Update bankruptcy laws<\/p>\n
By Dewi Anggraeni<\/p>\n
MELBOURNE (JP): While entering the world of global economy in
\nleaps and bounds, Indonesia's legal infrastructure has not quite
\ncaught up with the time. We inherited our bankruptcy law for
\ninstance, Faillisement Verordening, from the Dutch Colonial legal
\nstructure of 88 years ago. Hence, early last month, Dr. Sunaryati
\nHartono, Director of the National Law Development Body, proposed
\nthat a new bankruptcy law was needed to bring that aspect of the
\nlaw to the practices of today. The outdatedness of the law, it
\nseems, has been exploited by some unscrupulous individuals and
\ncompanies, who chose bankruptcy rather than pay their debts.<\/p>\n
Australia's Bankruptcy Act 1966 is based on the British law.
\nThis act deals with persons who, according to the court, fail to
\nmeet their payment obligations to various creditors. It is
\namended frequently to keep up with recent practices in the
\nbusiness world, the latest amendments passed in 1995. Corporation
\nlaw which deals with insolvent companies, is also regularly
\namended.<\/p>\n
Management of the act is carried out by the Insolvency and
\nTrustee Service Australia, under the Attorney General's
\nDepartment, and registrars in bankruptcy, who are part of the
\nFederal Court of Australia.<\/p>\n
Amendments are crucially needed, as the general technology
\naiding businesses is becoming increasingly sophisticated. Richard
\nMansell and Anne King, respectively partner and manager of
\nReconstruction & Insolvency of management consulting firm
\nDeloitte Touche Tohmatsu, confirmed this. In fact, each amendment
\nwas made usually because there had been events where the law had
\nbeen unable to adequately deal with certain practices deemed
\nunethical. Often as soon as an amendment was passed, new
\npractices were found in the field.<\/p>\n
\"The law is always trying to catch up with new practices,\"
\nsaid Mansell.<\/p>\n
According to Bankruptcy Act 1966, a person may voluntarily
\nlodge a petition to the court to be declared bankrupt.
\nAlternatively, the creditors may prove that the person is no
\nlonger solvent and have the court declare the person bankrupt.<\/p>\n
Following a declaration of bankruptcy, the creditors may
\nappoint a trustee to investigate and ascertain the liability of
\nthe bankrupt, to bring whatever assets are available into a pool
\nto distribute among the creditors. If no registered trustee is
\nappointed by creditors, a government agent, known as an official
\ntrustee or receiver, will automatically handle the case.
\nAppointing a registered trustee gives the creditors more service
\nthan the basic services given by an official trustee.<\/p>\n
The trustee is responsible for preventing the bankrupt from
\ntransferring assets such as land and houses to another family
\nmember. The 1990 amendments to the Bankruptcy Act 1966 allow a
\ntrustee the legal right to go back five years, in certain
\ncircumstances, to investigate the bankrupt's financial
\ntransactions.<\/p>\n
The trustee also has the legal right to look behind what is
\ncommonly known as the corporate veil, where a person may try to
\nput assets in the name of a company or a trust, thus trying to
\nseparate himself from his assets. He may try to use the corporate
\nstructure, or trust structure, to hide what he really has. A
\ntrustee must try to recover those assets.<\/p>\n
\"It is not an easy task,\" Anne King said, \"because everything
\nhas to be proven in court.\"<\/p>\n
King added that rarely do such cases end up in court.
\nGenerally, as soon as the trustee begins an investigation, the
\nbankrupt voluntarily surrenders the assets sought by the trustee,
\nbecause court proceedings can be extremely costly -- mentally and
\nfinancially. This is especially so if the bankrupt loses the
\ncase.<\/p>\n
A declared bankrupt has restrictions imposed on him. He is
\nbarred from holding any managerial position and obtaining bank
\nloans exceeding A$3000 (US$ 2,400) without advising everyone
\ninvolved of his bankrupt state. He must hand in all his bank
\ndocuments and passport to his trustee. While he may conduct
\nlimited business without establishing a company, he may not do so
\nunder a different name.<\/p>\n
A bankrupt may apply to the court for release from bankruptcy
\nprovided he fulfills all legal obligations for the release. This
\nmeans that he has to come to some agreement with his creditors,
\nin terms of payment of his debts. The creditors may agree to a
\nfraction of the amount owed to them. From the moment his
\napplication is officially lodged, it generally takes at least
\nthree years for the bankrupt to be discharged of his obligations.<\/p>\n
For this purpose the provisions of the 1991 amendments to
\nBankruptcy Act 1966 clarify the proceedings. It provides a
\nformula setting the permissible maximum income for a bankrupt.
\nHalf of any sum above the maximum income will be confiscated to
\nrepay his debts. If the bankrupt fails to observe this
\nobligation, his trustee is liable to report him and have him pay
\nunder court order. Failing to comply at this stage may land the
\nbankrupt in prison for contempt of court.<\/p>\n
While there are bankruptcy cases slipping through the
\nAustralian legal net, most are administered effectively. And the
\nact aims to do this in a manner as socially acceptable as
\npossible.<\/p>\n
The writer is a freelance journalist based in Melbourne.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/update-bankruptcy-laws-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }