Bankruptcy law needs wider definition

Bankruptcy law needs wider definition

JAKARTA (JP): The committee for the drafting of the bill on
the revision of the Indonesian Bankruptcy Law has proposed a
broader definition of "debt" than is contained in the current
insolvency law.

Kartini Muljadi, one of the committee members, said that
"debt" should mean any obligation that needs repayment or
fulfillment.

"The obligation here should not only be related to a debt in a
monetary sense," she said, at a seminar on the implementation of
the country's bankruptcy law.

"Debt might be a monetary indebtedness but this is not all,"
she said.

One party's obligation to deliver a service or goods can also
be considered as debt, according to Kartini. For example, if a
party cannot make a delivery, then that party is equivalent to a
party which is failing to repay debts, or also termed as being in
a state of default. Kartini, one of the country's senior lawyers,
said that the meaning of the debt should be re-defined to avoid
different interpretations.

This difference in interpretation was seen in the bankruptcy
case filed earlier this year by individuals Husein Sani and Johan
Subekti against PT Modernland Realty at the Commercial Court.

The two individuals filed a bankruptcy petition against the
property developer for the latter's failure to deliver units of
apartments, for which the plaintiffs had partially paid.

The Commercial Court accepted the claim and declared PT
Modernland Realty bankrupt.

The property developer then filed an appeal to the Supreme
Court.

The Supreme Court accepted the property developer's appeal and
automatically lifted the company's insolvency status previously
given by the Commercial Court.

The Supreme Court said in its appeal verdict that the
bankruptcy status of PT Modernland Realty should be revoked
because there was no debt involved in the deal between the
property developer and the two businessmen. The obligation to
deliver units of apartments could not be considered as debts, the
appeal verdict added.

Kartini said to avoid such unfair court rulings in the future
the drafting committee had proposed a broader definition of the
word debt.

"The word "debt" shall mean any amount payable, and if not
paid, will entitle the creditor to receive settlement thereof
from the debtor's assets," the proposed definition clause said.

The drafting committee who are completing the amendments of
the bankruptcy law are working under the auspices of the
Directorate General of Law at the Ministry of Justice. It
consists of senior lawyers, legal experts and Ministry officials.

The existing bankruptcy law, which was introduced only late
last year, has been widely criticized. Debtors said that the law
was enacted only to protect creditors. The creditors, on the
other hand said that the law was not strong enough to safeguard
their interests.

Kartini said that the bill was in the final stage of revision
and it would be submitted to the new House of Representatives for
approval.

However, she said that there were still issues not addressed
by the bill, including whether a creditor in a syndicated loan is
entitled to file a bankruptcy claim. (udi)