Insolvency Act

If the Court asks for a report, the Director must report on whether the debtor is willing to make a proposal, and the Court may then appoint an interim receiver or make a bankruptcy order.

Two or more debtors carrying on business as partners may file a joint petition.

The Court may issue a certificate for summary administration of a bankrupt estate if the stated conditions are met, may revoke it later, and the Official Receiver may then skip the first creditors’ meeting.

A creditor may ask the Court to appoint the Official Receiver as interim receiver, and the Court can give the Official Receiver control powers before bankruptcy is ordered.

The court must record the bankruptcy order date and notify the Official Receiver; a bankrupt debtor is disqualified from election to public office, and the court may grant or refuse the discharge certificate.

After adjudication, the Official Receiver must advertise it, the bankrupt must file a statement of affairs if not already filed, and the Official Receiver may call a creditors’ meeting. Execution proceedings may not start or continue once the adjudication is advertised, and the Court may stop the advertisement if there is an appeal.

Bankruptcy debt-recovery proceedings are stayed after adjudication, unless the Court allows earlier-started proceedings to continue.

After the Official Receiver advertises a bankruptcy order or notifies a creditor, the creditor may not start or continue execution or similar recovery steps against the bankrupt, and may not seize or sell property for rent by distress, except that an already-started distress process may continue.

A bankrupt must file a statement of affairs after adjudication, unless one was already filed under section 199. The Official Receiver must send a notice if no adequate statement has been filed, and the bankrupt may later file added or amended statements or answers.

The Official Receiver must call and notify creditors of the first meeting after adjudication, follow prescribed notice and advertising steps, and hold the meeting under the Rules.

A creditors’ meeting may appoint an expert or a committee to assist the Official Receiver, and a creditor with a lodged proof of debt may inspect and copy specified bankruptcy documents.

If a bankrupt dies after adjudication, the bankruptcy continues as if the bankrupt were still alive.

Defines what counts as a bankrupt’s estate and lists items excluded from it.

On adjudication, the bankrupt’s estate vests in the Official Receiver.

During bankruptcy, property the bankrupt acquires or that passes to the bankrupt, and the bankrupt’s powers over that property, vest in the Official Receiver, subject to section 216.

A transaction made after adjudication may be valid against the Official Receiver if the other party acts in good faith and for value, and the transaction is completed without the Official Receiver intervening.

A creditor who has executed against a debtor’s movable property or attached a debt cannot keep the benefit against the Official Receiver unless the execution or attachment was completed before adjudication and before notice of a bankruptcy application.

The sheriff must hand seized goods to the Official Receiver in certain bankruptcy cases, and must pass sale proceeds to the court cashier. The cashier must hold proceeds for a prescribed period, and may release them to the Official Receiver if bankruptcy notice is served; otherwise the cashier may deal with the money as if no notice was served.

In a bankruptcy, this Act does not invalidate certain payments, deliveries, conveyances, assignments, or other dealings made before adjudication if the other party had no notice of a pending bankruptcy-order application.

A bankrupt’s interest in immovable property vests in the Official Receiver on adjudication.

The Official Receiver may transfer certain bankrupt property, and people needed for the transfer must help when asked.

If a bankrupt is adjudicated bankrupt again before discharge, property and surplus are dealt with by vesting or payment rules between the first and second bankruptcy estates, and the Court can direct some assets to vest in the first bankruptcy.

A bankrupt must help realize and distribute property, give information, attend the Official Receiver, disclose new property before discharge, hand over property on demand, and report changes of address, employment, or name immediately.

A bankrupt must give the Official Receiver the information needed to prepare a statement of the estate’s financial position, and may have to provide detailed accounts and statements on request.

If the Official Receiver requires it, a bankrupt must make periodic payments toward their debts; the Court can later vary, suspend, cancel, or remit those obligations or arrears.

An undischarged bankrupt must not, without consent from the Official Receiver or the Court, run or manage a business or work for certain related persons or entities.

The Court may issue a search warrant to the Official Receiver, who may then search, seize, take possession of, and in some cases break open or use force to access places and property linked to a bankrupt.

