New commercial court, bankruptcy law launched

New commercial court, bankruptcy law launched

JAKARTA (JP): The government opened here yesterday the
country's first commercial court on the same day the new
bankruptcy law took effect.

The court, located at the Central Jakarta District Court, was
officially opened by Minister of Justice Muladi and Supreme Court
Chief Justice Sarwata Gandasubrata.

"The settlement of private debts will filter out companies
which are operated inefficiently from the business community,"
Muladi announced at the opening.

He said the court would be able to restore confidence and
return sufficient security to local and foreign investors to
invest in Indonesia again.

At least 35 cases are ready to be filed, he added.

The Jakarta court will be followed by the opening of four
others in Ujungpandang, South Sulawesi, Medan, North Sumatra,
Semarang, Central Java, and Surabaya, East Java.

The head of the team of 17 judges, I Gde Sukarata, said
yesterday no cases had been filed because the commercial court
would not start full operations for at least two weeks.

The new law is part of Indonesia's commitment to the
International Monetary Fund's (IMF) reform package linked to a
US$46 billion rescue package for the country's ailing economy.

It replaces the antiquated bankruptcy code, based on the 1905
Dutch insolvency ordinance which has been deemed opaque and
inefficient for dealing with contemporary problems.

Under the new law, a final ruling for a credible creditor
should be decided in no more than 300 days after the petition is
filed, including the 30-day period of appeal and 270-day period
of suspension of payments.

Analysts hailed the law, saying it gave creditors some
leverage.

"It will ensure that claimants do not face a setback in
Indonesia's infamously inefficient court system," one said
yesterday.

"Secured creditors will be able to get their hands on secured
assets more quickly while unsecured creditors will finally have a
weapon with which they can threaten recalcitrant borrowers."

However, its success would depend on its enforcement.

"Personnel who handle the bankruptcy cases must be well
trained," another analyst said.

A potential danger lay ahead if the courts were swamped by a
deluge of cases.

The law would also show the real condition of the companies.

"It will show whether a company is broke or is no longer
valuable," he said.

Threat of bankruptcy proceedings would force shareholders of
the companies to conduct long overdue restructuring of their
business, a move which would eventually benefit them, he added.
(das)