INDONESIA Law and Practice Contributed by: Enny Purnomo Widhya, Nugrahani Astiyanti and I Gusti Ngurah Oka Anantajaya, Mochtar Karuwin Komar
3.1.6 Negative Pledges The concept of negative pledge is generally recog - nised under Indonesian law, particularly within the context of loan and financing agreements. 3.1.7 Intercreditor Arrangements There are no material restrictions on intercreditor arrangements in Indonesia. 3.1.8 Syndicated Loans Syndicated lenders may, on the basis of agency law, appoint a security agent to act on behalf of the syn - dicate lenders pursuant to the security agency provi - sions contained in the relevant financing agreements. The role of the security agent can include (i) enforcing the rights of the syndicate lenders under the relevant financing agreements and (ii) applying the proceeds of any foreclosure proceedings in accordance with the provisions of the relevant financing agreements. 3.1.9 Debt Subordination Debt subordination is primarily achieved through con - tractual arrangement, including intercreditor arrange - ments. 3.1.10 Transfer/Assignment of Debts Under Foreign Laws The transfer of debt under Indonesian law is recog - nised and is conducted through an instrument called a cessie under the Indonesian Civil Code. As far as Indonesian law is concerned, the transfer agreement must be made in writing and such transfer should be notified and acknowledged by the debtor. 3.1.11 Usury/Interest Limitation Laws There are no specific laws that prohibit charging interest on loans. However, if the obligations of the debtor and creditor are disproportionately imbalanced in a loan agreement, the court may intervene (at the request of the disadvantaged party) to govern the obli - gations of the prejudiced party or declare the contract void. 3.2 Security 3.2.1 Typical Forms of Security and Recourse If the assigned object is insurance proceeds payable by the lessee or the lessee’s insurer to the lessor for security purposes, such assignment has to be made in
the form of a fiduciary security assignment agreement governed under Indonesian law and drawn up before a notary in the Indonesian language and registered with the Fiduciary Registry Office (failing which (i) the security assignment over the insurance proceeds of the lessee may not be enforceable in Indonesia and (ii) the assignee will not have a priority right (secu - rity right), which may be very useful in the event of bankruptcy of the lessee or the insurance company). In addition, if applicable, a guarantee from a parent company of the lessee for the due and punctual pay - ment and performance by the lessee of all the les - see’s obligations under or pursuant to the head lease agreement. 3.2.2 Types of Security Not Available If there is removable equipment to be secured sepa - rately from the airframe, then the most common form of security over such movable assets shall be fiduciary security. For such purpose, the fiduciary security can be registered if granted by an Indonesian entity. 3.2.3 Trust/Trustee Concepts See 2.2.5 Recognition of the Concepts of Trust/Trus- tee . 3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee As mentioned above, Indonesian law does not rec - ognise the concept of trust except in capital market matters and in the banking industry. Therefore, if the security assignment results in the trustee holding the aircraft in trust, from the perspective of Indonesian law, the trustee will be deemed legal owner of the air - craft. Please see 2.2.5 Recognition of the Concepts of Trust/Trustee . 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations As a general rule under Indonesian law, it is not pos - sible to assign contractual rights for purposes of secu - rity, except right to payments or monies and other in-rem rights (such as intellectual property rights). The novation arrangement whereby the current lessor will transfer all of its rights and obligations under the lease to a new lessor (and the accompanying amend - ments to the lease) is permissible under Indonesian
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