The Official Receiver may require a bankrupt and the bankrupt’s relatives to leave land or buildings in the bankruptcy property, and they must comply.

A bankrupt is entitled to inspect and copy certain documents at any convenient time.

After adjudication, a bankrupt and anyone else claiming through or under the bankrupt (other than the Official Receiver) cannot recover estate property or give a release or discharge for that property, subject to sections 215 and 216.

A bankrupt must not use a power to defeat or destroy an interest in property the bankrupt may otherwise be entitled to, after adjudication.

A bank that learns a customer is an undischarged bankrupt must notify the Official Receiver and must not pay money out of the account except in the stated cases.

The Official Receiver may give a bankrupt an allowance or let the bankrupt keep some money for support and immediate maintenance.

The Official Receiver may summon listed persons to be examined on oath and require relevant documents; the Court can also order arrest, expenses, or publication in specified cases.

If a required statement or resolution is filed before the bankrupt is discharged, the Court must hold a public examination. A copy of the creditors’ resolution must be certified by the Official Receiver or the meeting chairperson.

The Official Receiver may require delivery of a bankrupt’s documents, and most people may not withhold or claim a lien over certain bankrupt records against the Official Receiver.

The Official Receiver has listed powers over bankrupt property sales, but usually cannot sell before the first creditors’ meeting unless specific exceptions apply.

The Official Receiver must keep a bank account, deposit money received in that capacity into it as prescribed, and may invest estate money not needed immediately in Minister-approved investments.

The Official Receiver must use discretion when administering a bankrupt’s property and must consider creditors’ resolutions at creditor meetings.

A bankrupt is automatically discharged after adjudication, unless one of the stated exceptions applies.

A bankrupt may apply to the Court for discharge at any time, unless the Court has already refused and set a new earliest application date. The Official Receiver must summon the bankrupt for a public examination about discharge after three years from adjudication, and the Court must conduct that examination in certain specified cases.

The Official Receiver must prepare and file a report in Court when a bankrupt applies for discharge or is summoned for examination under section 241(2).

A creditor who wants to oppose a bankrupt's discharge must notify the Official Receiver and the bankrupt, state the ground, and do so within the prescribed time.

The Court may grant or refuse a bankrupt’s discharge, and may attach conditions, suspend it, set a future date, or later vary a judgment if the bankrupt consents.

After discharge, the Court may bar a bankrupt from certain business, company, and employment activities unless the Court permits them.

The Court may reverse a bankrupt’s discharge on application by the Official Receiver or a creditor, but only within the stated time and subject to notice and factual conditions.

A bankrupt who cannot meet a discharge condition may apply to the Court for absolute discharge, and the Court may grant it if the inability is not reasonably the bankrupt’s fault.

A bankrupt is generally released from provable debts on discharge, but not from certain fraud-related debts, specified judgment or statutory amounts, spousal maintenance, or unpaid student loans.

A discharge is conclusive evidence of bankruptcy, but it does not release certain people connected to the bankrupt. A discharged bankrupt must help the Official Receiver when required, and certain publication-related protections apply to the Director and Official Receiver.

The Court may annul a bankruptcy adjudication on application by the Official Receiver or any interested person, and must follow specified service, timing, and payment rules.

If an adjudication is annulled, property that had vested in the Official Receiver but was not sold or disposed of revests in the bankrupt, and the Official Receiver’s prior acts remain valid.

The Court may make an interim order for an individual debtor if the section 253 circumstances are met.

Some debtors, and in one case the trustee or Official Receiver, may apply to court for an interim order, but only in the situations set out here.

While an interim-order application is pending, landlords cannot use peaceable re-entry to forfeit the debtor’s leased premises without court leave, and courts may pause distress, legal process, or pending proceedings.

The Court may only make an interim order if specific conditions are met, and the order normally ends after the prescribed period.

The nominee must report to the Court before the interim order ends, and the debtor must provide the nominee with the documents needed for that report.

A debtor must give the nominee the proposal documents, and the nominee must report to the Court within the required time; the Court can replace the nominee or extend the reporting period.

The nominee, or replacement, must summon the debtor’s creditors’ meeting unless the Court directs otherwise, and must include every creditor whose claim and address are known.

