Mr.X Part I: Case Background & MO

Hello readers, 

Today we are going to discuss a case on bankruptcy fraud. This is a local case and the fraud was committed in 1996. In previous posting, we have discussed on type of bankruptcy fraud, now its time to apply those knowledge. Let's read this case together and try to identify which type of bankruptcy fraud this case can be categorized?

Case 1: Mr. X (not real name)

In the Court of Kota Kinabalu, the prosecution’s case was entered against Mr.X(respondent). Based on the background facts, the respondent was initially charged in the Sessions Court with two principal charges under provisions of the Penal Code. The first charge was for cheating under Section 420 of the Penal Code and the second charge was for false statement  under Section 199 of the same code. Besides, the Public Prosecutor had on 9 March 2010 tendered an alternative charge under Section 109(1)(m)(ii) of the Bankruptcy Act 1967.

Further, the criminal proceeding against the respondent on the two principle charges was discharged and acquitted as no any further evidence being offered by the Public Prosecutor. However, according to the judgement of the Court, the respondent pleaded guilty and convicted of the alternative offence under section 109(1)(m)(ii) of the Bankruptcy Act 1967. Therefore, the Session Court in Kota Kinabalu had on 27 September 2010 imposed a fine of RM10,000 in default a month’s imprisonment to the respondent, for failing to declare his bankruptcy status in ABC Bank loan application. 

The Session Court judge had imposed a RM10,000 fine on the respondent for not informing the ABC Bank in a loan application that he was a bankrupt. The facts leading to this court allegation are as follows: 

• On October 1991, XYZ Bank filed a Bankruptcy Notice against the respondent. The Bankruptcy Notice was served on the respondent and the affidavit of service was filed accordingly.
• Subsequently, on February 1993 the respondent was made a bankrupt as the Receiving Order and Adjudication Order were made against him.
• On April 1996, while the respondent has been adjudged bankrupt, he was engaged in the loan contract with the ABC Bank. Mr.X became a loan guarantor for his wife’s company, JKL Sdn. Bhd., in securing an overdraft facilities of RM50,000 and a loan of RM110,000.
• Thus, the legal proceeding was based on the commission of loan contract between the respondent and the ABC Bank dated April 1996. He failed to inform the bank that he was a bankrupt. Therefore, the respondent had breached the provision under section 109(1)(m)(ii) of the Bankruptcy Act 1967.

Can you identify what is the type of bankruptcy fraud?

A: False Statement

References:

http://www.kehakiman.gov.my/directory/judgment/file/S-09-207-2010.pdf.

http://www.insolvensi.gov.my/gallery/press-statement/the-star/182-star-02-12-10-a-g-t...