Lawyer says bankruptcy law must be revised
Lawyer says bankruptcy law must be revised
The Jakarta Post, Jakarta
Indonesia's Bankruptcy Law No. 4/1998 must be revised because
it does not provide certainty for businesses and investors,
according to a lawyer specializing in bankruptcy cases.
Hotman Paris Hutapea said that the logic of the law was weak
because a company that failed to repay one of its debts could be
declared bankrupt by the judges even if it had assets much
greater than its liabilities.
"The government and lawmakers must immediately revise this law
because the impact on the business community is severe," he told
The Jakarta Post on Tuesday.
The comments came after the Commercial Court last week
declared insurance firm PT Asuransi Jiwa Manulife Indonesia
(AJMI) bankrupt following a bankruptcy petition filed by the
receiver of the now defunct PT Dharmala Sakti Sejahtera over
unpaid dividends in 1999. AJMI has said that no dividends were
declared during the period. The finance ministry said that AJMI
was a solvent company with total assets of Rp 3.1 trillion.
Hotman said that the concept of the existing bankruptcy law
was made by Netherlands law expert Jerry Hoffe together with the
International Monetary Fund.
He said that the controversial part of the law was initially
aimed as a threat at recalcitrant local debtors to force them to
repay their debts to foreign creditors.
"But it (the law) has now boomeranged on them (foreign
firms)," he said, pointing out to the high profile Manulife
bankruptcy case.
He also said that insurance firms did not have the
"privileges" of banks or securities firms when dealing with the
bankruptcy court.
He pointed out that according to the bankruptcy law, the
Commercial Court must first seek the approval of Bank Indonesia
when it wanted to declare a bank bankrupt, and the approval of
the Capital Market Supervisory Agency (Bapepam) when declaring a
securities firm bankrupt.
Separately, Judge Cahyono of the Commercial Court told the
Post that a revised version of the bankruptcy law is now on the
making, which may require the court to obtain the approval of the
finance ministry before declaring an insurance firm bankrupt.
Cahyono is one of the three judges issuing the controversial
bankruptcy ruling on AJMI.