Malaysia passes Cross-Border Insolvency Bill to align with global standards

      

The Bill is based on the principles of the Model Law on Cross-Border Insolvency adopted by the United Nations Commission on International Trade Law (UNCITRAL) and seeks to enhance cooperation, to provide legal clarity, to safeguard creditor interests and assets of the debtor, and to support the rehabilitation of businesses in cross-border insolvency cases. 

    

The Bill allows foreign liquidators and administrators to access Malaysian courts to seek recognition of overseas insolvency proceedings and to apply for legal relief, such as halting local legal actions or safeguarding debtor assets. It also enables Malaysian practitioners to seek similar recognition in foreign courts. 

    

The Bill establishes a framework that encourages effective coordination between foreign courts and practitioners, ensuring a fair and efficient resolution process that protects the rights of creditors, debtors and other interested persons. 

    

Currently, the Bill strictly applies ​to corporate entities and excludes individuals and statutory bodies. However, the government has indicated the possibility of expanding its scope to cover individual insolvency in the future, subject to policy consideration. 

    

The Bill creates a predictable and transparent legal framework for cross-border insolvency in Malaysia which complements the government’s strategy to achieve a sustainable and competitive economic transformation. It is also expected to attract high-quality investments by enhancing legal certainty and investor confidence in Malaysia’s financial and legal systems.