complete guide to finding hidden assets from debtors in malaysia

The Creditor’s Guide To Finding Hidden Assets In Malaysia

To an individual facing bankruptcy or a company undergoing forced liquidation, the temptation to conceal assets is all too real.

news article showing debtor hiding assets from creditor
He coulda signed a prenup!

Therefore, whatever a debtor does, it’s always good practice to have full knowledge of their finances, and this guide provides an overview of asset concealment in Malaysia.

Here’s how we’ve broken it down:

  • types of hidden assets
  • concealment methods and 
  • how creditors can detect and recover these assets

Note: Just to be clear, we’ve written this for creditors dealing with business debt recovery, not divorce proceedings–the MISHU team has no knowledge on matrimony laws and our editor is terminally single😭

Let’s begin.

Common types of hidden assets

The variety of asset types make tracking hidden wealth difficult, especially for high-net worth debtors who are actively trying to defraud creditors.

image of bitcoin to show cryptocurrency which is a common type of hidden asset

Here are some of the most common types of assets that debtors conceal: 

  • Cash assets – Spread across multiple bank accounts in different names.
  • Non-cash financial assets – Cryptocurrencies and other financial instruments.
  • Real Estate – Houses, land, and commercial property. 
  • Personal belongings – High-value items like jewellery, watches and artwork.
  • Intangible assets – Intellectual property such as patents, trademarks, and licenses.
  • Company shares – Ownership in businesses concealed via nominee shareholders or shell companies.

These assets can be restructured, transferred, undervalued, or simply undeclared and hidden in plain sight–you’d be amazed at how ugly some very expensive pieces of art can be!

Methods of hiding assets

Hiding assets typically involves transferring them to a seemingly unrelated third party.

students passing note to symbolise transferring assets to third party

There are different ways to do this, and the Insolvency Act 1967 and Companies Act 2016 have provisions to challenge transactions that meet certain conditions and occur within set time limits.

Fraudulent transfers

Fraudulent transfers (Section 52, Insolvency Act 1967) are when a debtor moves assets to keep them out of reach, such as transferring a property to their spouse knowing creditors will otherwise seize it.

There is no time limit on when a transaction can be challenged as a fraudulent transfer.

Condition: The transaction must have been made with the intent to defraud creditors.

Undervalued transactions

Undervalued transactions (Section 53, Insolvency Act 1967) are when assets are ‘sold’ for far less than their actual value, often to related parties, reducing the debtor’s visible wealth–sometimes even causing them to go bankrupt!

This provision can be applied to transactions within five years of bankruptcy or liquidation.

Condition: The debtor was insolvent at the time of the transaction or went insolvent due to it.

Unfair preferences

Unfair preferences (Section 54, Insolvency Act 1967 & Section 293, Companies Act 2016) are when a debtor prioritises one creditor over others, typically favoring family members or business associates. 

These transactions can be challenged if they occurred six months before bankruptcy / insolvency or two years prior if it benefited a related party such as a family member.

Condition: The debtor must have been insolvent at the time.

Extortionate credit transactions

Extortionate credit transactions (Section 56, Insolvency Act 1967) are when a debtor takes on credit agreements with excessively high interest rates or unfair terms, worsening their financial position and reducing available assets for creditors.

These transactions can be challenged if they took place within three years before bankruptcy.

3 ways to check for hidden assets

If the debt value is high enough, we recommend you use all three!

CTOS company report

CTOS Credit Sample Report

A CTOS company report provides insights into a debtor’s financial background, including business ownership, directorships, and legal actions. This can reveal undisclosed companies or financial obligations linked to the debtor.

Audited accounts and annual report

short video showing purchase of annual reports via mydatassm

You can purchase copies of a company’s Audited Accounts or Annual Reports through MYDATA.

Close inspection of these documents can often reveal bank accounts, real estate and other significant assets held by company debtors.

Debt recovery lawyer

lawyer

A lawyer specialising in debt recovery can conduct deeper investigations, issue legal demands, and initiate asset tracing. They have the expertise to challenge fraudulent transfers and apply for court orders to recover concealed assets.

Let MISHU assist your business debt recovery

MISHU is partnered with numerous professional business service providers to help us deliver a comprehensive suite of solutions tailored to SME owners. Let us connect you with the right experts to meet your needs!

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