A creditors’ meeting must decide whether to approve a proposed voluntary arrangement, and it can only approve modifications if the debtor consents.

The chairman must report the meeting’s result to the Court and then immediately notify prescribed persons. If the meeting declined to approve the debtor’s proposal, the Court may discharge any interim order in force for the debtor.

If a voluntary arrangement is approved, it takes effect and binds certain people; if later unpaid amounts remain, the debtor must pay them, and an interim order ends after the prescribed period unless the Court directs otherwise.

If this section applies, the Court must annul the bankruptcy order on application by the bankrupt, or by the Official Receiver if the bankrupt has not applied within the prescribed period.

Certain people may ask the Court to challenge a creditors’ meeting decision, but only on specified grounds and within a prescribed time limit.

A debtor commits an offence if, to get creditors to approve a voluntary arrangement proposal, the debtor makes a false representation or fraudulently acts or omits to act.

If a debtor may have committed an offence connected to an approved voluntary arrangement, the nominee or supervisor must report it to the Director and provide requested information and document access.

A voluntary arrangement is treated as ending prematurely if, when it stops having effect, it has not been fully implemented for all persons bound by it.

This section lets people affected by a supervisor’s acts or decisions apply to Court, and lets the Court give directions or appoint a replacement supervisor.

Section 269 applies when an individual debtor wants to propose a voluntary arrangement and the listed conditions are met.

The debtor may give the Official Receiver the proposed voluntary arrangement and required financial information. If the Official Receiver thinks the proposal has a reasonable chance of approval and implementation, the Official Receiver may arrange for creditors to vote, and the arrangements must not allow proposal modifications. An interim-order application under section 253 cannot be made until those steps happen or the debtor is told the Official Receiver will not act.

The Official Receiver must report to the Court whether a proposed voluntary arrangement was approved or rejected.

If the Official Receiver reports approval under section 270, the voluntary arrangement takes effect and binds the debtor and eligible participants.

Section 267 applies to a voluntary arrangement that takes effect under section 271(2), in the same way it applies to one approved by a creditors’ meeting.

The Court may revoke a voluntary arrangement if it unfairly prejudices a creditor or there was a material irregularity.

This section says section 264 applies to approvals for voluntary arrangement proposals under section 271, and section 265 applies mutatis mutandis to voluntary arrangements that take effect under section 271(2).

This section defines “debtor” for this Part.

This section defines what counts as a provable debt, who may submit a proof of debt, and when a debt is treated as proved.

A creditor proving a debt must bear the costs, unless the Court orders the bankrupt’s estate or a company in winding-up to pay those costs.

The Official Receiver or liquidator may estimate an uncertain proof, and the Court must determine the amount if an application is made in the stated circumstances.

A proof of debt due six months or more after adjudication or winding-up is treated as the debt’s present value.

In insolvency, mutual credits and debts are set off, and only the balance is provable or payable. Certain set-off claims are barred for transactions or assignments made shortly before adjudication or winding-up, unless lack of suspicion is proven. Shareholder payments for share issues or calls are excluded.

A claim may include interest up to adjudication or winding-up commencement, and surplus assets can trigger further interest payments on admitted claims.

The Court may set aside a debtor’s transaction if it is a voidable preference and was made within two years before adjudication or winding-up.

The Court may set aside a debtor’s security interest if it was given within two years before adjudication or winding-up and the debtor could not pay due debts right after it was given.

A security interest generally cannot be set aside under section 283 if it secures new value given in good faith, or if it replaces an older security interest, subject to limits on any increase in amount or value.

A debtor who gave a security interest within six months before adjudication, winding-up, or bankruptcy is presumed unable to pay due debts immediately after giving it, unless the contrary is proved.

Section 283 does not affect a seller’s security interest to the extent it secures unpaid purchase money, if the security was given within the stated timing rules.

A debtor’s payment to a secured party must be applied to the debtor’s secured obligations, subject to the section’s order of application and a bank exception.

A court may set aside a debtor’s property transfer made within five years before adjudication or winding-up if it was intended to defraud a creditor, on application by the Official Receiver or a liquidator.

