Bankruptcy Proceedings Process in Commercial Court


Bankruptcy proceedings settlement process in Indonesia is performed in the Commercial Court (“Court”). This is in accordance with Article 1 paragraph 7 of Law Number 37 of 2004 on Bankruptcy and Postponement of Debt Payment (“Indonesian Bankruptcy Law“), which states that the court is the Commercial Court in the general court.

The procedure of bankruptcy application filing may be seen in the Article on “Procedure of Bankruptcy Application in Commercial Court”.

In the event of the authorized Court decides the bankruptcy proceedings, there are some matters that should be known by the debtor and creditor, as follows:

1. Bankruptcy application is stipulated in the Court where the debtor’s legal domicile is located.

2. If the debtor has left territory of Republic of Indonesiathe Court that has authority to pass judgment is the Court where its jurisdiction includes the debtor’s last legal domicile.

3. In the matter of the debtor is a firm, the Court that has the authority to pass judgment is the Court where its jurisdiction includes the firm’s legal domicile.

4. In the matter of the debtor is not domiciled in the territory of Republic of Indonesia, but performing a profession or business in the territory of Republic of Indonesia, the Court that has an authority to pass judgment is the Court where jurisdiction is debtor’s legal domicile or debtor’s head office where they perform their profession or running their business in the territory of Republic of Indonesia.

5. In the matter of the debtor is a legal entity, the Court that has an authority to pass a judgment is the Court where its jurisdiction includes the legal standing as set forth in the article of association of the legal entity.

The examination of bankruptcy application is conducted in a maximum period of 20 (twenty) days after the date of application is registered. At the request from debtor and based on reasonable reason, the Court may postpone the court until maximum period of 25 (twenty five) days after the date of application is registered. Court ruling of the bankruptcy petition shall be said with a maximum period of 60 (sixty) days after the date of bankruptcy petition is registered. Court’s decision shall contain:

a. Certain article of relevant laws and/or unwritten law source that become a basis to judge; and

b. Legal consideration and dissenting opinion from the judge member or the presiding judge.

A decision of bankruptcy petition, which contains a complete legal reasoning underlying the decision shall be stated in a public session and may be implemented first, although there is a legal action against it.

Under Article 10 of Indonesian Bankruptcy Law, as long as the decision of  bankruptcy petition has not been issued, every creditor, attorney, Bank Indonesia, the Capital Market Supervisory Agency, or the Minister of Finance may apply to the Court to:

1)    confiscate against on some or all debtor’s property; or

2)    appoint a temporary receiver to oversee:

a)      the management of debtor business; and

b)      the payment to the creditor, transfer, or encumbrance of debtor’s property which is in  bankruptcy is a receiver’s authority.

For the interest of bankrupt asset, it may be requested the cancellation of all debtor’s legal actions that have been stated bankrupt which has adverse effect to the creditor’s interest. The cancellation is filed to the court before the bankruptcy declaration is issued. The cancellation may only be performed if it can be proved that when the legal action is performed, debtor and other parties concerned know that the legal action will cause an adverse effect to creditor.

The court with the decision of bankruptcy, upon the recommendation from Supervisory Judge, receiver’s request, or creditor’s request or more, and after hearing the Supervisory Judge, may order that the bankrupt debtor is detained, whether in the State Prison or at his own house, under the supervision of prosecutor who appointed by the Supervisory Judge. Detention order is executed by the prosecutor who is appointed by the Supervisory Judge.

Alsha Alexandra Kartika

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