House asked to endorse bankruptcy rules<\/p>\n
JAKARTA (JP): The government urged the House of
\nRepresentatives yesterday to endorse its new bankruptcy
\nregulation issued in lieu of a law in April to deal with the
\nmountain of cases caused by the economic crisis.<\/p>\n
Minister of Justice Muladi told a plenary session of the House
\nthat the government hoped the regulation, issued to replace the
\nantiquated bankruptcy law, could come into effect on Aug. 20.<\/p>\n
The bankruptcy rules are part of the government's effort to
\nresolve the problem of the huge unpaid debts that Indonesian
\ncompanies owe foreign creditors.<\/p>\n
They are needed to give greater legal certainty to the
\nbusiness world which in turn could restore confidence that the
\ngovernment is serious in its efforts to solve the crisis, Muladi
\nsaid as he presented the draft regulation for the House's
\nendorsement.<\/p>\n
Muladi said time was of the essence and that the government
\ncould not draw up a bankruptcy bill because it would take too
\nlong to be passed.<\/p>\n
The government felt the proper legal instrument, given the
\nurgency of the matter, was to issue a new regulation in lieu of
\nthe bankruptcy law, he said.<\/p>\n
Muladi said Article 22 of the 1945 Constitution allowed the
\ngovernment to issue a regulation in emergency situations.<\/p>\n
An emergency was not simply when the country was physically
\nunder threat of aggression, rebellion or riot but should also be
\nlooked at in terms of the immediacy of a problem confronting the
\ngovernment.<\/p>\n
The minister said the existing Bankruptcy Law, enacted 92
\nyears ago during the Dutch colonial administration, was no longer
\neffective to deal with current bankruptcy cases.<\/p>\n
Few cases have been tried under the bankruptcy law, reflecting
\nthat the legislation has rarely been used or tested.<\/p>\n
The new regulation promises simple and swift court action in
\ndealing with bankruptcy cases.<\/p>\n
It states that a person or institution with debts owed to two
\nor more creditors can be declared bankrupt by a court order if
\nhe\/she or it defaults on at least one of the debts.<\/p>\n
A creditor or the government's prosecution office can petition
\na court for a ruling to declare the debtor bankrupt.<\/p>\n
In the case of debtor banks, the petition must come from Bank
\nIndonesia, the central bank, while for publicly listed companies,
\nit must come from the Capital Market Supervisory Agency.<\/p>\n
The regulation requires a court to rule within 30 days of the
\napplication being filed.<\/p>\n
The government is currently preparing to establish new
\ncommercial courts to deal specially with bankruptcy cases. They
\nwill be set up initially in Jakarta's five mayoralties.<\/p>\n
The regulation allows plaintiffs or state prosecutors, pending
\na court decision on bankruptcy, to apply to a court to order the
\nconfiscation of part or all of the debtor's assets.<\/p>\n
Alternatively, a court could appoint a receiver to monitor the
\nmanagement of the debtor's business affairs or oversee payments
\nand transfer of assets to creditors.<\/p>\n
The regulation allows a court to nullify some transactions
\nconducted by a debtor up to one year prior to the declaration of
\nbankruptcy, if there is sufficient evidence that the debtor was
\naware, or should have been aware, that the transactions would
\ndamage the creditors' interests.<\/p>\n
Creditors can request a court to nullify grants made by a
\ndebtor within the last 12 months if the debtor knew, or should
\nhave known, that such actions were harmful to the creditors.<\/p>\n
A creditor can immediately execute claims to rights to
\nguarantees, auctions and collateral.<\/p>\n
The new regulation also empowers a court to mediate in a
\ndispute between debtors and creditors.<\/p>\n
A court can rule for deferral of loan repayments if a debtor
\nis unable to meet its obligations, on condition that the debtor
\npresents a proposal for a settlement.<\/p>\n
The court must then set a date to hear the case within 45 days
\nafter it rules for deferral. (emb\/aan)<\/p>",
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