Bankruptcy Petition: Introduction

The bankruptcy petition is the second stage of the

bankruptcy proceedings after an act of bankruptcy
under s.3(1) of IA is committed.

A bankruptcy petition requests the court to make a

bankruptcy order against the debtor.

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Debtor’s petition

This is filed by the debtor himself

It shall allege that the debtor is Creditor’s Petition Joint petition

unable to pay his debts; (CP)
The presentation of a debtor’s
Where 2 or more
petition is deemed as an act of
A CP is filed by the creditors files a
bankruptcy; creditor.
petition against a
The court shall make a bankruptcy Form 41 debtor to obtain a
order upon the presentation of a
debtor’s petition bankruptcy order.
Once a debtor’s petition is presented
before the court it shall not be
withdrawn without the leave of the
court.
See s.7(1) IA and Form 40 IR

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 CP: conditions in which a creditor can petition against a
debtor.
Conditions in which the creditor may petition against a debtor (s. 5 IA)
(a) Debt must meet the threshold (s.5(1)(a) IA as amended); Form No. 41 of
IR paragraph 2
(b) the debt is a liquidated sum (s.5(1)(b) IA); Form No. 41 of IR paragraph 2
Re Fong Yuan Kwong ex Public Bank Bhd [1996] 4 MLJ 50
The HC referred to 1 White Book 1991 at para 13/1/14:
…a claim for interest will be treated…as liquidated demand, since its amount
can be duly calculated as mere matter of arithmetic…
1 White Book 1991 at para 6/2/4:
‘a liquidated demand is in the nature of debt, ie a specific sum of money due and
payable under or by virtue of a contract. Its amount must be either be already
ascertained or capable of being ascertained as a mere matter of arithmetic.’ 3
 CP: conditions in which a creditor can petition against a
debtor.
(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). Form No.
41 of IR paragraph 4
Re Lee Guan Par; ex p Hotel Universal Sdn Bhd [2009] 7 MLJ 435
BN served on debtor : 23.12.2005
Act of bankruptcy : 31.12.2005
Petition filed on : 8 March 2006
Petition is within time. (Act of bankruptcy occurred approx.3 months 8 days
before petition was filed)
See also: Tan Ah Tong v Dato Seri Dr Kuljit Singh [2002] 6 MLJ 39
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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), Form No. 41 of IR paragraph 1

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Bankruptcy Petition – secured creditors and guarantors
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.
Form No. 41 of IR paragraph 3
Guarantor other than a social guarantor requires leave from court. (s.5(3) –
(6)IA)
Refer to Form No. 41 of IR paragraph 5
Non-compliance of any of the requirements under s.5 will result in the
dismissal of the CP. S.5(7)IA

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 Bankruptcy Petition
R. 98IR – Every petition shall be:
✔Dated;
✔Signed; and
✔Witnessed/Attested.
Signing of the Bankruptcy Petition
Debtor’s petition: signed by the debtor
CP: signed by the creditor
There is no provision for a solicitor to sign the petition on behalf of the petitioning
creditor.
Re Lai Hua Kian [1990] 2 MLJ 487 at page 488 F right - CP cannot be executed by
a solicitor on behalf of the JC
Re V David, ex p United Asian Bank Bhd [1991] 2 MLJ 127 7
 CP – Signing of the Petition
The CP can be presented in 2 ways:

By an individual.

