INDONESIA Law and Practice Contributed by: Enny Purnomo Widhya, Nugrahani Astiyanti and I Gusti Ngurah Oka Anantajaya, Mochtar Karuwin Komar
or does not respond within the prescribed time-peri - od, the contract terminates by operation of law, and the remedy of the contract counterparty is to claim for damages. If the receiver states willingness to perform, then the counterparty can insist on security against performance by the receiver. The aim of Article 36 is to provide certainty for the counterparties on the con - tinuance of executory contracts. 2.9.6 Risks for a Lender if a Borrower, Guarantor or Security Provider Becomes Insolvent As mentioned above, where the obligation of the receiver to perform under the lease conflicts with their duty to treat all unsecured creditors equally, the receiver has no obligation to perform and the con - tract counterparty will have to accept damages as an unsecured creditor. 2.9.7 Imposition of Moratoria in Connection With Insolvency Proceedings Pursuant to the Bankruptcy Law, upon the declara - tion of bankruptcy, there is a 90-day automatic stay period, during which the right of the lessor to repos - sess will be suspended. The Aviation Law shortens the automatic stay period with respect to aircraft objects under the possession of a bankrupt debtor by providing that such period should be consistent with the Cape Town Convention, ie, 60 days. 2.9.8 Liquidation of Domestic Lessees Companies incorporated in or resident in Indonesia can be liquidated pursuant to the Company Law or the Bankruptcy Law. Under the Company Law Pursuant to the Company Law, dissolution of a com - pany shall occur if: • resolved by the general meeting of shareholders (with a quorum of at least ¾ of total shares with valid voting rights and approved by at least ¾ of total votes validly cast at the meeting); • the duration of establishment as stipulated in the articles of association has expired; • determined by the court;
• the bankruptcy status has been revoked by a final and binding judgment of the Commercial Court, and the bankruptcy estate of the company is insuf - ficient to pay the bankruptcy cost; • a state of insolvency has commenced; or • the business licence of the company is revoked so that the company is obligated to liquidate itself as stipulated in the applicable laws and regulations. Under the Bankruptcy Law There are two proceedings governed by the Bank - ruptcy Law: • declaration of bankruptcy; and • suspension of payment proceedings. 2.9.9 Ipso Facto Defaults The Indonesian legal framework prioritises a debtor’s ability to reorganise, and therefore favours restructur - ing and rehabilitation over the immediate termination of contracts upon a party’s insolvency. 2.9.10 Impact of Domestic Lessees’ Winding-Up In the case of an operating lease where the aircraft is not part of the lessee’s company assets, the les - sor/creditor/owner should be able to repossess the aircraft and export the aircraft out of Indonesia by vir - tue of the recorded IDERA or CDL, subject to certain licences mentioned above. In either bankruptcy or suspension of payment pro - ceedings, the lessor may not be able to receive pay - ments from the lessee. To mitigate risks that the secu - rity deposit and maintenance reserve be deemed as part of the insolvency estate of the lessee, they should be fully applied against the obligations of the lessee prior to a declaration of bankruptcy or the commence - ment of suspension of payment proceedings, and such application be notified by the lessor under the relevant lease agreement. 2.10 Cape Town Convention and Others 2.10.1 Conventions in Force The government of the Republic of Indonesia rati - fied the Cape Town Convention (both the Convention and the Protocol) by virtue of Presidential Regulation No 8 of 2007 on 20 February 2007 (the “Presidential
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