VOLUNTARY ARRANGEMENT

- Sec 2A - definition - a composition in satisfaction of a debtor’s debt or a scheme of

arrangement of a debtor’s affairs
- enables the debtor to propose a settlement plan to all his creditors but he/she may
only do so at any time before he/she is adjudged a bankrupt
- Process; (PAIMMARRICFC)
a. A debtor proposes VA before adjudicated bankrupt (P)
b. Debtor appoints a nominee and files application for VA to the court (A)
c. Court makes an interim order for VA (I)
d. An interim order has a moratorium effect (M)
e. Nominee summons a creditor meeting (M)
f. Approval of VA by special resolution with or without modification or rejection
of VA proposal (A)
g. Nominee reports the decision of creditor’s meeting to the court (R)
h. If dissatisfied then can apply to review decision of creditor’s meeting (R)
i. Implementation and supervision of VA by nominee (I)
j. Completion of VA (C)
k. If debtor fail to comply with the provision under VA, a creditor can petition for
bankruptcy (F)
l. VA ceases upon the death of the debtor (C)
- Sec 2C - appointment of nominee
- Sec 2F, 2G - nominee - registered accountant or advocate or solicitor or officer of a
corporate under BNM Act and registered with DGI and not undischarged bankrupt
- Sec 2C(2)(b) - interim order from court - 90 days - no similar application before 12
months
- Sec 2D(3) - validity of IO is 90 days and cannot be extended
- Sec 2E - stay of legal proceedings - no bankruptcy petition against debtor
- Sec 2I - creditors meeting
- Sec 2I(3) - conditions for approval
- Sec 43 - priority payment list
- Sec 2J(1) - report decision to court
- Sec 2J(2) - decline to approve, may set aside IO
- Sec 2K(1) - if approved VA, bind the creditors
- Sec 2K(4) - cannot enter into a credit facility unless consented and informed
- Sec 2O - revocation by failure to comply
- Sec 2P - revocation by death
- Sec 2L - review of meeting’s decision
- Sec 2L(1) - grounds for review
- Sec 2B - non-application

VOLUNTARY SETTLEMENT

- Sec 52
- Re Bower Williams - wife died intestate - husband entitled to certain shares in a
company which belongs to her - husband made VS for the benefit of the daughter
and himself - 10 months later he was adjudicated bankrupt - held: property falls
within the exception - valid against the trustee in the bankruptcy
 - Siti Ramlah Bajau - wife is not owner, registered under husband after marriage - not
contribute - name not appear as co owner - does not fall under exception
- Sec 53 - undue preference
- Lian Keow Sime - to prove UP - transaction took place 6 months before BP, when the
bankrupt was insolvent, effect of transaction is to confer preference, priority,
advantages over the creditors
- Silver corridor - issue arise as to whether the payment/disposal in favour of a creditor
was challenged to be in preference to other creditors following a bankruptcy/winding
up

DEBT MANAGEMENT PLAN

- Objective - to help debtors reduce their overall loan repayment instalments to a

tolerable percentage of their net monthly income so that they may reclaim sufficient
cash flow to fulfil their daily obligations
- Debt repayment is adjusted to the debtor’s available cash flow, giving them a second
chance to move on with their lives without worrying about their debts
- DMP binds all creditors - declaration of bankruptcy can be prevented
- helps to restructure cash flow, postpone bankruptcy proceedings, allow reasonable
repayment periods according to the latest cash flow and ensure no harassment from
debt collectors
- Conditions;
- The debts are owed to financial service providers regulated by BNM.
- The debtor must have a positive net disposable income after paying all
expenses.
- The total debt exposure does not exceed RM2 million.
- The applicant is not adjudged bankrupt.
- AKPK gradually extends its services to consumers who borrow from non-bank
financial institutions, such as credit cooperatives, National Higher Education Fund
Corporation, Tekun Nasional Berhad, and several cooperatives based on individual
arrangements
- AKPK was appointed as a nominee of the Voluntary Arrangement Schemes in 2017
under the Insolvency Act 1967 - The scheme is a pre-bankruptcy rescue mechanism
to help individuals with the opportunity to restructure and/or reschedule their debt
before they are declared bankrupt.
- Two categories of approval for DMP;
- blanket approval
- Unsecured loans to repay within 10 years
- Instalments to cover at least proposed interest and can extend min 15
of total loan
- Waiver of interest, penalty and late payment charges
- Pay instalments by AKPK or to credit providers
- approval with consent from the bank
- secured/unsecured loans that do not fall in blanket app
- Cover at least interest
- + principal
- Same method
- Statistics;
 - B40
- Live in urban areas
- Between age 30-40
- Works in priv sector
- Unsecured debts of credit cards and personal loans
- Reasons;
- poor financial planning
- unexpected shocks such as loss of employment or death of a breadwinner
- limited savings
- lifestyle spending
- financial scams