A court may set aside a debtor’s gift to another person if the gift was made within two years before adjudication or winding-up and the debtor could not pay due debts right after making it.

This section sets out how the Official Receiver or liquidator must notify parties before setting aside certain voidable transactions, and how objections are handled.

If a voidable transaction is set aside, the Court may order property to be re-transferred to the Official Receiver or liquidator, or order payment of money instead.

The Court must not set aside a transaction under section 290 against a person if that person proves good faith, lack of reasonable suspicion of the debtor’s insolvency, and value given or reliance on the transfer’s validity.

The Official Receiver or liquidator may recover excess value from certain transactions with related persons or companies made within the specified period.

The Court may order the recipient of a debtor’s contribution to pay its value to the Official Receiver or liquidator.

The Court may decide the value of a debtor’s contribution and order repayment, but it can reduce or refuse repayment in certain cases.

The Official Receiver or liquidator must use the repaid money or sale proceeds in a set order: keep enough to pay creditors in full with interest, pay any surplus to the property recipient, and not pay anything to the debtor first.

In winding-up or bankruptcy, certain debts and claims are paid before other unsecured debts.

This section sets the order for distributing a debtor’s assets: preferential claims first, then general creditors, then the debtor; in company winding-up, surplus assets are distributed under the company documents or rateably to shareholders.

Partnership estates must be applied first to the correct debts, and the Official Receiver must administer the estates together and keep separate accounts.

A creditor who proved a debt late may still be paid unpaid dividends from money held by the Official Receiver or liquidator, but cannot upset an earlier dividend distribution.

The Official Receiver or liquidator must declare a final dividend and notify rejected creditors; after the relevant time, the dividend is distributed to proved creditors.

This section defines “undistributed money” for sections 303 and 304.

The Official Receiver or a liquidator must pay undistributed money into the Insolvency Surplus Account, keep it subject to entitled claims, and after 12 months transfer unclaimed money into the general fund.

Money in the general fund of the Insolvency Surplus Account may be used only for the purposes listed in this section, and the Official Receiver may appoint a committee to help administer the account.

A non-Official Receiver appointed as provisional liquidator, liquidator, administrator, or receiver is disqualified if certain conditions apply, and may not act until notice, security, and insurance evidence are given.

The Official Receiver must monitor a provisional liquidator or liquidator and may require information, apply to court, direct an examination of records, or refer the matter to the Director.

The insolvency practitioner may be paid remuneration set by the Rules.

A person must act as an insolvency practitioner for a company by serving as its liquidator, provisional liquidator, administrator, or receiver, and for an individual by serving as trustee in bankruptcy or, in a voluntary arrangement, as nominee or supervisor.

A person may act as an insolvency practitioner only if they meet the section’s qualification conditions.

A person may act as an insolvency practitioner only if qualified under the section’s authorization, security, and disqualification rules.

The Minister may recognize a professional body and set minimum qualifications for insolvency practitioners.

A person may apply to the competent authority for authorization to act as an insolvency practitioner, and the application must follow the authority’s directions, include required information, and be accompanied by the prescribed fee.

The competent authority may grant or refuse an application, must grant it if the applicant meets the stated fit-and-proper and qualification requirements, and may withdraw an authorization in specified cases.

A competent authority must give written notice when it grants, proposes to refuse, or proposes to withdraw an authorization, and must state the relevant effective date or grounds.

A person served with a notice under section 314(2) may submit written representations to the competent authority within the prescribed period after service.

This Part is intended to create effective mechanisms for handling cross-border insolvency cases.

This Part applies in specified cross-border situations involving foreign courts, foreign representatives, foreign states, or concurrent proceedings under this Act.

This section defines key insolvency terms for this Part and says the Court may refer to certain UNCITRAL materials when interpreting it.

If this Act conflicts with Malawi’s treaty or other international agreement obligations, section 211 of the Constitution applies.

The Court performs the Act’s functions on recognition of foreign proceedings and cooperation with foreign courts.

A Malawi insolvency practitioner is authorized to act in a foreign state for a proceeding under this Act, if the applicable foreign law allows it.

