Govt to unveil new bankruptcy law today

Govt to unveil new bankruptcy law today

JAKARTA (JP): The government will announce today regulations
to amend the bankruptcy law and improve the legal infrastructure
for business in the country, Minister of Justice Muladi said
yesterday.

Muladi told reporters here that a government Perpu (regulation
in lieu of a law) would be announced by the State Secretariat and
would serve until a new bankruptcy law was established and
enacted. The move was taken because of the urgent need to address
the problem of bankruptcies.

"We finalized the draft during a meeting on Monday night at
the office of the Coordinating Minister for Economy, Finance and
Industry/Chairman of the National Development Planning Board,"
Muladi said.

He said the government had consulted with the International
Monetary Fund (IMF) during the drafting process.

"We had to be quick because of the critical condition of the
country's economy," he added.

Today is the deadline for the enactment of a new bankruptcy
law under the terms of the latest economic reform package
brokered by the IMF earlier this month.

The package also promises to enact an antimonopoly law,
establish a special bankruptcy court and introduce regulations to
cover the winding up of companies, mergers and acquisitions.

Indonesia's current bankruptcy code is considered to be too
opaque and irrelevant to the modern business world. It is based
on the 1905 insolvency ordinances enacted by Dutch colonial
authorities.

Radius Prawiro, chairman of the Corporate Foreign Debt
Settlement Team, said recently that a new bankruptcy code would
expedite the liquidation of insolvent companies and help resolve
the problem of the private sector's US$68 billion of offshore
debt burden.

Muladi also said earlier this month that the rights of
creditors and debtors would be equally protected by an effective
bankruptcy law.

Analysts noted the country's economic turmoil had forced many
companies into technical bankruptcy but present procedures for
declaring bankruptcy were so complicated that parties involved
were reluctant to become involved with the legal process.

Foreign creditors lining up to foreclose on the assets of
their debtors have complained about the antiquated and badly
drafted bankruptcy procedures that make it nearly impossible for
them to take legal action.

Muladi said the country's legal system would be capable of
coping with the new bankruptcy law once a commercial court had
been established. Initially, one commercial court will be
established in each of Jakarta's five mayoralties.

Muladi said the Perpu will not be directly enacted because
Ministry of Justice officials still need more time to prepare
those who will administer the law.

"We need 120 days to train judges and staff," Muladi said,
adding that at least five judges would be placed in each
commercial court.

Muladi said the government would submit the Perpu to be
deliberated by the House of Representatives next month.

Muladi met with all factions of the House of Representatives
last week to discuss the new regulations.

None of the legislators present disagreed with the new
proposals, but they did ask for further explanation.

In an effort to cope with the rapid legal developments, Muladi
yesterday formed a team of 12 legal experts to advise the
ministry.

Led by criminal law expert Romly Atmasasmita, the team
consists of Barda N. Arief, Yusril Ihza Mahendra, Erman
Radjaguguk, Sutan Remy Syahdeini, Maria S.W. Sumardjono, Etty R.
Agoes, Jusuf Anwar, Talib Puspokusumo, B.M. Kuncoroyakti, M.T.
Arifin and Sigid Edi Utomo.

"The team has direct access to me and will give advice on
legal issues," Muladi said. (byg)