QUOTE(F3RAL HO @ Feb 7 2012, 01:59 PM)
Dear Bro & Sis Lawyers,
Sorry to barge in on any current discussion, but i got a case which i really need help. Really hope dear bro & sis lawyers could share your expertise and guide me.
I was referred by a lowyat member onto this thread after i've posted my question on Finance, Business and Investment House.
Previous ThreadAnyhow, my relative is sued for bankruptcy on year 2009 (he is still not bankrupt at the moment, but blacklisted), he transferred his property (own house) to his sister in the same year 2009. I've heard that the official assignees or government have the power to take back the property of the bankrupt (even after transferred or sold to third party). Is it true?
Also, there is a duration of 2/5 years, why is there 2 different durations?
Welcome. This is an open thread for anyone to drop by and pose questions, so don't need to to say sorry to barge in for anything. Open discussions are always welcome.
Now, a person commits an act of bankruptcy in the following scenarios as stated in Section 3 of the Bankruptcy Act 1967:
3. (1) A debtor commits an act of bankruptcy in each of the
following cases:
(a) if in Malaysia or elsewhere he makes a conveyance or
assignment of his property to a trustee or trustees for the
benefit of his creditors generally;
(b) if in Malaysia or elsewhere he makes a fraudulent
conveyance, gift, delivery or transfer of his property or
of any part thereof;
© if in Malaysia or elsewhere he makes any conveyance or
transfer of his property or of any part thereof, or creates
any charge thereon which would under this or any other
written law for the time being in force be void as a
fraudulent preference if he were adjudged bankrupt;
(d) if with intent to defeat or delay his creditors he does any
of the following things:
(i) departs out of Malaysia or being out of Malaysia
remains out of Malaysia;
(ii) departs from his dwelling-house or otherwise
absents himself, or begins to keep house or closes
his place of business; or
(iii) submits collusively or fraudulently to an adverse
judgment or order for the payment of money;
Bankruptcy 15
(e) if execution issued against him has been levied by seizure
of his property under process in an action or in any civil
proceeding in the High Court, Sessions Court or Magistrates
Court where the judgment, including costs, is for an
amount of one thousand ringgit or more;
(f) if he files in the court a declaration of his inability to pay
his debts or presents a bankruptcy petition against himself;
(g) if he gives notice to any of his creditors that he has
suspended or that he is about to suspend payment of his
debts;
(h) if he makes to any two or more of his creditors, not being
partners, an offer of composition with his creditors or a
proposal for a scheme of arrangement of his affairs, and
such offer or proposal is not followed by the registration
within fourteen days thereafter of a deed of arrangement
with his creditors, in accordance with the rules for the
time being in force for the registration of deeds of
arrangement under this Act;
(i) if a creditor has obtained a final judgment or final order
against him for any amount and execution thereon not
having been stayed has served on him in Malaysia, or by
leave of the court elsewhere, a bankruptcy notice under
this Act requiring him to pay the judgment debt or sum
ordered to be paid in accordance with the terms of the
judgment or order with interest quantified up to the date
of issue of the bankruptcy notice, or to secure or compound
for it to the satisfaction of the creditor or the court; and
he does not within seven days after service of the notice
in case the service is effected in Malaysia, and in case
the service is effected elsewhere then within the time
limited in that behalf by the order giving leave to effect
the service, either comply with the requirements of the
notice or satisfy the court that he has a counterclaim, set
off or cross demand which equals or exceeds the amount
of the judgment debt or sum ordered to be paid and
which he could not set up in the action in which the
judgment was obtained or in the proceedings in which
the order was obtained:
Provided that for the purposes of this paragraph and
of section 5 any person who is for the time being entitled
to enforce a final judgment or final order shall be deemed
to be a creditor who has obtained a final judgment or
final order;
(j) if the officer charged with the execution of a writ of
attachment or other process makes a return that the
debtor was possessed of no property liable to seizure;
and for the purposes of this paragraph the date when the
writ is lodged with the officer shall be deemed to be the
date of the act of bankruptcy.In your relative's case, the act of bankruptcy referred to would be in clause © - fraudulent transfer. Why fraudulent? Because it was done clearly to defeat the interest of his creditors, who would be entitled to the proceeds of an auction of the property had it still been registered in his name.
As such, such transfer would void and can be set aside by the Director-General of Insolvency.
With regard to the doctrine of relation back, I am not aware of any duration of 2/5 years in relation to voidance of transfer in such scenarios.
The doctrine of relation back is provided for in Section 47 of the Act:
Relation back of Director General of Insolvency’s title
47. (1) The bankruptcy of a debtor, whether the same takes place
on the debtor’s own petition or upon that of a creditor, shall be
deemed to have relation back to and commence at the time of the
act of bankruptcy being committed on which a receiving order is
made against him, or if the bankrupt is proved to have committed
more acts of bankruptcy than one to have relation back to and to
commence at the time of the first of the acts of bankruptcy proved
to have been committed by the bankrupt within six months next
preceding the date of the presentation of the bankruptcy petitionThe assets of a bankrupt are deemed to be under the control of the Director General of Insolvency [DGI]. As such, the DGI has title over it.
Section 47 provides that the bankruptcy of a debtor can be related back to the date of the act of bankruptcy committed by that debtor. In your relative's case, it would be on the date he transferred the title in favour of another relative to defeat the interest of his creditors.
It also provides, in simple terms, that if there are more than 1 act of bankruptcy, any act done to defeat the title of the DGI can be related back to 6 months before the presentation of the bankruptcy petition by a creditor.
Property is not limited to real property. It includes others as well. Definition of property in the Act is as follows:
“property” includes money, goods, things in action, land and
every description of property, whether real or personal and whether
situate in Malaysia or elsewhere, also obligations, easements and
every description of estate, interest and profit, present or future,
vested or contingent, arising out of or incident to property as
above definedHope the above helps. If there is anyone else who would like to contribute another opinion backed by legal provisions, you are most welcome to correct my opinion as above.