Bankruptcy Petition I

28/4/2020
Bankruptcy Petition: Introduction
1. Different types of petition;
2. Conditions in which the creditor may petition against a debtor (s.5
IA);
3. Procedure –
a) Filing of the bankruptcy petition;
b) Format of the bankruptcy petition;
c) Witnessing/attesting the bankruptcy petition;
d) Affidavit verifying the creditor’s petition.
4. Service of the petition
Bankruptcy Petition: Conditions in which a creditor can
petition against a debtor.
2 types of Bankruptcy Petition
• Debtor’s Petition. See s.7(1) IA and Form 40 IR
• Creditor’s Petition
Conditions in which the creditor may petition against a debtor
See provisions under s. 5 IA – non compliance will result in the dismissal of
the creditor’s petition.
(a) Debt owing to the petitioning creditor or to the petitioning creditor and his
co-petitioner(s) jointly amounts to not less than RM50,000 (s.5(1)(a) IA);
(b) the debt is a liquidated sum (s.5(1)(b) IA);
(c) the act of bankruptcy on which the petition is based on has occurred
within 6 months before the presentation of the petition (s. 5 (1)(c) IA).
Bankruptcy Petition – conditions in which a creditor can petition
against a debtor.
(d) the debtor must be domiciled in Malaysia; or within 1 year before
the date of the presentation of the CP, the debtor has –
 Ordinarily resided in Malaysia; or
 Had a dwelling house in Malaysia; or
 Had a place of business in Malaysia; or
 Carried on business personally in Malaysia or through an agent; or
 Has been, or is, a member of a firm or partnership which has carried
on business in Malaysia by means of partner or partners or an agent
or manager.
(s.5(1)(d) IA)
Bankruptcy Petition – secured creditors (s.5(2) IA)
If the creditor is a secured creditor, he must state in his petition –
(a) that he is willing to give up his security for the benefit of the
creditors in the event the debtor is alleged a bankrupt; or
(b) give an estimate of the value of his security.

Refer to Form No. 41 of IR paragraph 3

Bankruptcy Petition – guarantors (s.5(3) – (6) IA)
s. 5(3)(a)
– no commencement of any bankruptcy action against a social
guarantor;
- Definition of a social guarantor.

s. 5(3)(b)
- Guarantor other than a social guarantor (requires leave from court)
- Provisions in s.5(4),(5) and (6) are also applicable.

Refer to Form No. 41 of IR paragraph 5

Bankruptcy Petition – Filing
s.88 IA
The High Court (HC) shall be the court having jurisdiction in
bankruptcy.
r.100 IR
 The petition should be filed in the HC in which it is to be presented;
• Note: Practice Direction No. 3 of 1993, paragraph 2(ii) – all
bankruptcy cases must be filed in the State in which the JD
resides.
 Where the debtor has for the greater part of one year immediately
before the presentation of petition carried on business in one State
and resided in another, the petition may be filed in the court of the
State in which he has carried on business.
Bankruptcy Petition – Filing
To illustrate see the following cases:
Fung Beng Tiat v Madrid Construction Co [1996] 2 MLJ 413 (FC)
Re Chin Kwan Kee; ex p Shriro Paper (M) Sdn Bhd [1999] 3 MLJ 497
(Refer to lecture notes on SPECTRUM)

Deposits (r.201 IR)

Prior to the filing of the bankruptcy petition, the petitioner has to deposit
with the DGI a sum of RM1500 if a debtor, and RM2000 of a creditor.
The receipt of the DGI must be produced to the court of the filing of the
petition.
Once filed, a CP cannot be withdrawn without the leave of court. See
s.6(7) IA.
 Bankruptcy Petition – Format
R. 98IR – Every petition shall be:
Dated;
Signed; and
witnessed.

A copy of the sealed copy of the petition shall be submitted to

the DGI by post or otherwise.

Form 41 IR for Creditor’s Petition. (see details to be filled in)

Form 40 IR for Debtor’s Petition.
 Bankruptcy Petition – Execution of Petition
The bankruptcy petition must be signed by the creditor or the debtor
himself, depending on whether it is a creditor’s petition or a debtor’s
petition.

There is no provision for a solicitor to execute the petition on behalf of the

petitioning creditor.

