Dr. Hotman Paris Hutapea,
S.H, M.hum
Hotman Paris & Partners
A: The Kensington Commercial
Blok A.12
Jl. Bulevar Raya, Kelapa
Gading Permai
Jakarta Utara 14240,
Indonesia
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E: hopp@uninet.net.id
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By Dr. Hotman Paris Hutapea, S.H, M.hum Managing Partner of Hotman Paris & Partners and Vice-Chairman of Indonesia Bar Association (PERADI)
Not every Indonesian law experts able to understand the limitations of the law no.37 year 2004 on Indonesia Bankruptcy Law, as one must posses the necessary experience on formal procedural law and substantive civil law, the two aspects of Indonesia bankruptcy law. Nonlitigators would have a different understanding of the law from those who are civil litigators. If the formulators of the law are not experienced practitioners, they come up with one that lost its legal logic and in contradiction with the nature of the law.
The content of Indonesia bankruptcy law is against the nature of the bankruptcy law itself and is a killer machine for Debtor’s business, and had raised cannibals within the professions involved.
THE MISTAKES
1. The minimum requirement of only one creditor to file a bankruptcy application (while proving there are other creditors) is the main evidence that the law is against the nature of the creation of the bankruptcy law itself, as it should exist for the benefit of ALL CREDITORS. Other creditors, who do not want to file for bankruptcy, then must also register their claims in the bankruptcy proceeding.
To quote Prof. Dr. Sudargo Gautama “Pailisement is the confiscation as a whole of all debtor’s assets. It is a general confiscation (algemeen beslag) of all of the debtor’s assets...The purpose is that the assets can be divided equally within all Creditors.”
“GENERAL CONFISCATION OF ALL DEBTOR’S ASSETS” and “ASSETS divided for ALL CREDITORS” are the main principles of the bankruptcy law that differs it from the civil law procedures. It is to avoid chaos if creditors individually racing to execute the debtor’s assets.
Some argue there is also the option of filing a suspension of payment (PKPU) or the settlement agreement proposal. This is where the law must be seen not only from the formal and material law perspective but also from the experienced lawyers’. The options are the entrance to the Debtors financial downfall, as just because the application of one single creditor:
- after the bankruptcy application is registered, the Debtor is forced to file a single settlement agreement towards all creditors;
- all creditors are forced to vote for the settlement agreement, except for the security holder who choose not to;
- the settlement agreement must pass the creditors voting with high requirements as regulated;
- the debtor must pay the super expensive curator/ administrator fee.
2. A creditor is allowed to file for the suspension of payment of the Debtor. It does not make any legal sense if the creditor files the application, but the debtor files the settlement proposal. Also, because one creditor files for it, the debtor is then forced to file a settlement towards all creditors. The time period of suspension of payment also does not make any sense. The purpose is to give an opportunity for the debtor to reorganize the business, but they are only given 45 days. De facto, 45 days is more a preparation for the Debtor’s death. It is not even enough for the debtor to prepare the settlement agreement. This foreigner influenced bankruptcy law in which the amendment from the regulation no. 1 year 1998, is motivated by interests which in favour of the Creditor but very destructive to the Debtors.
3. A security holder creditor is allowed to file a bankruptcy and join the voting without losing their right to the security. This means that they still have access to the debtor’s asset if the outcome of the voting is not in their favor.
4. The voting approval requirement is too high, leads to a higher failure of acceptance of the settlement agreement. The creditor voting must reach at least 51% of creditors who present in terms of parties, and 2/3 out of the total claims who present in terms of money. This is the biggest obstacle in the bankruptcy law.
5. The administrator/curator fee, which is so expensive even by a Wall Street or London inner-circle lawyer fee standard. It is a percentage of the debtors total debts, without excluding its liabilities, as regulated by the minister regulation.
SOLUTION
1. The law should revise the requirement of minimum creditors amount to file bankruptcy application to at least 75% of all creditors whose claims are due and payable, and the burden is in the debtor to prove that they have not reached the minimum 75% of all creditors whose claims are due and payable. This is to exercise the foremost purpose of bankruptcy law, for the benefit of ALL CREDITORS.
2. Security holders creditors should not be allowed to file the application and to vote.
3. Revise the regulation on the curator fee.
FIRM PROFILE
• Specializes in complex civil litigation, bankruptcy, international finance litigation, criminal disputes, and administrative law disputes.
• Registered the first cases under the bankruptcy law when the law and the commercial court were first introduced in 1998.
• Previous cases include: 2001 Sinarmas APP bonds default, the Gulaku dispute, Churchill Mining saga, JIS Teachers case.
• Clients include: Kertas Nusantara Group, Artha Graha group, Tripolyta, MNC group, Arpeni, Sungai Budi Group, Borneo Lumbung Tbk, J resources.