INSOL International
Seoul One-Day Seminar
The Bankruptcy/Insolvency
Regime in Indonesia
Michael S. Carl
SSEK Legal Consultants
INSOLVENCY/BANKRUPTCY
REGIME IN INDONESIA
• Law No. 37 of 2004 regarding Bankruptcy and Suspension of Debt Payment Obligation (the “Indonesian Bankruptcy Law”) – regulates bankruptcy and suspension of debt payment obligations (“PKPU”)
INSOLVENCY PROCEEDINGS
• PKPU and Bankruptcy proceedings take place in a Commercial Court
• PKPU gives creditors and debtors an option to restructure indebtedness in a court process as an alternative to a liquidation bankruptcy
INSOLVENCY PRACTITIONERS
IN INDONESIA
• Receiver
–party-proposed and court-appointed
–performs management and/or settlement of bankruptcy assets
–has full control over bankruptcy assets
• Administrator
–party-proposed and court-appointed
INSOLVENCY PRACTITIONERS IN
INDONESIA
• Qualifications - Receiver / Administrator
- Indonesian citizen
- complete a course and be certified by a professional organization
- accountant or lawyer
INSOLVENCY PRACTITIONERS
• Supervisory Judge
–court-appointed
–selected from Commercial Court judges
–monitor management and settlement of bankruptcy assets –court is obliged to hear Supervisory Judge’s opinion before
making a decision with regard to the management or settlement of bankruptcy assets
• Bankruptcy Lawyer
–appointed respectively by either debtor and creditors –provide advice on the bankruptcy case
–protect the interests of his/her client
• Financial Advisor
–not mandatory
–usually appointed in bankruptcy or PKPU proceedings involving large companies
ISSUES IN RESOLVING BANKRUPTCY
• Rotation of judges in commercial court can result in change of Supervisory Judge in PKPU/bankruptcy case, leaving a Supervisory Judge without a deep understanding of the case
• The non-appointment of an Independent Financial Advisor due to fees
• Questions on the independence of Receiver or Administrator
• Criminalization of Receiver and Administrator profession
• Need to revise the Bankruptcy Law
• PKPU or bankruptcy as a “way out” from a debtor’s obligation to pay back large debts
