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Cases & Deals


Amendment to the Insolvency Act 1967 - Insolvency (Amendment) Act 2023
June 2023

Part A - Introduction


1. On 24.5.2023, the Insolvency (Amendment) Bill 2023 (‘Amendment’) was passed unanimously by the Dewan Rakyat. The overarching intention of the Amendment is to facilitate a more effective bankruptcy administration.


2. Amongst the key amendments to the Insolvency Act 1967 (‘the Act’) are as follows:























Part B – A silver lining for bankrupt individuals?


1. For ease of reference, the differences in s 33C of the Act following the Amendment are as follows:

2. Historically, automatic discharge was introduced vide the Bankruptcy (Amendment) Act 2017 with the intention to reduce the number of reported bankruptcy cases.

3. Prior to the Amendment, automatic discharge was applicable upon the expiration of 3 years from submission of statement of affairs, provided that the bankrupt individual meets the target contribution. However, there has been difficulty for any bankrupt individual to comply with the target contribution, and this target contribution is solely determined by the DGI. Whether the DGI takes into account the bankrupt individual’s ability to repay is another matter altogether. 

4. The difficulty to pay the target contribution is evident whereby there has been no successful case of automatic discharge since it was introduced. 

    5. Therefore, the Amendment intends to relax the condition for automatic discharge by prescribing the target contribution based on the bankrupt individual’s financial ability. This is to enable the bankrupt individual to be discharged in a shorter period of time of 3 years from the submission of the statement of affairs. 

    6. Notwithstanding the relaxed condition, the Amendment has introduced a new power for the DGI to suspend the automatic discharge of a bankrupt individual for not more than 2 years, if the bankrupt individual does not fulfill his obligations under the Act. The DGI’s new power may very well undo the intended effect brought upon by the relaxed condition for an automatic discharge.  

    7. The other hurdle that the bankrupt individual needs to overcome is the creditor. A creditor who wishes to object to the automatic discharge may still apply to the court, within 21 days upon being notified, to suspend the automatic discharge on the ground, amongst others, that the discharge will prejudice the administration of justice. This broad and encompassing provision, unless refined, may give the creditor the right to object to the automatic discharge thereby nullifying any good intention of the Amendment. 

    8. On another note, the Amendment includes 2 new categories of bankrupt individual whose discharge cannot be opposed by the creditors, namely bankrupt individual above 70 years old, and bankrupt individual who is incapable of managing their affairs due to mental disorder, as certified by a psychiatrist from any government hospital. This particular amendment has more bite as it excludes the view of the creditors in such discharge application.   

    9. Only time will tell if the Amendment will achieve its purpose, or will we see another round of refinement in the near future.


Brian Foong Mun Loong

Anson Chee Weng Kian

[1] Section 9 of the Amendment.

[2] Section 8 of the Amendment.

[3] Section 3 of the Amendment.

[4] Section 2 of the Amendment.

[5] Section 10 of the Amendment.

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