How did the Insolvency Act threshold rise to RM100,000 affect filings?

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The Insolvency Act’s RM100,000 Threshold Reduction Led to Fewer Entrepreneur Bankruptcies

The number of bankruptcy cases involving entrepreneurs saw a decrease, falling to 5,695 in the previous year from 6,554 in 2021. This decline is directly attributed to the amendment of paragraph 5(1)(a) of the Insolvency Act 1967, which was enacted through the Insolvency (Amendment) Act 2020. The key change introduced by this amendment was the raising of the bankruptcy threshold to RM100,000.
Lowered Filing Numbers for Entrepreneurs

Last year, the total number of bankruptcy cases specifically concerning entrepreneurs stood at 5,695. This represents a notable reduction from the 6,554 cases recorded in 2021. The revised legal framework, which increased the minimum debt required for a bankruptcy petition to RM100,000, is identified as the primary factor behind this downward trend.
Legislative Amendment and its Impact

The Insolvency (Amendment) Act 2020, specifically Act A1624, brought about a significant alteration to the Insolvency Act 1967. By amending paragraph 5(1)(a), the law effectively raised the monetary threshold for bankruptcy proceedings. This legislative adjustment means that a higher debt amount is now required before an individual, including entrepreneurs, can be formally declared bankrupt.
Government Initiatives to Support Entrepreneurs

Beyond the threshold adjustment, the government has implemented other measures to assist entrepreneurs. The introduction of the Voluntary Arrangement under Act 360, effective from October 6, 2017, allows debtors to seek a court order to suspend bankruptcy proceedings. This suspension provides a window for debtors to negotiate debt repayment plans with their creditors, offering an alternative to formal bankruptcy.
Public Awareness and Discharge Programmes

The Malaysian Department of Insolvency (MdI) has also been active in raising awareness and facilitating relief for those affected by bankruptcy. Programmes such as MdL Prihatin and social media campaigns are being utilised to educate the public on bankruptcy issues. Furthermore, an initiative commenced on March 1 of this year to discharge individuals with debts under RM50,000 from their bankruptcy status, provided they meet the stipulated conditions.

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How did the Insolvency Act threshold rise to RM100,000 affect filings?

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