KUALA LUMPUR: The Cross Border Insolvency Bill 2025, enabling local creditors to recover debts from insolvent companies within the ASEAN region, has been tabled for its first reading in the Dewan Rakyat.
Minister in the Prime Minister's Department (Law and Institutional Reform) Datuk Seri Azalina Othman Said tabled the Bill on Monday (July 28).
The proposed Bill aims to promote cooperation between courts and authorities in Malaysia and foreign states involved in cross-border insolvency cases.
It also seeks to provide legal certainty for trade and investment and ensure fair administration of cross-border insolvencies, protecting creditors' interests and the debtor.
The Bill aims to protect and maximise the value of the debtor’s property and facilitate the rescue of financially troubled businesses.
Clause 3 outlines the Bill's application when assistance is sought in Malaysia or any foreign state regarding cross-border insolvency proceedings, or when foreign creditors participate in Malaysian proceedings.
However, the Bill does not apply to individual insolvency, bankruptcy, those carrying on a registered business under specific Acts, or limited liability partnerships under the Limited Liability Partnership Act 2011.
Some of the notable Clauses are;
> Clause 4 provides that the Bill is to be read alongside existing Malaysian insolvency laws, supplementing rather than replacing them.
> Clause 6 authorises Malaysian insolvency office-holders or court-appointed individuals to act in foreign states subject to local laws, while Clause 7 gives theCourt discretion to refuse recognition or grant relief if it conflicts with Malaysian public policy.
> Clause 11 states that foreign representatives appointed in foreign proceedings can apply to commence proceedings under Malaysian law if conditions are met.
> Clause 12 allows foreign representatives to participate in Malaysian debtor proceedings upon the recognition of foreign proceedings while Clause 13 ensures foreign creditors have the same rights as Malaysian creditors, stating their claims shall not be ranked lower solely because they are foreign.
> Clause 21 provides discretionary relief upon recognising foreign proceedings, allowing the foreign representative to manage the debtor's Malaysian property, ensuring local creditors' interests are protected and
> Clause 32 ensures equitable payment in concurrent proceedings, preventing creditors from receiving more than their share compared to others in Malaysia.
The Bill's tabling follows Malaysia's plan to adopt the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency.
