INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Ulyarta Naibaho and Bilal Anwari, ABNR Counsellors at Law
4. Statutory Restructuring, Rehabilitation and Reorganisation Proceedings 4.1 Opening of Statutory Restructuring, Rehabilitation and Reorganisation A petition for PKPU and bankruptcy may be filed by the following. • One or more creditors. • The debtor on a voluntary basis. • The public prosecutor (in the public interest). • Prescribed agencies in the case of particular debt - ors, as follows: (a) banks, securities companies, stock exchanges, alternative market organisers, clearing and guarantee institutions, depository and set - tlement institutions, fund organisers protect - ing investors, securities funding institutions, securities pricing agencies, insurance compa - nies, Sharia insurance companies, reinsurance companies or Sharia reinsurance companies, pension funds, guarantee institutions, financ - ing institutions, microfinance institutions, organisers of electronic systems that facilitate the collection of public funds through offer - ings, information technology-based co-funding service organisers or special-purpose vehicle (financial instrument management institutions) and/or trustees, and other financial services institutions that are registered and supervised by the OJK insofar as their dissolutions and/ or bankruptcy are not regulated separately in other laws; and (b) an SOE operating in the public interest, the capital of which is owned by the state and not divided into shares by the Minister of Finance of the Republic of Indonesia. The petition will be granted if the following require - ments are fulfilled: • the debtor has at least two creditors; • the debtor has failed to pay at least one debt that is due and owing; and • the foregoing two requirements can be summarily proved (eg, a dispute on the amount of debt being
mirrored (with local adaptations), especially in larger restructurings. A standstill agreement generally contains obligations for the company aimed at, for example, providing the creditor with more detailed information on the financial circumstances of the company. It is also common to require the inclusion of more covenants, especially relating to the financial condition or actions of the company, and to request additional security as part of the restructuring arrangement. Standstill agreements have become more common since the onset of the COVID-19 pandemic. As part of the restructuring plan, the borrower will normally be granted a grace period for repayment of the loan. Alternatively, in a more general sense, a default waiver is always an option, subject to the outcomes of nego - tiations between the creditor and debtor. There are no statutory requirements or legal doctrine imposing duties on creditors. As a general rule, a creditor is entitled to act in its own interest and may decline any proposal for an out-of-court restructuring. As there is no statutory provision enabling a cram- down to deal with dissenting creditors in an out-of- court restructuring, a consensual, agreed out-of-court financial restructuring or work-out may not be entirely effective if not all creditors participate in the process and/or agree with the proposal. As the non-partici - pating and/or dissenting creditors are not bound by the agreed restructuring, each of them may initiate legal proceedings against the debtor on the basis of default, which would jeopardise the “partially” agreed restructuring implementation. 3.2 Legal Status An out-of-court restructuring is based on private con - tractual agreements between the debtor and its credi - tors. The disadvantage of informal restructuring is that the debtor is unable to take advantage of the features provided by court-supervised restructuring, including a stay period that prevents the enforcement of credi - tors’ rights against the debtor during the restructuring process and a cram-down on dissenting and non-par - ticipating creditors. Therefore, the restructuring can only be effective towards the participating creditors.
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