Will Najib lose control of his assets if bankrupt?

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Najib Would Lose Control of His Assets if Declared Bankrupt

If Datuk Seri Najib Razak is declared bankrupt, he would lose control over his assets, which would then be placed under the authority of the director-general of insolvency. This significant consequence was highlighted by his lawyer, Tan Sri Shafee Abdullah, during arguments before the Court of Appeal. The potential loss of asset control is a key concern in the ongoing legal dispute concerning substantial tax arrears.
Bankruptcy Proceedings and Asset Control

The core of the argument presented by Najib's legal team is that allowing the Inland Revenue Board (LHDN) to proceed with its bankruptcy case would render his appeal before the Special Commissioners of Income Tax (SCIT) meaningless. Shafee likened the situation to being unable to defend oneself effectively if bankruptcy proceedings were to advance without resolution of the underlying tax appeal. A declaration of bankruptcy would not only restrict Najib's activities but, crucially, would lead to his assets being managed by a state-appointed official.
Tax Dispute and "Pay First, Talk Later" Principle

The tax assessment in question amounts to an additional RM1.69 billion for the years 2011 to 2017. Najib maintains that the funds, allegedly RM8 billion in donations, were used for political and welfare purposes. However, the LHDN, represented by senior revenue counsel Norhisham Ahmad, cited a Federal Court ruling from October 2023. This ruling upheld the "pay first, talk later" principle, which dictates that tax assessments must be settled irrespective of any ongoing appeals.
High Court Ruling on Bankruptcy Proceedings

This legal challenge follows a High Court decision on November 17 last year, which rejected applications by both Najib and his son, Nazifuddin, to stay bankruptcy proceedings. These proceedings were initiated due to unpaid tax arrears, with Najib facing RM1.69 billion and Nazifuddin RM37.6 million. The High Court's ruling affirmed that taxpayers cannot use pending appeals as a shield against tax recovery actions.
Najib's Challenge to Bankruptcy Notices

Najib is currently contesting two bankruptcy notices. His argument is that the tax assessments, which have escalated from RM1.46 billion to RM1.69 billion due to penalties and interest, are fundamentally flawed. He contends that these assessments should not be enforced while related legal proceedings are still active and unresolved.

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Will Najib lose control of his assets if bankrupt?

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