My presentation for Law of Insolvency 1. Please note some slight errors in grammar and abbreviations used (e.g.: Director General of Insolvency is DGI)

2. DEFINITION
RECEIVING ORDER
A court order appointing the Director General of
Insolvency (DGI) to manage the property
of a debtor or bankrupt.
ADJUDICATION ORDER
The judgment or decree of a court having jurisdiction,
that a person against whom a petition in bankruptcy has
been filed or who has filed his voluntary petition be
ordered and adjudged to be a bankrupt.

3. At the hearing of the petition, court may choose to:
(1) RO + AO
(Simultaneous Order)
(2) RO ONLY
(Section 24(1): provided that debtor
can convince court that he is still
capable of arranging a scheme to
repay debt or can offer composition)

4.  Court order making the Official Assignee/ DGI the Receiver
of the debtor’s properties (Section 8(1) of Bankruptcy Act
1967). Further, Section 8(4) also provides that DGI shall take
possession of all accounts and documents relating to the
affairs and property of the debtor.
 A receiving order is also made first (either RO alone or
RO + AO = Bankrupt)
 Does not make debtor a bankrupt but merely deprives
debtor the possession and control over his property.
 Acts as a protection over the debtor’s assets (Section 4 BA)
RECEIVING ORDER

5.  Once RO is made, cause of action will be vested on DGi
(Section 38 of Bankruptcy Act 1967)
-Debtor’s creditors cannot commence legal
proceedings against the debtor without leave
from court.
-Chin Kon Nam v Chai Yun Phin Development
“…he is also incompetent to employ an
advocated and solicitor to act on his behalf without
prior sanction from DGi.

6. ADJUDICATION ORDER
 Will be granted simultaneously with RO if:
-Debtor fails to satisfy court he can offer a composition or
scheme of arrangement to settle his debt (Section 24(1)) +
-Debt of petitioning creditor, act of bankruptcy & service of
petition can be proven.
 Will be granted after RO:
-Application made under Section 16 & Section 24 of BA 1967
 Can only be obtained when RO has already been served or AO
was served simultaneously with RO. AO cannot stand alone.
 Debtor receives the status of “bankrupt”

7.  Property and monies will be vested in DGI where DGI
will act as Trustee and divide the bankrupt’s
property among his creditors (Section 24(4) BA)
 Every 6 months, the bankrupt must account for all
monies/ property received during the period.
 Bankrupt immune from all legal proceedings
(excluding criminal, committal or proceeding
secured by creditor to realize assets)

8.  Other Effects of being adjudged bankrupt:
Bankrupt will be disqualified from:
(a) Appointment as sessions court judge or magistrate (Section 36 BA)
(b) Holding public office (Section 36 BA)
(c) Holding the office of a member of Parliament (Art 48 FC)
(d) Holding position in some statutory bodies
(e) Practising in certain profession
(f) Leave Malaysia without permission rom DGI or court (Section 38 BA)
(g) Cannot maintain or bring any action (other than for damages in respect of
injury to his self) without permission of DGI
(h) If receive monies or property exceeding RM 500,00 must immediately
report to DGI
(i) Cannot enter into business alone or in partnership or engage in
management of business or trade run by his wife, son, daughter or relatives
without DGI’s permission

9. ASPECT RECEIVING ORDER ADJUDICATION ORDER
POSITION OF DIG SECTION 8:
DGI ACTS AS
PROTECTOR OF
DEBTOR’S ASSET
(NOT YET OWNER)
SECTION 24:
DGI ACTS AS TRUSTEE
OF BANKRUPT’S ASSET
AND FURTHER
DISTRIBUTES IT AMONG
THE CREDITORS OF THE
BANKRUPT
STATUS OF DEBTOR DEBTOR ONLY (WHEN
NO AO IS YET ISSUED)
ADJUDICATED
BANKRUPT
RESTRICTIONS CAUSE OF ACTION WILL
BE SUBJECTED TO DIG’S
DISCREATION
SUBJECTED TO DGI’S
DISCREATION +
VARIOUS LIMITATION
UNDER THE LAW
POSITION OF DEBTOR IN POSITION TO OFFER
COMPOSITION OR
SCHEME OF
ARRANGEMENT
CANNOT OFFER
COMPOSITION OR
SCHEME OR
ARRANGEMENT