Is It Bankrupt or Wound-Up?
A lesson in law for those who are unaware. Not too long ago, there were two news reports in The Star which used the word “Bankrupt“. I think I need to share with you that the word “Bankrupt” is only used in certain instances and not like what was used in the news reports. People have been using the word “Bankrupt” so much that they are unaware that it does not apply to Companies. This is my case study:-
News report no. 1 (1,656 credit card holders declared bankrupt last year). “Some 1,656 credit card holders from the existing 2.5 million credit card holders in the country were declared bankrupt last year. Of this number, 805 were declared bankrupt for failing to settle their credit card debts.” That statement is correctly made. Individuals can be declared bankrupt if they owe their creditor more than RM30,000.00 (which is the minimum amount at the moment). The correct legal term to use is bankrupt.
News report no. 2 (Protecting holiday-makers from dodgy tour agents) says “Lim (Deputy Tourism Minister Datuk Donald Lim) was referring to the recent case of tour agent Excellence Holidays Sdn Bhd which went bankrupt and caused scores of people to lose money they had paid in advance for tour packages to locations like Europe, China and Hong Kong.” That is wrong. A company (Sdn Bhd or Bhd) does not go bankrupt. A company gets wound-up. It can be wound-up because it owed money to creditors (minimum amount RM500.00 only) or the shareholders decide to call it quits. The correct term to use is wound-up. Another term to use is liquidation. An individual doesn’t get wound-up (unless he was angry at another person!) or go into liquidation (unless he gets thrown into a meat mincer!).
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