Where the petitioner is a corporation it is to be executed by an authorized

person by the corporation under the company’s seal.
• See s. 133(a) IA and rule 215 IR
(cases in lecture notes)
 Bankruptcy Petition – Witnessing the Bankruptcy Petition
r. 101 IR – qualified persons to witness or attest a bankruptcy petition
A petition that is not witnessed/attested by a qualified person as set out in the IR is
defective.
Re V David, ex p United Asian Bank Bhd [1991] 2 MLJ 127
The JC, United Asian Bank Bhd commenced bankruptcy proceedings against the
judgment debtor. At the hearing of the petition, it was submitted for the JD that the
petition was defective as –
(a) the attestation clause “signed by the petitioner in my presence….” as
contained in Form 9 (under the new IR this is Form 41) was not included in
the petition;
(b) the petition was wrongly signed by the JC’s attorney.
(see lecture notes on what was held by the Court)
See also: Ooi Thean Chuan v Banque Nationale de Paris [1992] 2 MLJ 526 at
page 531I
 Bankruptcy Petition – Witnessing the Bankruptcy Petition

Solicitors in Peninsular Malaysia are not authorized to attest to a petition in

Sabah and Sarawak and vice versa.
Lie Kok Keong v Tang Container and Services Sdn Bhd [2004] 1 MLJ 373
COA
(See lecture notes)

Joint petition (where a petition is represented by 2 of more creditors jointly)

– see r.106 IR.
Creditor’s Petition (CP) – Affidavit Verifying CP
The CP shall be supported by an affidavit verifying the petition. See s.6(1) IA
and r.105 IR.
The affidavit verifying the petition affirms the truth of the statements in the
petition.
It will have the same title and distinctive number as the first proceeding i.e the
BN and the petition.
Under r.107 IR before the Registrar seals copies of the petition, he must
investigate the truth of the petition through the verifying affidavit. Therefore, if
the verifying affidavit has the same title and distinctive number as the petition,
it would allow the Registrar to identify the petition to the verifying affidavit
and thus the affidavit would verify the statement in the petition sufficiently.
Where the CP is not verified by an affidavit the CP and all the subsequent
proceedings are a nullity.
Creditor’s Petition (CP) – Affidavit Verifying CP

Format of the affidavit -

 Form 42 – Affidavit of truth of statements in petition
 Form 43 – Affidavit of truth of statements in joint petition
Affidavit Verifying CP – Who should affirm the affidavit?

It should be affirmed by the creditor himself or where the petitioner is a

corporation it is to be executed by an authorized person by the corporation
under the company’s seal.
See s.133(a) IA and rule 215 IR

Cases:
• UMW Industries Bhd v Lim Chee Hian [2005] 1 CLJ 319
• Re See Joon Siong Ex-parte Mayban Securities Sdn Bhd [2009] 2 CLJ
667
 Affidavit Verifying CP – When should the affidavit be
affirmed?
Sobri bin Arshad v Associated Tractors Sdn Bhd [1991] 3 MLJ 32
The creditor’s petition was dated 10 November 1989.
The affidavit verifying the creditor’s petition was affirmed on 9 November 1989.
The JD sought to challenge the creditor’s petition on the ground that the affidavit
verifying the petition was affirmed prior to the petition’s presentation on 10
November 1989.

Held: (dismissing the creditor’s petition)

Affidavit verifying the petition must be sworn before the presentation of the petition
as an affidavit cannot support an ‘unborn petition’ as a petition only comes to life
only when it is presented. The flaw in the proceedings cannot be cured by s.131 of
the Bankruptcy Act 1967
Affidavit Verifying CP – When should the affidavit be
affirmed?
Re Mohd Sharif bin Sapie, ex p Malayan Banking Bhd [1992] 2 MLJ 102
In this case the bankruptcy petition was signed on 5.3.1991.
The affidavit verifying the petition was affirmed on 5.3.1991.
The petition and the affidavit (with an original copy of the petition annexed to
it) were filed/presented in court on 13 March 1991.
The official assignee was of the view that the petition was not valid because the
affidavit of the truth of its contents was affirmed before the petition was
presented to court.
Affidavit Verifying CP – When should the affidavit be
affirmed?
Re Mohd Sharif bin Sapie, ex p Malayan Banking Bhd [1992] 2 MLJ 102
Held:
(1) The petition was not invalid simply because the verifying affidavit
was affirmed before the petition was presented. It was a formal defect or an
irregularity which can be cured by s.131 Bankruptcy Act 1967.
(2) There is no time frame prescribed in the Bankruptcy Act 1967 or
Bankruptcy Rules 1969 for the swearing and filing of the affidavit verifying
the bankruptcy petition.
(3) It was clear in this case that the contents of the petition were verified
by the affidavit as the petition had the same title number with the affidavit
and the petition was attached to the affidavit. Thus, the affidavit met the
requirements of the Act and the rules.
Affidavit Verifying CP – When should the affidavit be
affirmed?
Re Teoh Thean Peng, ex p D&C Leasing Sdn Bhd [1993] 2 MLJ 1
The JD opposed the petition of the JC, among others, on the following grounds:

