KUALA LUMPUR: The Bankruptcy (Amendment) Bill 2016 was passed in the Dewan Rakyat on Wednesday.
The Bill, which was earlier tabled for its second reading by Minister in the Prime Minister's Department Datuk Seri Azalina Othman Said, was passed at the committee stage by a majority voice vote at 6.20pm.
Among the major changes to the Bankruptcy Act 1967 is substituting the term "bankruptcy" in all proceedings to "insolvency", automatically releasing bankrupts after three years, and that social guarantors cannot be declared bankrupt.
Azalina said the changes to the bankruptcy policy was needed to address the unfair treatment of social guarantors, who previously ended up as bankrupts after principal borrowers failed to repay their loans.
Social guarantors are defined as those who do not profit and essentially provide a guarantee for an education loan, hire purchase transaction for personal or non-business use, or a housing loan for personal dwellings.
"There have been a lot of cases where social guarantors were made bankrupt. This is an improvement to the previous process and a system that is fairer to them," she said when wrapping up the debates on the Bill on Wednesday.
However, the Pengerang MP added that the amendments do not absolve social guarantors completely as they would still be subject to legal proceedings for debt recovery.
Azalina had earlier said when tabling the Bill that as of February this year, the Malaysian Insolvency Department was handling 293,086 active bankruptcy cases nationwide.
Selangor registered the highest number of bankrupt individuals, accounting for almost one-fifth of the nation's overall total.