RI 'lacks experts for new bankruptcy law'<\/p>\n
JAKARTA (JP): Indonesia's new bankruptcy law may face
\ndifficulties during its first year as the result of a lack of
\nlawyers and accountants qualified to act as receivers and
\nadministrators, according to the chairman of a receivers'
\nassociation.<\/p>\n
\"I admit the lack of expert personnel may pose a problem
\nduring the first year,\" said Timur Sukirno, who was installed as
\nthe chairman of the newly-established Indonesian Receivers and
\nAdministrators Association yesterday.<\/p>\n
He said the privately-run association had only 16 qualified
\nreceivers and administrators in addition to those employed by the
\nstate-owned Receivers House (BHP).<\/p>\n
Experts have said the quality of BHP receivers and
\nadministrators is far from sufficient to handle modern bankruptcy
\nproceedings.<\/p>\n
The Commercial Court, set up recently to enforce the
\nbankruptcy law, is slated to start operations on Aug. 20.<\/p>\n
\"We anticipate that a mounting number of bankruptcies and
\nsuspension-of-payment petitions will be filed at the commercial
\ncourt so we intend to conduct training programs to ensure we have
\nan adequate number of receivers and administrators,\" said Timur.<\/p>\n
He added that a training class sponsored by the International
\nMonetary Fund (IMF) and the Asian Development Bank (ADB) would
\nopen on Aug. 10 for around 40 lawyers and accountants.<\/p>\n
He explained that the task of a court-appointed receiver was
\nto manage the assets of debtors declared bankrupt by the
\ncommercial court and to ensure that funds raised from the sale of
\nthese assets were distributed equally among unsecured creditors.<\/p>\n
The administrator assists directors of the debt-ridden company
\nto manage their assets and restructure their debts in a debt
\npayment suspension case, he added.<\/p>\n
The Ministry of Justice director general of law, Erman
\nRajagukguk, admitted that Indonesia has a very limited number of
\nqualified receivers and administrators compared to more than
\n6,000 in Australia who process an average of 35,000 bankruptcy
\npetitions every year.<\/p>\n
\"We will have to train more lawyers and accountants. But in
\nthe meantime the existing ones will just have to work much
\nharder,\" he said yesterday after inaugurating the receivers and
\nadministrators association.<\/p>\n
He also conceded that BHP staff were poorly qualified and
\nlacked specializations in the receivership and administrative
\nwork.<\/p>\n
The new bankruptcy law, approved by the House of
\nRepresentatives last month, will replace the current law which
\nwas introduced in 1906 by the Dutch colonial authorities. It will
\ntake effect on Aug. 20 and will provide a clear timetable within
\nwhich the court must rule on bankruptcy proceedings.<\/p>\n
Under the new law, commercial courts must complete bankruptcy
\ncases within 30 days of when they were filed. A further 30 days
\nis then allowed for an appeal process.<\/p>\n
This is a significant improvement on the old regulations,
\nwhich allowed debtors to delay cases almost indefinitely.<\/p>\n
Erman said that 25 commercial courts would start processing
\nbankruptcy and debt moratorium petitions on August 20.<\/p>\n
Hundreds of companies are now technically bankrupt as a result
\nof the sharp depreciation of the rupiah against the U.S. dollar
\nwhich has caused the value of unhedged foreign debts to soar in
\nlocal currency terms.<\/p>\n
The new ruling is also expected to improve confidence in the
\ncountry's crisis-hit economy by providing creditors and investors
\nwith effective legal protection in the event of their investment
\nturning sour.<\/p>\n
However, the implementation of the new bankruptcy law should
\nnot be seen as doomsday by troubled debtors, said Fred Tumbuan, a
\nfounder of the receivers and administrators association.<\/p>\n
\"A bankruptcy declaration does not mean that the day of
\nreckoning has arrived,\" he said.<\/p>\n
He pointed out that the new law also provided an ailing but
\npotentially viable company with legal protection so that it could
\nrestructure its debts.<\/p>\n
The law stipulates that a debtor, with the help of an
\nadministrator, has the right to ask the court for 270 days to
\nrestructure its debts, including through negotiations to write
\noff debt with its creditors.<\/p>\n
Analysts have said that most local companies will be in no
\nposition to pay their dues after a year of the economic crisis
\nwhich has seen the value of the rupiah drop more than 80 percent
\nagainst the U.S. dollar.<\/p>\n
The Indonesian private sector holds enormous overseas debts
\nwhich it is unable to repay. Companies have been forced to go
\ncap-in-hand to their foreign creditors to ask for huge debt
\ndiscounts to allow them to resume payments and business
\noperations.<\/p>\n
The success of the Indonesian Debt Restructuring Agency
\n(INDRA), which started operation on Monday, also partly hinges on
\nthe willingness of foreign creditors to write off large amounts
\nof debt in addition to the eight year debt restructuring program
\nwhich they have already agreed to. (rei)<\/p>",
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