of proceedings or for any other cause it thinks just, make a receiving order on the petition of some other creditor, and shall thereupon dismiss, on such terms as it thinks just, the petition in which proceedings have been stayed as aforesaid. 19 Bankruptcy (7) A creditor's petition shall not after presentation be withdrawn without the leave of the court. Debtor's petition and order thereon 7. (1) A debtor's petition shall allege that the debtor is unable to pay his debts, and the presentation thereof shall be deemed an act of bankruptcy without the previous filing by the debtor of any declaration of inability to pay his debts, and the court shall thereupon make a receiving order. (2) A debtor's petition shall not after presentation be withdrawn without the leave of the court. Effect of receiving order 8. (1) On the making of a receiving order the Director General of Insolvency shall be thereby constituted receiver of the property of the debtor, and thereafter, except as directed by this Act, no creditor to whom the debtor is indebted in respect of any debt provable in bankruptcy shall have any remedy against the property or person of the debtor in respect of the debt, or shall proceed with or commence any action or other legal proceeding in respect of such debt unless with the leave of the court and on such terms as the court may impose. (2) This section shall not affect the power of any secured creditor to realize or otherwise deal with his security in the same manner as he would have been entitled to realize or deal with it if this section had not been passed--nor shall it operate to prejudice the right of any person to receive any payment under or by virtue of section 31 of the Employment Act 1955 [Act 265] of the States of *Peninsular Malaysia or any corresponding provisions in Sabah and Sarawak. (2A) Notwithstanding subsection (2), no secured creditor shall be entitled to any interest in respect of his debt after the making of a receiving order if he does not realize his security within six months from the date of the receiving order. (3) On a receiving order being made against a debtor he shall, within twenty-four hours after such order has been served upon him file an affidavit in the office of the Director General of Insolvency, containing a true and correct statement of the names and residences *NOTE--All references to "West Malaysia" shall be construed as reference to "Penisular Malaysia"­see the Interpretation (Amendment) Act 1997 [Act A996], subsection 5(2). 20 Laws of Malaysia ACT 360 of all the partners, if any, in his business and of his principal assets and liabilities. Such statement shall for the purposes of this Act be deemed to be part of the debtor's statement of his affairs referred to in section 16. (4) On such order as aforesaid being made against a debtor the Director General of Insolvency shall forthwith take possession of all books of account and other papers and documents in the possession, custody or control of the debtor relating to his property or affairs, and may take into his possession all or any deeds, books, documents and other property of the debtor. Court may detain or order arrest of debtor and commit him to prison unless he gives security not to leave Malaysia 9. (1) On making a receiving order, the court, on application made by or on behalf of the petitioning creditor or any other person claiming to be a creditor, may detain the debtor if he is present, and if he is not present may order the debtor to be arrested and brought before the court by warrant addressed to any police officer or officer of the court, and unless the debtor, when so detained or brought before the court, gives security to the satisfaction of the court that he will not leave Malaysia without the previous permission in writing of the Director General of Insolvency or of the court, he may be committed to the civil prison and be there kept until the close of his public examination or until the court otherwise orders. (2) If a receiving order is made against a firm in the firm's name no such warrant to arrest any alleged partner in the firm shall issue, except upon the application of the petitioning or some other creditor and upon evidence on oath as to the persons who at the date of the receiving order are partners in the firm. (3) If any person arrested denies that he is a partner, the court shall order his release unless the petitioning or other creditor gives security, to the satisfaction of the court, to meet the probable damages if such person is found not to be a partner. (4) The cost of maintaining any debtor in prison under this section shall be prepaid by the applicant from time to time to the gaol authority, according to the cost of rations for the time being. 21 Bankruptcy Discretionary powers as to appointment of interim receiver and stay of proceedings 10. (1) The court may, if it thinks it advisable for the protection of the estate, at any time after the presentation of a bankruptcy petition and before a receiving order is made, appoint the Director General of Insolvency to be interim receiver of the property of the debtor or of any part thereof, and direct him to take immediate possession thereof or of any part thereof, including all books of account and other papers and documents belonging to the debtor and relating to his business. (2) The court may at any time after the presentation of a bankruptcy petition stay any action, execution or other legal process against the property or person of the debtor. Service of order staying proceedings 11.  