INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Ulyarta Naibaho and Bilal Anwari, ABNR Counsellors at Law
unsecured creditors present or represented at the meeting, whose rights are also acknowledged or provisionally acknowledged; and • more than half of the secured creditors who are present or represented at the meeting, and who represent at least two-thirds of the total amount of the secured claims of the secured creditors present or represented at the meeting. Dissenting Creditors There are no special procedural protections and rights in statutory insolvency and restructuring proceedings other than the IBL rule requiring dissenting secured creditors to be compensated by either the value of the collateral (as determined by the collateral documents) or the collateral value determined by an appraiser, whichever is lower. New Money New money can be introduced by various parties, including current or new shareholders, secured credi - tors or new creditors. However, under Indonesian law, it is not possible to grant these new money providers any super-priority liens or rights, whether within or outside formal insolvency proceedings. Providers of new money may require in rem secu - rity rights over unencumbered assets or second/ subsequent-rank already-encumbered assets, as a condition for their investment. This allows them to take precedence over unsecured creditors but not over existing secured or preferred creditors, unless those creditors consent. Since not all creditors may participate in or agree to the out-of-court restructuring process, there is a risk that the transaction could be invalidated or annulled in bankruptcy for being preju - dicial to other creditors. 4.3 The End of the Restructuring, Rehabilitation and Reorganisation Procedure If a composition plan is approved and confirmed, and becomes final and binding, it will bind all creditors except the dissenting secured creditors. Subsequent - ly, the debtor will no longer have PKPU status. However, bankruptcy will be declared immediately, and the bankruptcy estate will be in a state of insol - vency, if:
• no plan is submitted, and the request to extend the PKPU is not granted by the creditors; • no composition is approved by the creditors after the maximum period of the PKPU expires (270 days after the provisional suspension of payments is granted); • the plan is rejected in the voting process by the creditors; • the plan is approved by the creditors but not con - firmed by the commercial court; or • a confirmed composition plan is annulled by the commercial court due to an annulment petition submitted by a creditor. The IBL adopts the principle of fairness, which implies that the provisions regarding bankruptcy provide a sense of justice for the interested parties. This princi - ple of fairness is designed to prevent the arbitrariness of creditors who seek payment of their respective claims against the debtor, without considering other creditors. The debtor is expected to observe this prin - ciple when formulating their restructuring plan. The commercial court is the judicial authority ratify - ing the approved composition plan that passed the voting process. In the scheduled judge’s deliberation hearing, the commercial court must decide whether or not to confirm the approved plan, and provide its reasoning. The commercial court may only refuse to ratify the plan if: • the estate of the debtor, including goods for which a right of retention is exercised, is much larger than the amount agreed in the composition; • implementation of the plan is not adequately assured; • the plan was concluded fraudulently or under undue influence of certain creditors; and/or • the administration costs cannot be paid. Failure to fulfil the composition plan post- restructuring This can lead to a challenge to the composition plan of the debtor, as approved by the creditors and homolo - gated by the commercial court (homologated plan), by dissenting creditors via a cassation or case review petition to the Supreme Court. It can also lead to the filing of a petition to nullify a homologated plan by
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