(1) The petition represented in the Penang HC was invalid because the
verifying affidavit was not physically attached to the petition as required by the
Bankruptcy Rules 1969; and
(2) The verifying affidavit was affirmed before the presentation/filing of the
petition. Thus, the petition was invalid
Affidavit Verifying CP – When should the affidavit be
affirmed?
Re Teoh Thean Peng, ex p D&C Leasing Sdn Bhd [1993] 2 MLJ 1
Held:
The words in Form 11(now Form 42) and r.106 (now r.105) of the rules and
s.6(1) of the Act show that the petition must be tied to or affixed to or stapled to
the verifying affidavit, so as to avoid any disputed as to what exactly is being
verified. If the petition is not annexed to the verifying affidavit, that will render
the proceedings a nullity.
However, the bankruptcy proceedings will not be rendered a nullity if the
verifying affidavit has the same title and distinctive number as the petition. This
is because the affidavit verifies the statements in the petition with sufficient
particularity.
Affidavit Verifying CP – When should the affidavit be affirmed?
Re Teoh Thean Peng, ex p D&C Leasing Sdn Bhd [1993] 2 MLJ 1
Held:
1.The words in Form 11(now Form 42) and r.106 (now r.105) of the rules and s.6(1)
of the Act show that the petition must be tied to or affixed to or stapled to the
verifying affidavit, so as to avoid any dispute as to what exactly is being verified. If
the petition is not annexed to the verifying affidavit, that will render the proceedings a
nullity.
2. However, the bankruptcy proceedings will not be rendered a nullity if the verifying
affidavit has the same title and distinctive number as the petition. This is because the
affidavit verifies the statements in the petition with sufficient particularity.
3. The affidavit verifying the petition must be affirmed after the petition has been
attested. However, the affirmation of the verifying affidavit shortly before the petition
is filed/presented but after it has been duly attested is permissible.
Affidavit Verifying CP – When should the affidavit be
affirmed?
Re Koh Kim Kuay, ex p MBf Finance Bhd [1995] 1 MLJ 792
In this case, the JD made an application to strike out the CP on the
ground that the petition was invalid because:
(i) the affidavit verifying the petition was affirmed before the
presentation of the CP; and
(ii) the copy of the CP attached to the affidavit verifying the petition
was not a sealed copy.
Affidavit Verifying CP – When should the affidavit be
affirmed?
Re Koh Kim Kuay, ex p MBf Finance Bhd [1995] 1 MLJ 792
Held (dismissing the application):
(1) The BA and its rules do not prescribe the time as to when the affidavit
verifying the CP is to be affirmed;
(2) However, it is generally accepted that the effect of the rules is that every
CP presented without an affidavit verifying the CP annexed to the CP would not
be accepted by the Registrar. Accordingly, the affidavit verifying the CP have to
be affirmed prior to the presentation/filing of the CP and not after that.
(3) Since the CP has to be verified by affidavit before it is filed/presented the
copy of the CP annexed to the verifying affidavit cannot be a sealed copy.
Affidavit Verifying CP – When should the affidavit be
affirmed?
See also the following case:
Re Ho Weng Keong, ex p Marketlink (M) Sdn Bhd [1993]1 MLJ 60
From the cases it can be concluded:
1. The IA does not prescribe a time when the affidavit verifying the CP is
to be affirmed.
2. The unsealed CP must be attached to the affidavit verifying the CP so as
to avoid any dispute as to what exactly is being verified;
3. The affidavit verifying the CP must be affirmed after the CP has been
attested/witnessed.
CP – Service
S. 6(1)IA and r.108 IR – personal service to debtor. Service of the petition shall be
proved by affidavit. See r.110 IR and Form 44
See:
• Lim Boon Kiak v Affin Bank Bhd [2013] 6 CLJ 579 – CP must be served
personally to the debtor and not to a firm of solicitors.
• Samuel Pakianathan a/l Jabamanikam v Perwira Habib Bank Malaysia Bhd
[1996] 1 LNS 140 – the CP was not served on the debtor but handed to someone
in the debtor’s premises who acknowledged that the debtor lived there was good
service so long as it was brought to the debtor’s notice.

S. 6(1A) IA and r. 109 IR – substituted service to debtor

r.111IR – death of debtor before service
s.96 IA – continuance of bankruptcy proceedings on death of the debtor.