Where an order is made under section 10, staying any action or proceeding or staying proceedings generally, the order may be served by sending a copy thereof, under the seal of the court, by prepaid registered post to the address for service of the plaintiff or other party prosecuting such proceeding. Power to appoint special manager 12. (1) The Director General of Insolvency may, if satisfied that the nature of the debtor's estate or business or the interests of the creditors generally require the appointment of a special manager of the estate or business other than the Director General of Insolvency, appoint a manager thereof accordingly to act until the first meeting of creditors, and with such powers, including any of the powers of a receiver, as are entrusted to him by the Director General of Insolvency. (2) The debtor may be appointed special manager. (3) The special manager shall give security and account in such manner as the Director General of Insolvency, subject to the control of the court, directs. (4) The special manager shall receive such remuneration as the Director General of Insolvency, within the prescribed limits and subject to such control as aforesaid, determines. 22 Laws of Malaysia ACT 360 Advertisement of receiving order 13.  Notice of every receiving order, stating the name, address and description of the debtor, the date of the order and the date of the petition, shall be gazetted and advertised in a local paper as prescribed. Power of court to rescind receiving order in certain cases 14.  If in any case where a receiving order has been made on a bankruptcy petition it appears to the court, upon an application by the Director General of Insolvency or any creditor or other person interested, that a majority of the creditors in number and value are resident in the Republic of Singapore, and that from the situation of the property of the debtor or for other causes his estate and effects ought to be distributed among the creditors under the bankruptcy or insolvency laws of that country, the court, after such inquiry as it seems fit, may rescind the receiving order and stay all proceedings on or dismiss the petition upon such terms, if any, as it thinks fit. Proceedings consequent on Receiving Order First and other meetings of creditors 15. (1) As soon as may be after the making of a receiving order against a debtor a general meeting of his creditors, in this Act referred to as the first meeting of creditors, shall be held for the purpose of considering whether a proposal for a composition or scheme of arrangement shall be entertained, or whether it is expedient that the debtor be adjudged bankrupt, and generally as to the mode of dealing with the debtor's property. (1A) Any creditor who has tendered a proof of debts, or his representative duly authorized in writing, may question the debtor concerning his affairs and the causes of his failure. (2) With respect to the summoning of and proceedings at the first and other meetings of creditors the rules in Schedule A shall be observed. Debtor's statement of affairs 16. (1) Where a receiving order is made against a debtor he shall make out and submit to the Director General of Insolvency a statement of and in relation to his affairs in the prescribed form, 23 Bankruptcy verified by affidavit, showing the particulars of the debtor's assets, debts and liabilities, the names, residences and occupations of his creditors, the securities held by them respectively, the dates when the securities were respectively given, the cause of his insolvency, the date when he last balanced his accounts before becoming insolvent, the amount of his capital at the date of such balance, after providing for all his liabilities and making allowances for bad and doubtful debts, and such further and other information as is prescribed or as the Director General of Insolvency requires. (2) The statement shall be so submitted within the following times: (a) if the order is made on the petition of the debtor, within seven days from the date of the order; (b) if the order is made on the petition of a creditor, within twenty-one days from the date of the order, but the Director General of Insolvency may in either case for special reasons extend the time by order made under his hand, to be forthwith filed, recording the reasons therefor. (3) If the debtor fails without reasonable excuse, proof whereof shall lie on him, to comply with the requirements of this section he shall be guilty of a contempt of court and may be punished accordingly, and the court may on the application of the Director General of Insolvency or of any creditor adjudge him bankrupt. (4) Any person stating himself, in writing, to be a creditor of the bankrupt may personally or by agent inspect this statement at all reasonable times and take any copy thereof or extract therefrom, but any person untruthfully so stating himself to be a creditor shall be guilty of a contempt of court and shall be punishable accordingly on the application of the Director General of Insolvency. Public Examination of Debtor Public examination of debtor 17. (1) Where the court makes a receiving order, the Director General of Insolvency may make an application to hold a public sitting on a day to be appointed by the court for the examination of the debtor, and the debtor shall attend thereat, and shall be examined as to his conduct, dealing and property: 24 Laws of Malaysia ACT 360 Provided that when the debtor is a lunatic or suffers from any such mental or physical affliction or disability as in the opinion of the Court renders him unfit to attend his public examination the court may dispense with such examination or direct the debtor to be examined in such manner and place as the court thinks expedient. (2) The examination shall be held as soon as conveniently may be after the expiration of the time for the submission of the debtor's statement of affairs and after the first meeting of creditors. (3) The court may adjourn the examination from time to time. (4) Any creditor who has tendered a proof, or his representative authorized in writing, may question the debtor concerning his affairs and the causes of his failure. (5) The Director General of Insolvency shall take part in the examination of the debtor, and for the purpose thereof may, if specially authorized by the Attorney General, employ an