Indonesia’s distressed enforcement environment

Author: | Published: 30 Oct 2015

Ashurst partner Joel Hogarth examines the practical realities of enforcing distressed debt in Indonesia, and the need for detailed due diligence when acquiring debt instruments

Over the last few years, a dominant strategy for enforcing debt instruments in Indonesia has developed. It's an insolvency proceeding known as suspension of payments – or more commonly by its Indonesian initials, PKPU and it's very broadly analogous to an English administration or US Chapter 11 proceeding.

The primary reason for its popularity is the defined, tight timelines stipulated by law and which are adhered to in practice by the Indonesian courts. It involves a detailed and nuanced process. But at a very high level, a debtor in PKPU is essentially required to engage with its creditors at least to get their support for finding a consensual resolution within 45 days, or it will be declared bankrupt. If it cannot ultimately reach a deal with...