The Indonesian Bank Restructuring Agency (Ibra) was formed by the Indonesian government on January 26 1998 by virtue of Predential Decree 29 of 1998 as the implementation of Law 10 of 1998. After six years of its operation, the President of the Republic of Indonesia has issued a decree stipulating that Ibra will be dissolved if by April 30 2004 it accomplishes all of its pending duties related to: (a) the liquidation of operational dysfunctional banks; (b) the settlement of banks' shareholder obligations; (c) audit; and (d) transactions that existed before February 27 2004. This decree (Presidential Decree 15 of 2004) is effective as of February 27 2004.
It is unclear whether Ibra should be considered dissolved on April 30 2004 if it fails to accomplish these duties by then. Nor is it clear how Ibra might accomplish so many pending duties in less than 60 days.
Meanwhile, the government has passed Regulation 10 of 2004, which creates a state-owned asset management company, effective as of February 27 2004 (GR 10/2004), and another presidential decree, number 16 of 2004, regarding the liquidation team at Ibra, also effective as of February 27 2004 (PD 16/2004).
The objective of the asset management company is to manage the state's sovereign assets, derived from Ibra, on behalf of the Minister of Finance, after the dissolution of the agency. From all of the available records, it seems Ibra has only terminated part of its duties and has not yet dissolved, so it is unclear when the asset management company will lawfully be able to manage the sovereign assets. Nor is it clear which assets will be considered sovereign assets.
The definition that should be relied upon is under Law 1 of 2004, which says the term only covers clean assets (free from restriction or limitation). It explains that the asset management company's duties consist of: (a) asset restructuring; (b) cooperation with other parties to increase the assets' value; (c) recovery of claim; and (d) asset sales. So PD 16/2004 should explicitly state that Ibra's liquidation team will be authorized to handle the non-clean assets. In fact, this can only be inferred from several provisions that stipulate that the liquidation team handles legal matters involving Ibra and acts as the attorney-in-fact to the Minister of Finance. But the liquidation team is also obliged to administer the assets derived from Ibra and transferred to the Department of Finance.
The next question is how the Department of Finance plans to transfer the clean assets of the state to the company. Article 3 of GR 10/2004 stipulates that assets should be transferred in the form of capital injections, in addition to cash capital (subject to a decree from the minister of finance). The asset management company is a limited liability company, which is subject to several restrictions on capital under Law 1 of 1995 regarding limited liability companies.
Other legal considerations will arise, such as, if the company is determined to sell assets in accordance with its stipulated duty, will this affect the structure of its capital, especially its subscribed and paid-up capital which was calculated on the basis of the transfer value of assets from the Department of Finance? The basis of this valuation should be predetermined by the Department of Finance as the shareholder of this state-owned company. Lastly, it remains unclear where the non-clean assets will be transferred to. Based on the Decree of the Minister of Finance 61 of 2002 regarding the State Receivable Affairs Committee (SRAC), together with Government Regulation in lieu of Law Number 49 of 1960 regarding SRAC and the State Receivable Affairs Board (Law 49/1960), the non-clean assets could be collected through management, claim and auction or enforcement of civil imprisonment of the obligor, provided that those assets have been properly transferred to SRAC in accordance with Law 49/1960 provisions. Therefore, during Ibra's liquidation period, assets characterized as non-clean assets will not be transferred to the asset management company but will also not be required to be transfered to the SRAC, subject to the management of Ibra's liquidation team.