Bankruptcy law should be amended, says Yusril<\/p>\n
DENPASAR, Bali (JP): The current bankruptcy law should be
\namended to minimize legal uncertainties that have hampered
\nforeign investment, a minister said on Wednesday.<\/p>\n
Minister of Justice and Human Rights Yusril Ihza Mahendra, who
\nlater on Wednesday was removed from the Cabinet by President
\nAbdurrahman Wahid, said he hoped the government could submit a
\nnew bankruptcy bill to the House of Representatives sometime this
\nyear.<\/p>\n
Speaking at a seminar on Asian insolvency reform, Yusril said
\nthe latest amendment of the 1998 bankruptcy law was only half
\ncomplete. The current law, he said, is still largely based on the
\n1905 Dutch bankruptcy law.<\/p>\n
\"Only part of the old bankruptcy law has been amended for the
\npurpose of dealing with some of the consequences of the economic
\ncrisis,\" he said in his opening speech at the seminar.<\/p>\n
Indonesia amended its bankruptcy law in 1998 partly to help
\nthe Indonesian Bank Restructuring Agency (IBRA) recover some of
\nthe bad loans at local banks through litigation.<\/p>\n
IBRA took over billions of US dollars worth of nonperforming
\nloans and assets after the government liquidated a number of
\nlocal banks in 1997.<\/p>\n
Albeit the agency faces hurdles in restructuring the loans,
\nIBRA rarely has succeeded in winning its bankruptcy suits against
\ncompanies and liquidating their assets.<\/p>\n
\"A good law on bankruptcy will assist economic recovery,\"
\nYusril said, adding that because of the partial amendment, the
\ncurrent bankruptcy law contains inconsistencies that must be
\naddressed.<\/p>\n
\"This should be done by introducing a new bankruptcy law that
\nreconciles the differences that now exist.\"<\/p>\n
Yusril cited several reasons to enact a new law: first, to
\nprevent the disproportionate loss of debtors' assets should
\nseveral creditors request payment at the same time.<\/p>\n
Second, to prevent secured creditors demanding the right of
\nsale of the debtors' assets without regard to the interests of
\nthe debtor and other creditors.<\/p>\n
\"And to avoid deception by the creditor or the debtor,\" he
\nadded.<\/p>\n
As an example, Yusril said a debtor might try to accommodate a
\ncertain creditor at the expense of other creditors.<\/p>\n
Local media have reported several bankruptcy cases involving
\nallegedly fictitious creditors that have influenced the vote on
\ndebt restructuring proposals in favor of the debtor.<\/p>\n
The latest such case involved the International Finance
\nCorporation (IFC), which filed a bankruptcy suit against PT Panca
\nOverseas Finance.<\/p>\n
IFC, the financial arm of the World Bank, lost its case
\nagainst Panca after what IFC alleged were fictitious creditors
\nvoted in favor of Panca.<\/p>\n
Yusril did not refer to these cases, but said the new
\nbankruptcy law must prevent deception by debtors trying to
\nprotect their assets from creditors.<\/p>\n
He said the new bankruptcy law also should cover some issues
\nthat are not dealt with in the existing law.<\/p>\n
As an example, he said there should be an article that
\nstipulated that creditors or debtors need not appeal bankruptcy
\nrulings to a higher court.<\/p>\n
\"It (the appeal) can be done directly by applying for a final
\nappeal with the Supreme Court. Accordingly, the settlement period
\ncould be shortened,\" he said.<\/p>\n
He also suggested putting in place a mechanism for the
\nsuspension of the enforcement rights of secured creditors, or
\nthose who own a debtor's pledge.<\/p>\n
He said this mechanism would mean greater fairness for all
\nparties involved.<\/p>\n
\"The law also should regulate the legal status of agreements
\nmade by the debtor prior to the issuance of a bankruptcy
\npetition,\" he added.<\/p>\n
Clarification of the terms and procedures for applying for a
\nbankruptcy petition and the suspension of payment also require
\nimprovement, he said.<\/p>\n
Yusril also cited as necessary new provisions on the role of
\nthe curator, or court receiver, the creditors' committee, the
\ntermination of suspension and payment.<\/p>\n
The head of the Asian Development Bank's private sector legal
\ngroup, Henry C. Pitney, said that aside from revising the
\nbankruptcy law, the government also should improve its legal
\ninfrastructure and human resources, including judges and lawyers.<\/p>\n
The two-day seminar on insolvency brought a number of legal
\nexperts and bankers from various countries together to exchange
\nideas on improving Indonesia's current bankruptcy law.<\/p>\n
Some 100 participants from 22 countries attended the forum,
\nincluding representatives from the International Monetary Fund,
\nthe World Bank and the Organization for Economic Cooperation and
\nDevelopment.(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bankruptcy-law-should-be-amended-says-yusril-1447893297",
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