advocate and solicitor but no advocate and solicitor shall be allowed to take part in the examination on behalf of the debtor. (6) The court may put such questions to the debtor as it thinks expedient. (7) The debtor shall be examined upon oath, and it shall be his duty to answer all such questions as the court puts or allows to be put to him. (8) Such notes of the examination as the court thinks proper shall be taken down in writing by the Registrar and shall be read over to and signed by the debtor, and may thereafter be used in evidence against him, and shall be open to the inspection of any creditor at all reasonable times. (9) When the court is of opinion that the affairs of the debtor have been sufficiently investigated, it shall, by order, declare that his examination is concluded, but such order shall not preclude the court from directing a further examination of the debtor as to his conduct, dealings and property whenever it sees fit to do so. (10) (Deleted by Act A827). 25 Bankruptcy Composition or Scheme of Arrangement Power for creditors to accept and court to approve composition or arrangement 18. (1) The creditors may, by special resolution at the first meeting or any adjournment thereof, resolve to entertain a proposal for a composition in satisfaction of the debts due to them from the debtor, or a proposal for a scheme of arrangement of the debtor's affairs. (2) The composition or scheme shall not be binding on the creditors unless it is confirmed at a subsequent meeting of the creditors by a resolution passed by a majority in number, representing at least three-fourths in value of all the creditors who have proved, and is approved by the court. (3) Any creditor who has proved his debt may assent to or dissent from such composition or scheme by a letter addressed to the Director General of Insolvency in the prescribed form, and attested by a witness, and sent or posted so as to be received by such Director General of Insolvency not later than the day preceding such subsequent meeting, and a creditor so assenting or dissenting shall be taken as being present and voting at such meeting. (4) The subsequent meeting shall be summoned by the Director General of Insolvency by not less than seven days' notice and shall not be held until after the public examination of the debtor is concluded. (5) The notice shall state generally the terms of the proposal and shall be accompanied by a report of the Director General of Insolvency thereon. (6) The debtor or the Director General of Insolvency may, after the composition or scheme is accepted by the creditors, apply to the court to approve it, and notice of the time appointed for hearing the application shall be given as prescribed. (7) (Deleted by Act A827). (8) The court before approving a composition or scheme shall hear a report of the Director General of Insolvency as to the terms of the composition or scheme and as to the conduct of the debtor, and shall hear any objections which may be made by or on behalf of any creditor. 26 Laws of Malaysia ACT 360 (9) If the court is of opinion that the terms of the composition or scheme are not reasonable or are not calculated to benefit the general body of creditors, and in any case in which the court is required under this Act to refuse a bankrupt his discharge, the court shall, or if any such facts are proved as would under this Act justify the court in refusing, qualifying or suspending the discharge, the court may, in its discretion, refuse to approve the composition or scheme. (10) If the court approves the composition or scheme the approval may be testified by the seal of the court being attached to the instrument containing the terms of the composition or scheme, or by the terms being embodied in an order of the court. (11) A composition or scheme accepted and approved in pursuance of this section shall be binding on all the creditors so far as relates to any debts due to them from the debtor and provable in bankruptcy. (12) A certificate of the Director General of Insolvency that a composition or scheme has been duly accepted and approved shall, in the absence of fraud, be conclusive as to its validity. (13) A composition or scheme under this section may be enforced by the court on application by any person interested, and any disobedience of an order of the court made on the application shall be deemed a contempt of court. (14) If default is made in payment of any instalment due in pursuance of the composition or scheme, or if it appears to the court on satisfactory evidence that the composition or scheme cannot, in consequence of legal difficulties or for any sufficient cause, proceed without injustice or undue delay to the creditors or to the debtor, or that the approval of the court was obtained by fraud, the court may, if it thinks fit, on application by any creditor, adjudge the debtor bankrupt and annul the composition or scheme, but without prejudice to the validity of any sale, disposition or payment duly made or thing duly done under or in pursuance of the composition or scheme. (15) W h e r e  a  debtor  is  adjudged  bankrupt  under subsection (14), any debt provable in other respects, which has been contracted before the date of the adjudication, shall be provable in the bankruptcy. 27 Bankruptcy (16) If under or in pursuance of a composition or scheme a trustee or assignee is appointed to administer the debtor's property or manage his business or distribute a composition, Part IV shall apply to such trustee or assignee as if he were an assignee in a bankruptcy, and as if the terms "bankruptcy","bankrupt" and "order of adjudication" included respectively a composition or scheme of arrangement, a compounding or arranging debtor and an order approving the composition or scheme. (17) Part III shall, so far as the nature of the case and the terms of the composition or scheme admit, apply thereto, the same interpretation being given to the words "assignee," "bankruptcy" and "order of adjudication" as in subsection (16). (18) No composition or scheme shall be approved by the court which does not provide for the payment in priority to other debts of all debts directed to be so paid in the distribution of the property of a bankrupt. (19) The acceptance by a creditor of a composition or scheme shall not release any person who under this Act would not be released by an order of discharge if the debtor had been adjudged bankrupt. Effect of composition or scheme 19.  