Bankruptcy

According to Article 1131 of Indonesian Civil Code, all movable and immovable asset of debtor which is exist or will be exist encumbranced for security to debtor’s obligation derived from any agreement and/or law. According to Article 1132 of Indonesian Civil Code, the goods are a joint guarantee for all creditors to which the proceeds of the sale of the goods are divided according to the ratio of their respective receivables unless there are valid reasons (privilege right) among the creditors.

Bankruptcy proceeding is a proceeding to implement the stipulation as provided in Article 1131 and 1132 of Indonesian Civil Code instead of every creditor resolves their own receivable which may cause seizure of debtor’s asset contrary to the stipulation as provided in Article 1132 of Indonesian Civil Code.

The main objective of bankruptcy proceeding is to resolve all debts of the debtor to its all creditors in accordance to law.

Once a person or company is declared in bankruptcy by a commercial court, all its assets shall be confiscated and possessed by one or more curators which are appointed by the commercial court. The curators will settle to bankrupt person’s or company’s debt from the proceeds of sale of debtor’s asset.

If a debtor is declared in bankruptcy, all settlement of the debtor’s obligation must be settled through bankruptcy proceeding. Any other proceeding related to debtor’s payment obligation shall become null and void.

The process for determining whether a debtor qualifies for bankruptcy is 60 working days. A debtor is qualified for bankruptcy if the debtor has more than one creditor and at least one of the debt is due and payable.

Under Indonesian bankruptcy law, there is no need to prove that the debtor is in insolvency condition.