KUALA LUMPUR – The lack of a set bankruptcy threshold when the law minister next September holds discretionary powers to decide the limit has caused concern, especially among businesses, that it will affect debt-related enforcement.
Previously, the amount of debt required to proceed with a bankruptcy action was RM50,000, but with the Insolvency (Amendment) Act 2020, the limit is raised to RM100,000.
The Temporary Measures for Reducing the Impact of Coronavirus Disease 2019 (Covid-19) Act 2020, which came into force last week, also increases the threshold to RM100,000, but will be in force only up till August 31, 2021.
Though similar-sounding, the two laws have key differences, lawyer V. Satchianthan told The Vibes.
“First, the changes made to the Covid-19 Act with regard to bankruptcy are in force only until August 31 (next year).
“As for the Insolvency (Amendment) Act, the minister is given powers to change the threshold.”
He said the minister can exercise the said powers only after the period stated in the Covid-19 Act.
“The Covid-19 Act expressly states that it supersedes other laws. If the minister wants to make changes to the bankruptcy threshold now, it would clash with the Covid-19 Act.”
SME Association of Malaysia president Datuk Michael Kang said businesses prefer a set limit.
“If the bankruptcy threshold can change from time to time, businesses may be fearful. It should be in black and white, not change from time to time.”
However, he said, the government’s move is welcome for the near term, in view of the Covid-19 pandemic and its effects on individuals and companies.
“The amendment is definitely good for commerce (for now) as it allows parties to work together to find solutions, like giving discounts or coming up with instalment plans.
“There is no point if you declare the other party bankrupt and get nothing.” – The Vibes, October 30, 2020
.jpg)
.jpg)
