What does the Insolvency (Amendment) Act 2020 change for entrepreneurs?

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The Insolvency (Amendment) Act 2020 raised the bankruptcy threshold to RM100,000, aiming to reduce bankruptcy rates among entrepreneurs.

The Insolvency (Amendment) Act 2020 introduced a significant change by amending paragraph 5(1)(a) of the Insolvency Act 1967, effectively increasing the bankruptcy threshold to RM100,000. This legislative adjustment was specifically implemented with the objective of assisting entrepreneurs and consequently lowering the overall rate of bankruptcy within this demographic.
Increased Bankruptcy Threshold

The core change brought about by the Insolvency (Amendment) Act 2020 is the elevation of the minimum debt required to initiate bankruptcy proceedings. Previously, the threshold was lower, but the amendment, which modified Act 360, set the new benchmark at RM100,000. This means that an individual must owe RM100,000 or more to be declared bankrupt under the updated legislation.
Reduction in Entrepreneurial Bankruptcies

Following the implementation of the amended Act, there has been a noticeable decrease in the number of bankruptcy cases involving entrepreneurs. In the past year, the number of such cases stood at 5,695, a reduction from the 6,554 cases recorded in the preceding year. This decline is directly attributed to the higher bankruptcy threshold, which provides a greater buffer for entrepreneurs before they face potential bankruptcy.
Introduction of Voluntary Arrangement

Beyond raising the threshold, the government also introduced the Voluntary Arrangement under Act 360, effective from October 6, 2017. This mechanism allows debtors to seek an interim court order to suspend bankruptcy proceedings. During this suspension, debtors can engage with their creditors to negotiate a repayment plan for their outstanding debts, offering an alternative to outright bankruptcy.

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What does the Insolvency (Amendment) Act 2020 change for entrepreneurs?

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