The Court may refuse to take an action under this Act if doing so would be manifestly contrary to the public policy of Malawi.

The section preserves the Court’s and an insolvency practitioner’s power to give additional assistance to a foreign representative under other Malawi laws.

When interpreting this Part, attention must be given to its international origin, the need for uniform application, and the observance of good faith.

A foreign representative has the right to apply directly to the Court.

A foreign representative’s application does not by itself put the representative or the debtor’s foreign assets and affairs under the Court’s jurisdiction for other purposes.

A foreign representative may apply to start a proceeding under this Act if the conditions for starting it are met.

If a foreign proceeding is recognized, the foreign representative may participate in a proceeding about the debtor under this Act.

Foreign creditors have the same rights to start and take part in proceedings as creditors in Malawi, and their claims cannot be ranked lower than general unsecured creditors just because they are foreign.

Foreign creditors must be notified in the situations covered by this section, and the Court may order steps to notify creditors whose addresses are unknown.

A foreign representative may apply to the Court for recognition of a foreign proceeding, but the application must include specified evidence and a statement of related proceedings.

The Court may presume certain facts about recognition and the authenticity of supporting documents.

A foreign proceeding must be recognized if the stated requirements are met, and the court may later modify or end recognition in some cases.

A foreign representative must promptly tell the Court about specified changes and any other foreign proceeding involving the same debtor, starting when the application for recognition is filed.

The Court may grant provisional relief after an application for recognition is filed, if the foreign representative requests it and urgent protection of the debtor’s assets or creditors’ interests is needed.

When a foreign main proceeding is recognized, actions, executions, and transfers involving the debtor’s assets are stayed or suspended, but the Court can modify or end that stay.

After recognizing a foreign proceeding, the Court may grant relief to protect the debtor’s assets or creditors’ interests, but certain stays cannot block criminal or public regulatory proceedings.

The Court must ensure creditors and other interested persons, including the debtor, are adequately protected when granting, denying, modifying, or terminating relief, and it may attach conditions to relief or change it later.

A foreign representative may apply to court after recognition of a foreign proceeding, but needs court permission if a proceeding under the Act is already ongoing regarding the debtor.

A foreign representative may intervene in proceedings in Malawi if a foreign proceeding has been recognized and Malawi law requirements are met.

The Court must cooperate as much as possible with foreign courts or foreign representatives in section 317 matters, and it may communicate with them or ask them directly for information or assistance.

The insolvency practitioner must cooperate as much as possible with foreign courts or foreign representatives in matters covered by section 317, and may communicate directly with them, subject to the Court’s supervision.

Cooperation under sections 341 and 342 may be carried out by any appropriate means.

After recognition of a foreign main proceeding, a proceeding under this Act may be commenced only if the debtor has assets in Malawi and the proceeding is limited as stated.

When a Malawi proceeding and a foreign proceeding run together, the Court must coordinate them and adjust relief if needed.

When there is more than one foreign proceeding about the same debtor, the Court must seek cooperation and coordination, and it may have to review, modify, terminate, or grant relief depending on how the foreign proceedings are recognized.

If there is no evidence to the contrary, recognizing a foreign main proceeding counts as proof that the debtor is insolvent for starting a proceeding under this Act.

A creditor who has already received part payment in a foreign insolvency proceeding may not receive another payment for the same claim in a proceeding under this Act against the same debtor, while other creditors of the same class are still receiving proportionately less.

A person who breaks a provision of this Act that has no specific offence, or commits an offence under the Act with no specific penalty, is liable to a fine of K50,000.

The Director may accept money instead of prosecution for an offence under the Act, but only if the person admits the offence in writing.

The Minister may make regulations to carry out the Act’s purposes.

The Chief Justice may make court rules for winding-up businesses in Malawi and for applications under this Act.

A person convicted of an offence under subsidiary legislation made under subsection (1) may be fined up to K200,000 and imprisoned for one year.

This section repeals two Acts and keeps certain existing subsidiary legislation in force unless it conflicts with this Act.

This section lets certain pre-commencement insolvency officeholders keep acting for six months, then requires them to comply with Part IX.