Under Indonesian Law no. 37 Year 2004, suspension of payment (PKPU) as court procedure allow and can be used as a way for debtor to avoid and protect itself from bankruptcy and force to have the debt restructured in order for the debtor can still carry on doing its business.
PKPU is divided into 2 stages Temporary PKPU and Permanent PKPU. Temporary PKPU last for 45 days from the date of the PKPU judgment recited. During the period, debtor can proposed for restructuring scheme in the form of composition plan, which may not happen due to the involvement of many creditors which have to be verified in short period of time. In order to give more time for the debtor to provide or revise the composition plan, the debtor can propose for time extension in the form of Permanent PKPU, which can last for maximum 270 days. During the whole PKPU period, debtor cannot be forced to pay its debt and stay period will apply.
For the composition plan or Permanent PKPU to be granted, it has to be approved by the secured and unsecured creditors through voting mechanism with approval vote of more than half of each type of creditors who are present at the meeting as long as the creditors represent at least two-thirds of the total outstanding receivables payable to respective secured and unsecured creditors who are present at the meeting.
One or more creditors can request for termination of PKPU as stipulated in Article 255 paragraph 1, if the debtor:
- acts in bad faith in the management of the assets;
- attempts to prejudice its creditor;
- taking management or ownership of the assets without authorization;
- fails to carry out the obligations required by the court or actions requested by the administrator in the interest of the debtor’s assets’;
- condition makes the continuation of the PKPU infeasible; or
- cannot be expected to fulfil its obligations to creditors on time.
Petition for termination of PKPU must be examined within 10 days after the filing and the decision must be issued within 10 days as from the examination is completed. If the court decides to terminate PKPU then the debtor will be declared bankrupt. In bankruptcy stage, secured creditors can execute the security object and will be given only 2 months after the insolvency condition commenced to sell the object.