CP is signed by the individual

By a corporation

authorised agent under seal of the corporation signs the petition.
See s. 133(a) IA and rule 215 IR
Re See Joon Siong Ex-parte Mayban Securities Sdn Bhd [2009] 2 CLJ
667 - in this case it was decided that the resolution of the company
authorizing its officer “to affirm affidavits and other legal documents
pertaining to trading” was adequate.
What is important is that the officer is authorized by the corporation. A
power of attorney can also be acceptable.
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Bankruptcy Petition – Attesting/witnessing the Bankruptcy Petition
r. 101(1) IR – Every bankruptcy petition shall be attested.
r. 101(2) IR - qualified persons to witness or attest a bankruptcy petition
- If the attestation is in Malaysia, the witness must be a solicitor, Federal
Counsel, Magistrate, DGI or Registrar;
- If the attestation is outside Malaysia, the witness must be a Judge,
Magistrate, Consul, Vice-Consul or a Notary Public
The attestation must be by the qualified person as set out in the IR. Otherwise
it is fatally defective.
Ooi Thean Chuan v Banque Nationale de Paris [1992] 2 MLJ 526 where
the CP was attested in Singapore by a solicitor of the Republic of Singapore.
Lie Kok Keong v Tang Container and Services Sdn Bhd [2004] 1 MLJ
373 COA – An advocate and solicitor in Peninsular Malaysia is not authorized
to attest to a petition in Sabah and Sarawak even if the petition is to be filed in
the HC in Malaya and vice versa. 9
Bankruptcy Petition – Attesting/witnessing the Bankruptcy Petition
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.

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Bankruptcy Petition – Attesting/witnessing the Bankruptcy Petition
Held:
(1) The requirement under the bankruptcy rules that when a petition is
signed by the JC, it must be done in the presence of a witness should be
strictly construed. The absence of the words ‘signed by the petitioner in my
presence…’ shows that the creditor’s petition was not signed in the presence
of the witness;
(2) There is nothing in the creditor’s petition that the attorney is
authorized by the JC to sign the petition. There is also no evidence that the
attorney is acting under a valid power of attorney. As such the attorney who
signed the petition was not lawfully authorized to sign the petition.
(3) These are serious defects and substantial injustice would be caused by
these defects. The injustice cannot be remedied by any order of the court.
The creditor’s petition was defective.
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 Affidavit of truth of statements in CP
 The CP shall be supported by an affidavit verifying the petition.
See s.6(1) IA and r.105 (1) IR.

 The affidavit affirms the truth of the statements in the petition.

Where the CP is not verified by an affidavit, the CP and all the
subsequent proceedings are a nullity.

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Affidavit of truth of statements in CP
Format of the affidavit
∙ Form 42 – Affidavit of truth of statements in petition
∙ Form 43 – Affidavit of truth of statements in joint petition.
The affidavit will have the same title and distinctive number as the first
proceeding i.e the BN and the CP.
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.
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Affidavit of truth of statements in CP

Who should affirm the affidavit?

- if the creditor is an individual, it should be affirmed by the creditor

himself;
- where the petitioner is a corporation, it is to be affirmed by an authorized
person by the corporation under the company’s seal.
See s.133(a) IA and rule 215 IR
Case: Re See Joon Siong Ex-parte Mayban Securities Sdn Bhd [2009] 2
CLJ 667

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Affidavit of truth of statements in 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 were 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 the petition’s contents was affirmed on 5.3.1991 which
is before the petition was presented to court (13.3.1991).

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Affidavit of truth of statements in CP
Ct held:
1. The petition was not invalid simply because the verifying affidavit was
affirmed before the petition was presented to court.
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.

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Affidavit of truth of statements in CP
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. 17
Affidavit of truth of statements in CP
Held:
1. The words in Form 11(now Form 42 IR) and r.106 (now r.105IR) 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 disputes as to what exactly is being verified.
2. However, if the petition is not annexed to the verifying affidavit, that may not render
the proceedings a nullity as the verifying affidavit has the same title and distinctive
number as the petition.
3. There is no irregularity where the affidavit verifying the petition is affirmed after the
petition was signed and attested but before presentation to court. In this case the petition
was signed and attested on 30 May 1991, the affidavit of truth of statement in the CP
was affirmed on 31 May 1991 and the petition and the affidavit was presented to court
on 3 June 1991.
See also: Re Ho Weng Keong, ex p Marketlink (M) Sdn Bhd [1993]1 MLJ 60 – the
petition and the affidavit verifying the CP may be dated on the same day. It is not an
irregularity. 18
Affidavit of truth of statements in CP
Summary:
∙ The IA or IR do not prescribe a time when the affidavit verifying the CP is to
be affirmed.
∙ The affidavit verifying the CP should be attached to the CP so as to avoid any
dispute as to what exactly is being verified. However, if this is not done, it
does not invalidate the CP as long as the verifying affidavit can be identified
to the CP by its distinctive title and number. (Please note: The practice is
usually to file both the CP and the verifying affidavit together);
∙ The affidavit verifying the CP must be affirmed after the CP has been signed
and attested/witnessed or on the same date the CP was signed and attested.

