Overview

Having been some time in the preparation, the Supreme Court has finally published a handbook for cases that involve bankruptcy settlements and suspension-of-debt-payment obligations through the issuance of Decree No. 3/KMA/SK/I/2020 (“Decree 3/2020”).[1] While aiming to ensure that judges and registrar staffs operating within commercial courts implement the various provisions set out under Law No. 37 of 2004 on Bankruptcy and Suspension of Debt Payment Obligations (“Law 37/2004”) in a consistent fashion,[2] the handbook was also created in an effort to support the Indonesian Government’s objective of providing simple, prompt and affordable proceedings, thus bringing the country into line with global ease of doing business standards.[3]

The Appendix to Decree 3/2020 addresses the structure of the handbook, which is divided into the following two books:

1. Book I on Processes for the Examination of Petitions for Declaration-of-Bankruptcy and Suspension-of-Debt-Payment Obligation (Penundaan Kewajiban Pembayaran Utang – “PKPU”) Cases (“Book I”); and
2. Book II on Processes for the Settlement of Bankruptcy and PKPU Cases after Decisions on Declarations of Bankruptcy and PKPU (“Book II”).

The handbook’s contents have been enforced since 14 January 2020,[4] and in an effort to elaborate upon the handbook’s contents, this edition of Indonesian Law Digest (ILD) will specifically address the following matters:

1. Bankruptcy:

1. Eligible petitioners;
2. Petition requirements;
3. Overall procedure for the processing of bankruptcy petitions;
4. Follow-up measures to bankruptcy decisions.

2. PKPU:

1. Eligible petitioners;
2. Petition requirements;
3. Overall procedure for the processing of PKPU petitions;
4. Follow-up measures to PKPU decisions.

1. Bankruptcy

Under Law 37/2004, bankruptcy is defined as the general seizure of all of the assets of any debtor who has been declared bankrupt (“Bankrupt Debtor”). These assets are to be managed and settled by a receiver under the auspices of the relevant supervisory judge.[5] A debtor may be declared as bankrupt by a commercial court if:[6]

1. The debtor is saddled with two or more creditors, in which creditors can comprise the following: concurrent/unsecured creditors, separate/secured creditors and preferred creditors;[7]
2. The debtor has not settled the relevant credits; and
3. One of the credits in question is due and payable.

The following sections will offer an elaboration of the provisions set out in the handbook which address the various parties which may submit bankruptcy petitions. The ensuing sections will also address the various requirements which have to be met and procedures that have to be completed in order to process such petitions, as well as various follow-up measures that apply after decisions on bankruptcy declarations have been handed down.

1. Eligible Petitioners

In general, the commercial court can declare bankruptcies based on petitions which are filed either by a debtor or by creditors.[8] Book I clarifies the various types of parties which may submit petitions:[9]

Although Law 37/2004 does not specifically authorize receivers to submit bankruptcy petitions on behalf of Bankrupt Debtors, Law 37/2004 specifies the duty of receivers to manage and/or settle bankruptcy estates (harta pailit). Therefore, a receiver may become an eligible petitioner, since the receivables of a Bankrupt Debtor against third parties are part of the relevant bankruptcy estates and their management, therefore, falls under the duty of the receiver. Any legal actions which involve such estates, including petitions for bankruptcy in relation to said receivables, must be submitted by the receiver.

2. Petition Requirements

Petitions for declarations of bankruptcy should be submitted to the head of the relevant commercial court,[11] along with various required documents which differ based on the relevant type of petitioner, as elaborated upon in the table below:[12]