Notwithstanding the acceptance and approval of a composition or scheme, such composition or scheme shall not be binding on any creditor so far as regards a debt or liability from which, under this Act, the debtor would not be discharged by an order of discharge in bankruptcy unless the creditor assents to the composition or scheme. No deed of arrangement valid except under section 18 or 26 unless registered 20.  No deed of arrangement, except a composition or scheme entered into under section 18 or 26, shall be valid unless the same has been registered within fourteen clear days after the first execution thereof by the debtor or any creditor, in accordance with the rules for the time being in force for the registration of deeds of arrangements under this Act. 28 Laws of Malaysia ACT 360 Penalty for collusive preference 21. (1) Every person who signs or on whose behalf is signed a deed of arrangement to which section 20 applies, who within two months before or at any period after signing the same, receives any secret or collusive preference, gratuity, security, payment or other consideration, all hereinafter included in the expression "gratuity", for concurring in or signing such deed of arrangement shall be guilty of an offence punishable as hereinafter mentioned. (2) Every gratuity for concurring in or signing, or having concurred in or signed a deed of arrangement, shall be deemed to be secret and collusive unless the same or any promise for the same is disclosed on the face of the deed of arrangement or in a memorandum annexed to the deed at the time when the person who has received or is to receive such gratuity signs the deed of arrangement, which memorandum shall also be signed in acknowledgment of having seen the same by all the parties to the deed of arrangement before the registration thereof. (3) Every person committing an offence under this section shall be liable to a fine not exceeding five times the amount or value of the gratuity received by or promised to him, and the court before which such person is tried may award a part of any such fine, not exceeding one-half thereof, to the informer through whom the conviction has been obtained, provided that such informer is not the debtor. Power of Minister to make rules 22. (1) The Minister may make rules for the registration of deeds of arrangement under this Act. (2) Such rules shall provide for-- (a) the mode of registration; (b) the form of the registers to be kept for the purpose of registration of deeds of arrangement under this Act; (c) the inspection of the registers and deeds registered and the taking of copies and extracts of the same, and the custody of the registers and other documents connected with the business of registration; (d) the fees to be taken in respect of registration of deeds of arrangement and in respect of office copies or extracts and searches. 29 Bankruptcy (3) Until rules are made under this section, the rules for the registration of deeds of arrangements shall be as set out in Schedule B. Rectification of registers 23.  The court, upon being satisfied that the omission to register a deed of arrangement within the time required by this Act, or that the omission or mis-statement of the name, residence or description of any person was accidental or due to inadvertence or to some cause beyond the control of the debtor and not imputable to any negligence on his part, may, on the application of any party interested and on such terms and conditions as are just and expedient, extend the time for such registration or order such omission or mis- statement to be supplied or rectified by the insertion in the register of the true name, residence or description. Adjudication of Bankruptcy Adjudication of bankruptcy 24. (1) At the time of making a receiving order the court shall adjudge the debtor bankrupt unless the debtor can show to the satisfaction of the court that he is in a position to offer a composition or make a scheme of arrangement satisfactory to his creditors; provided that when a receiving order is made against a firm in the firm's name the court shall not adjudge any person bankrupt as a member of the firm unless such person is proved to the satisfaction of the court to be a partner by his own admission or by evidence on oath. (2) The court may at any time, on the application of the debtor himself, by petition in writing, unstamped, to be forthwith filed, adjudge him bankrupt and at the same time make a receiving order against him, and such application may be made without notice. (3) Where a receiving order is made against a debtor, if the creditors at the first meeting or any adjournment thereof resolve by ordinary resolution that the debtor be adjudged bankrupt or pass no resolution, or if the creditors do not meet, or if a composition or scheme is not accepted or approved in pursuance of this Act within fourteen days after the conclusion of the examination of the debtor or such further time as the court allows, the court shall adjudge the debtor bankrupt. 30 Laws of Malaysia ACT 360 (4) When a debtor is adjudged bankrupt his property shall become divisible among his creditors and shall vest in the Director General of Insolvency. (5) Notice of every order adjudging a debtor bankrupt, stating the name, address and description of the bankrupt and the date of the adjudication, shall be published in the Gazette and advertised in a local paper as prescribed, and the date of the order shall for