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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;
∙ 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.
o Note: Practice Direction No. 3 of 1993, paragraph 2(ii) – all bankruptcy cases
must be filed in the State in which the JD resides (administrative not
mandatory).
∙ *remember this will also determine the issuance of the BN.
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 Bankruptcy Petition – Filing
Fung Beng Tiat v Madrid Construction Co [1996] 2 MLJ 413 (FC)
On 18.3.1991, a BN was issued by the HC Kuala Lumpur for the judgment
sum of RM337,812.25 obtained by the creditor against the debtor.
No action was taken by the debtor on the BN.
On 10.6.1991 the creditor presented a bankruptcy petition against the debtor
in KLHC
In opposing the petition, the debtor argued that the petition should be
presented in the HC of Sabah instead of HC Kuala Lumpur, because the
debtor was, for the one year before the presentation of the petition not
resident in KL or in any State within the Peninsular Malaysia, but an
ordinarily resident in Sandakan, Sabah.

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 Bankruptcy Petition – Filing
The creditor argued among others that –
(a) the creditor can present its petition in any State within the
Federation and that the proceedings could, after the making of the
bankruptcy order be transferred to the State in which the debtor was
resident pursuant to ss 5(1)(d), 93(7) and 131 of the Bankruptcy Act
1967;
(b) s.131 of the Bankruptcy Act 1967 operated to save the petition
as the alleged defect or irregularity did not occasion any injustice to
the debtor.

HC judge agreed with creditor’s arguments. Debtor appealed.

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 Bankruptcy Petition – Filing
FC held among others: (allowing the debtor’s appeal, the creditor’s
petition was struck out with liberty to file afresh in the HC of Sabah)
(a) By the provision of article 121 of the FC, there are 2 HC in
Malaysia exercising distinct territorial jurisdiction over different
geographical areas of the country, that is, the HC in Malaya and the
HC in Sabah and Sarawak. Each has jurisdiction over disputes arising
within its territory. There is no Federal legislation that confers power
upon one HC to transfer proceedings to the other.
(b) The provision in s. 93(7) of the Bankruptcy Act 1967 on
transferring proceedings between one State to another refers to a State
within the territorial jurisdiction of the respective HC.
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 Bankruptcy Petition – Filing
Re Chin Kwan Kee; ex p Shriro Paper (M) Sdn Bhd [1999] 3 MLJ 497
The debtor contracted a debt with the creditor while he was carrying on a business in
Cheras, Kuala Lumpur.
He no longer carried on business in Cheras, and his residence at all material times is an
address in Ampang, Selangor
The creditor’s petition against the debtor was filed in HC Kuala Lumpur on 23.3.1998. It
described the debtor as of the Cheras address.
The debtor sought to strike out the creditor’s petition on the grounds amongst others that the
petition was filed in a State other than the State in which the debtor was resident.
The SAR dismissed the debtor’s application to strike out the CP. The debtor appealed.
Held:
Notwithstanding that the petition was filed in the wrong State, the filing of the petition
in a State other than the State in which the debtor is resident does no invalidate the
petition. Section 93(7) IA can be applied.
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Bankruptcy Petition – Deposits and Withdrawal

Deposits (r.102 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 if
a creditor.
The receipt of the DGI must be produced to the court of the filing
of the petition.
Withdrawal of CP (s.6(7) IA)
Once filed, a CP cannot be withdrawn without the leave of court.

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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.

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

r.111IR – death of debtor before service – the court may order service to be affected
on the personal representative.
Should the affidavit of truth of statement in the CP be served together with the CP?
See Mat Ripen Mat Elah v Perwira Affin Bank Bhd [2005] 1 LNS 82, [2005]
MLJU 121 26