Avoiding bankruptcy amicably in Indonesia

Author: | Published: 1 Nov 2000

Going broke in Indonesia need not be so painful as most companies presently find it. Indonesia's failing companies usually end up threatened with the Bankruptcy Regulation, which is used to allow one or more creditors to file a petition for declaration of bankruptcy against the debtor in a commercial court.

The petition is intended to enforce settlement from the debtor by way of liquidation of its assets or by agreeing on a composition plan in bankruptcy. However, few debtors in Indonesia - or even foreign creditors dealing with Indonesian debtors - are aware of or are familiar with an alternative method of settling debts; a court-sanctioned composition plan. This alternate legal route is also provided in the Bankruptcy Regulation, known as Law No 4 of 1998, but avoids unnecessarily bankrupting the debtor. The court sanction is particularly useful for debtors with good faith, seeking to restructure their debt and to settle amicably with all of their creditors, but which are...