A bankrupt is not allowed to transfer his property to a third party once a

Bankruptcy Order has been entered against him. As soon as a person is declared bankrupt,
any of his property shall be automatically vested upon the DGI.

According to section 8(1)(b) of the Insolvency Act 1967, it is stated that:

“On the making of a bankruptcy order - all the property of the bankrupt shall become
divisible among his creditors and shall vest in the Director General of Insolvency and the
Director General of Insolvency shall be the receiver, manager, administrator and trustee of
all properties of the bankrupt.”

A bankrupt is not allowed to deal with his property as provided under section 8(1)
(b) of the Insolvency Act 1967 because all of his assets and unsecured property will be
vested to DGI. Therefore, any transactions and dealings of his properties can only be made
through the DGI except for Malay Reserved land whereby a bankrupt has the power to
realize the property and the proceeds from it shall be given to the DGI. For secured
property, the bankrupt shall himself deal with the secured creditor. A bankrupt is also not
allowed to enter into any dealings or transactions which involve financial borrowing and
selling.

All the properties shall vest on the DGI except properties listed under section 48(1)
(a) of the Insolvency Act 1967. This includes the tools of his trade and the necessary
wearing apparel and bedding and other like necessaries of himself, his wife and children to
a value not exceeding RM 5,000.00. All properties which are vested on the DGI will be
realized and the proceeds shall be distributed amongst creditors whom debt has been
admitted by the DGI.
 According to section 17 of the Contracts Act 1950, it is stated that:
“Fraud” includes any of the following acts committed by a party to a contract, or with his
connivance, or by his agent, with intent to deceive another party thereto or his agent, or to
induce him to enter into the contract:
(a) the suggestion, as to a fact, of that which is not true by one who does not believe it to be
true;
(b) the active concealment of a fact by one having knowledge or belief of the fact;
(c) a promise made without any intention of performing it;
(d) any other act fitted to deceive; and
(e) any such act or omission as the law specially declares to be fraudulent.

According to section 19(1) of the Contracts Act 1950, it is provided that:

When consent to an agreement is caused by coercion, fraud, or misrepresentation, the
agreement is a contract voidable at the option of the party whose consent was so caused.