INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Ulyarta Naibaho and Bilal Anwari, ABNR Counsellors at Law
2.3 Secured Creditors Liens/Security
• under instant or direct right of execution ( parate eksekutie ), without a judicial process, if the security provider is co-operative; or • based on a court execution order ( fiat eksekusi ) ordering the execution attachment and auction of the security, if the collateral provider is uncooperative. 2.4 Unsecured Creditors Unsecured creditors have no specific rights and rem - edies under the IBL outside the restructuring and insolvency context. Nonetheless, the IBL allows a bankruptcy petitioner (whether a preferred, secured or unsecured creditor) to request the commercial court to: • impose a conservatory attachment on the debtor’s assets; and/or • appoint an interim receiver to supervise the debtor’s business with respect to the estate of the debtor prior to its bankruptcy. As far as is known, there have been no cases to date involving either of these processes in Indonesia. 3. Out-of-Court Restructuring 3.1 Out-of-Court Restructuring Process There are no formal regulatory processes or require - ments for an out-of-court restructuring, but the follow - ing points should be observed. There is no mandatory consensual restructuring nego - tiation before the commencement of a formal “statu - tory process”. Debtors often prefer a court-supervised process due to the benefits the IBL provides to debt - ors, which include: • a stay period that prevents the enforcement of creditors’ rights against the debtor during the restructuring process; and • the possibility of a cram-down on dissenting and non-participating creditors. Standstill agreements, default waivers and similar agreements, as part of an informal and consensual restructuring process or negotiation, are not uncom - mon in Indonesia; many of the practices common in larger/more complex restructurings are followed or
The types of security that may be taken by secured creditors consist of mortgages over land ( Hak Tang- gungan ), fiduciary security, pledge and hypothec. A mortgage is used to secure certain real estate titles over land and fixtures attaching to it. Other immovable assets (which arguably include land with land titles that may not be mortgaged, as well as uncertified land) and movable, tangible and intangible assets (including but not limited to receivables, insurance proceeds and intel - lectual property rights) may be secured by a fiduciary transfer (also referred to as a “fiduciary assignment”). Assets that can be secured by a fiduciary transfer (other than immovable assets) can also be secured by pledge. Due to the requirement under a pledge that the pledged property be delivered to the creditor, most assets are secured by a fiduciary transfer, as it does not include this requirement. An exception to this is shares of an Indonesian company and bank account balances, which in practice are normally secured by pledge. A hypothec is used to secure registered vessels/ships that have a gross tonnage of more than 20 cubic metres or the equivalent of seven gross tonnage. The formalities to establish security under Indonesian law (other than pledge) are, in general: • the execution of a deed before the relevant officials (land conveyancer for mortgage, notary for fiduciary security, vessel registration and ownership recorda - tion officer for a hypothec over a vessel); and • registration with the relevant register maintained by the relevant authority (land registry, maintained by the land office; fiduciary registry, maintained by the fiduciary registration office; main vessel registry, maintained by the Ministry of Transportation). Rights and Remedies Beyond the restructuring/insolvency context, the rights and remedies that secured creditors have to enforce their security upon the debtor’s default on its secured obligations include selling the security through public auction (or private sale in certain cir - cumstances). This can be done either:
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