CAN A BANKRUPT PERSON IN MALAYSIA SELL HIS PROPERTY?
In Malaysia, a bankrupt person cannot freely enter into a sale and purchase agreement or any kind of agreement regarding their property without the consent of the Official Assignee (OA). This is because once a person is declared bankrupt, their assets (including property) are transferred to the control of the OA, who manages the assets on behalf of creditors. The OA is responsible for deciding how assets are disposed of and whether any transactions, such as the sale of property, can take place.
Here are the main points to consider:
- Control Over Assets:
Upon being declared bankrupt, the bankrupt person’s assets, including property, fall under the administration of the Official Assignee. The OA will manage and distribute these assets to settle outstanding debts.
- Entering Into Agreements:
The bankrupt person is restricted from entering into legally binding agreements, including a sale and purchase agreement, without the approval of the OA. If they try to do so without consent, it may be considered invalid. This applies to agreements related to the sale, transfer, or encumbrance of property.
- Sale of Property:
If a bankrupt person wants to sell their property, they must obtain the approval of the OA. The OA will decide whether the sale is in the best interest of creditors. If the OA agrees, they will oversee the sale process and the proceeds will typically go toward repaying the bankrupt person’s debts.
- Exceptions:
In some cases, if the bankrupt person is allowed to retain a property (e.g., their primary residence), the OA may permit the sale, but this still requires approval and will generally be subject to conditions.
If the bankrupt person manages to settle the bankruptcy through a discharge (by paying off debts or via other arrangements), they may regain full control of their property and can then sell it or enter agreements freely.
- Legal Consequences:
If a bankrupt person enters into a sale or purchase agreement without the approval of the OA, it can have serious legal consequences, and the agreement may be voided. Additionally, the bankrupt person may face penalties for not following the proper procedure.
Summary:
A bankrupt person in Malaysia cannot independently enter into a sale and purchase agreement or any other agreement involving their property without the consent of the Official Assignee. The OA has the authority to approve or deny such transactions to ensure the interests of creditors are protected. If you are in such a situation, it’s important to consult with the OA or seek legal advice before proceeding with any property transactions.
