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Conditions precedent to
bankruptcy
y Apart from the statutory requirement of a debt of
RM30,000.00, M

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y ÷he acts are listed under Section 3(1) (a) to (j) of

Bankruptcy Act.

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Acts of bankruptcy in connection with the
debtor͛s dealing with his property.
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M 
A debtor commit an act of bankruptcy if he makes a
conveyance or assignment of his property to a trustee
for the benefit of his creditors generally.

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y Such conduct is made an act of bankruptcy as the
property of the debtor may by conveyance be
distributed otherwise than in accordance with the law
of bankruptcy and thus may detrimental to the
interest of the creditors.

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y u)
M 
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M
A debtor commits an act of bankruptcy when he makes
a fraudulent conveyance, gift, delivery or transfer of all
or part of his property to another person.

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y §t must be made with fraudulent intention.
y §ntention may be inferred from the surrounding
circumstances and it may be fraudulent even if the
transferee has given valuable consideration.

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§n Re Anson Cycle & Motor Works
[1960] MLJ 171
y M ÷he debtor claimed that he had sold a
house to his secondary wife for RM16,000.00 three
month before he was made bankrupt. ÷he court
was satisfied that the wife had given valuable
consideration for the conveyance, but was of the
opinion that she shared her husbandǯs intention to
defraud his creditors. ÷he Court held that the sale
gave rise to an act of bankruptcy.

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ëfficial Assignee v Koh Thong Chuan [1997]
5 MLJ 136
y ÷he debtor sold to his son a property for RM1
millions less than 6 months before a Creditorǯs
petition was presented against him.

y §ssue: Whether the conveyance was fraudulent?

D
y Court noted the financial standing of the son who
was only u years old then , his silence over the
over payment of the purchase price which was
itself below the market price, his knowledge of the
financial difficulties his father was in and the
possible motive for the scheme, and concluded
that on the balance of probabilities, the
conveyance was fraudulent.

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y
M   
M





A debtor commits an act of bankruptcy if he is in
Malaysia or elsewhere convey or transfers or
charges his property or any part thereof and such
transaction would be void as a fraudulent
preference under the act or any other written law if
he were adjudged bankrupt.

d
y A debtor is deemed to have given a fraudulent
preference over other creditors if he is found to have
given benefit in favour of the creditor when he is
unable to pay his debt from his own money as they
become due, and if he is adjudged bankrupt on a
bankruptcy petition presented within six month after
the date of giving the benefit.

dd
y ÷he benefit maybe given by way of making a
conveyance or transfer of property or making
charge on the property, making payment etc.

du
y
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M 
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M 
A debtor commits an act of bankruptcy if with intent
to defeat or delay his creditors, he:
(1) departs from Malaysia or if, being out of Malaysia,
remains out of Malaysia; or

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y (u) departs from his dwelling house or otherwise
absent himself or begin to keep house or closes his
place of business; or
y (3) submits collusively or fraudulently to an adverse
judgment or order for payment of money.

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y
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A debtor commits an act of bankruptcy if execution has
been levied by seizure against his property pursuant to
a judgment obtained.
÷he act of bankruptcy takes place the moment the
property is seized.

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y
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MM 
A debtor commits an act of bankruptcy if
he files in the court:-
(1) A declaration of his inability to pay his debt;
(u) or a Bankruptcy petition against himself.

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y ÷he act of bankruptcy takes place only upon the filing
of the declaration or the debtorǯs petition.

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y
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M
A debtor commits an act of bankruptcy if he gives
notice to any of his creditor that he has suspended or is
about to suspend payment of his debt.

dD
y ÷he notice of suspension could be given orally but
must be given formally and deliberately, and with the
intention of giving notice.

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y
M   

   
M 
y A debtor commits an act of bankruptcy if he
makes any two or more of his creditors or a scheme
of arrangement of his affairs, and such offer or
proposal is not followed by registration within 14
days thereafter of a deed of arrangement with his
creditors.

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y §n 
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" &'()*  %+, - ÷he
Federal Court explained that under this section, an act
of bankruptcy is committed if the debtor has made an
offer and is not followed by registration of a deed of
arrangement. Conversely,if it is followed by the
registration,no act of bankruptcy is committed.

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y
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y When a bankruptcy notice has been served on the
debtor, and the debtor fails to comply with the
requirement of the notice ?M  (  after the
service of the bankruptcy notice, the debtor
commits an act of bankruptcy.

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y
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An act of bankruptcy takes place if the executing
officer of a writ of attachment or other process makes a
return that the debtor was possessed of no property
liable to seizure.

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y §n 

M
 0 " &')1* %+, 2 A Creditorǯs
Petition was presented upon on the sheriffǯs return
that the debtor had no property liable to seizure
under Writ of Seizure and Sale. ÷he debtor filed an
affidavit to challenge the act of bankruptcy and
claimed that he had goods in stock worth a small
fortune and was interested in a big housing
scheme.

u„
y ÷o counter his allegation, the creditorǯs solicitor
testified orally that at the meeting between himself
and the debtor six days after the sheriffǯs return, the
debtor had confirmed that he has no assets as he had
sold them all previously and applied the proceeds in
part payment of his debts.

uV
y Based on the evidence, the court was satisfied that the
return was correct and granted the bankruptcy orders
against the debtor.

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