Most trade debts sit with a company, a sole proprietor or both. Who you pursue shapes which tools you have, how fast they work and how much pressure you can apply. With the bankruptcy threshold set to rise, that choice matters more.
The RM150,000 bankruptcy threshold was announced in Budget 2027 (9 October 2026, speech paragraph 80) for "beginning 2027". It is not yet law: no amending bill, gazette or commencement date has been published. Until the Insolvency Act 1967 is amended, the minimum debt for a creditor's bankruptcy petition remains RM100,000. The RM50,000 winding-up threshold under section 466 of the Companies Act 2016 is unchanged. We will update this page when the amendment is gazetted.
The two thresholds side by side
| Company (Sdn Bhd / Bhd) | Individual | |
|---|---|---|
| Law | Companies Act 2016, s465–466 | Insolvency Act 1967 |
| Minimum debt | RM50,000 (unchanged) | RM100,000 now; RM150,000 announced for 2027 |
| Judgment needed first? | No, for an undisputed debt; a statutory demand can be served directly | Normally yes, the bankruptcy notice is based on a judgment |
| Time to respond | 21 days after the statutory demand | Time stated in the bankruptcy notice |
| Main risk | Debtor files to restrain the petition if the debt is genuinely disputed | Service difficulties, set-aside applications, slower process |
Our section 466 notice of demand guide and winding-up a company over RM50,000 explain the company route in detail. The individual route is covered in our bankruptcy notice and creditor's petition guide.
Why the company route often wins for trade creditors
- Lower threshold. RM50,000 against RM100,000, and the gap would widen to RM100,000 if the RM150,000 figure is enacted.
- No judgment needed for an undisputed debt. A statutory demand can go out once the debt is due, which saves months.
- Commercial pressure. A winding-up petition is advertised and can trigger bank and supplier reactions. Directors of a solvent, trading company usually pay or negotiate.
The caveat: a statutory demand is not a debt collection tool for disputed claims. If the debtor has a genuine, substantial dispute, the court can restrain the petition and award costs against you. Use it for clear debts only.
When pursuing the individual makes sense
- The debtor is a sole proprietor or partnership. There is no company. The owners are personally liable.
- A director signed a personal guarantee. You may pursue the company and the guarantor in parallel.
- The company is an empty shell. If the company has no assets, the individual behind it may be the only realistic source of payment, if there is a legal basis such as a guarantee or fraud.
Read director personal liability for when directors can be personally liable without a guarantee.
How Budget 2027 shifts the balance
Budget 2027 announced three things that make individual bankruptcy a weaker lever: a higher threshold, an expanded Second Chance Fast Track Policy, and continued strengthening of automatic discharge (paragraph 80 of the Budget 2027 speech (PMO); reported by The Edge and Bernama). None of these affects the company route. For B2B creditors, that points to:
- Contracting with companies where you can, and checking the company is real and solvent before extending credit.
- Taking personal guarantees from directors of smaller companies, so you keep both routes.
- Acting early on overdue company accounts above RM50,000, before the debtor's position worsens.
See credit checks before you extend credit for the practical checklist.
A worked example
Suppose a supplier is owed RM120,000 by a sole proprietor and RM120,000 by a Sdn Bhd. Against the company, the supplier can serve a statutory demand straight away if the debt is undisputed. Against the sole proprietor, it must first obtain judgment, then issue a bankruptcy notice. If the RM150,000 threshold commences before that point, bankruptcy would no longer be available for that debt, and the supplier would rely on garnishee orders or a writ of seizure and sale.
Use our debt claim calculator to see what each claim is worth with interest, and our debt recovery service to have the route chosen and run for you.
Frequently asked questions
Is it easier to recover debt from a company or an individual in Malaysia?
For undisputed trade debts above RM50,000, the company route is often faster because a section 466 statutory demand can be served without first obtaining judgment, and the threshold is lower than for bankruptcy.
Did Budget 2027 change the company winding-up threshold?
No change to the RM50,000 threshold under section 466 of the Companies Act 2016 was announced.
Can I pursue a director personally for a company debt?
Only with a legal basis, most commonly a personal guarantee, or in limited cases such as fraudulent trading. Otherwise the company alone is liable.
Can I use a statutory demand for a disputed debt?
It is risky. If the debt is genuinely disputed on substantial grounds, the court may restrain the winding-up petition and order costs against you.