Bankruptcy and Suspension of Debt Repayment Obligation (PKPU)

The Indonesian Bankruptcy Law, which was formulated in Law number 37 of 2004, does not make a clear distinction between individual / individual bankruptcy and business entity / company bankruptcy. As an introduction and for further discussion, the author will use the term "bankruptcy for business entities / companies" because it is more often used in practice and custom.

The difficulties experienced by a company in running its business are actually common things experienced by any company. The various types of difficulties faced by the Company, especially in financial matters, can be classified into 4 (four) conditions, namely:

  1. The condition of a company that is still generating profits, however, has problematic capital structures, for example debt that exceeds paid-in capital. In such circumstances a solution can be sought in the form of capital restructuring in order to rearrange the term of debt repayment;
  2. The condition of a company that has an asset value below its debt value, then this company can be rearranged with a new capital structure, which is expected to equalize the asset value with the debt value so that the obligations towards these debts can be fulfilled;
  3. The condition of a company that has bright prospects but is poorly managed by the management team, for this condition the solution is to carry out a management restructuring followed by a restructuring of the company's capital;
  4. A company that is no longer able to fulfill its obligations is accompanied by a condition of very low asset value, and it is no longer possible to carry out rescue efforts as described earlier, then the final solution is to carry out liquidation through a bankruptcy institution.

Thus, in principle, a company (PT) that is bankrupt has only 2 (two) solutions, namely: First, by dissolving the company in which there is an alternative to Bankruptcy, and Second, by carrying out an turn around to make recovery for the company.

"Bankruptcy is a solution to resolve a PT bankruptcy, and not as a tool to bankrupt PT which is and still has the potential for growth."

Companies that are going or are experiencing bankruptcy are of course companies that have previously experienced difficult times in their business continuity. This difficulty is usually a financial difficulty (Financial Distress) can put the company into a variety of circumstances which the author concludes as follows:

  1. Economic Failure, namely where the company's revenue cannot cover total costs, including capital costs. Experienced business Economic Failure can continue its operations as long as the Creditor wishes to provide additional capital and the Owner can receive a rate of return (return) below the market interest rate. In addition, in general, symptoms of financial difficulties, such as where the company is unable to pay its obligations on time (Technical Insolvency), or what is worse is where the value of the company's assets / assets is lower than the value of the company's obligations that must be fulfilled (L);
  2. Business Failure, that is, where the company ceases operations with the result of losses for creditors, thus a business can be classified as "failed", even though it did not go through bankruptcy proceedings; and
  3. Legal Bankruptcy, namely where bankruptcy is declared by a court decision (institution / third party) in accordance with the law due to the stages of financial difficulties mentioned above.

Principle Commercial Exit from Financial Distress (Commercial Solutions to Financial Troubles)

By law, the essence of the purpose of bankruptcy is a process related to the distribution of assets / assets of the debtor to his creditors. Bankruptcy is a way out for the process of distributing debtor's assets which is the creditor's right in a certain and fair manner.

It is said with certainty, because in the bankruptcy process the steps and processes for distributing assets have been determined, such as who is the creditor and has the right to share the assets of the bankrupt debtor.

It is said in a fair manner, because in the bankruptcy process a third party who is expected to be independent in nature, namely the Curator and the Supervisory Judge who are given the authority to regulate the amount of the distribution of assets until the implementation process. The independence characteristic of the Curator and Supervisory Judge is then expected to bring justice between the interests of the Bankrupt Debtor and its Creditors.

Because without certainty and justice, it is very open to harm each other from both the creditors and the debtors. Where through the bankruptcy instrument, creditors can damage the reputation of the bankrupt debtor, and the bankrupt debtor also has the opportunity to use the bankruptcy instrument to pay his debt obligations inappropriately or even up to a very small and irrational figure to his creditors.

Even though it is clear that the Bankruptcy instrument is actually a solution offered for companies experiencing financial difficulties in the hope that the company can be saved and get out of a difficult situation (financial distress) so that the company can resume operations as an economic pillar that strengthens the progress of a nation.

It is unfortunate that the Indonesian Bankruptcy Law does not adhere to principles Commercial Exit from Financial Distress so that legal experts and advocates / lawyers have not been able to implement Bankruptcy as a "solution", on the contrary, there is often a deviation from Justice which is expected to be obtained by bankrupt debtors and creditors.


To Consult and make appointment with our lawyer click here