INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Ulyarta Naibaho and Bilal Anwari, ABNR Counsellors at Law
5.4 The Position of Shareholders and Creditors in Liquidation Shareholders’ Position Secured Creditors’ Rights and Remedies
6.2 Jurisdiction Both the bankruptcy and PKPU procedures apply to debtors that have their domicile in Indonesia. The IBL provides that the commercial court also has the author - ity to declare bankruptcy or PKPU for a debtor who does not reside in Indonesia but conducts their pro - fession or business there. In this case, the court that has jurisdiction to adjudicate the petition will be the commercial court that has jurisdiction over the debt - or’s domicile or headquarters in Indonesia. Theoreti - cally, a debtor incorporated outside of Indonesia can still undergo restructuring or insolvency proceedings in Indonesia, provided they meet the requirement of con - ducting their profession or business within the country. 6.3 Applicable Law The IBL adopts the territoriality principle, meaning that Indonesian law shall apply to all bankruptcy and PKPU cases handled by the court, regardless of whether or not the debtor has assets outside of Indonesia. This means that foreign court judgments in foreign insol - vency proceedings are not recognised in Indonesia. As a result, judgments from overseas restructuring and insolvency cases cannot be enforced within the country. A foreign creditor who secures a judgment abroad must relitigate the matter through a local pro - ceeding governed by the IBL, through either PKPU or bankruptcy proceedings. 6.4 Recognition and Enforceability Unless there is an applicable convention between Indonesia and the state where the judgment is ren - dered, foreign court judgments will not be recognised or enforced by the Indonesian courts; no such con - vention yet exists. However, a foreign court judgment could be offered, accepted and given such evidentiary weight as the Indonesian court may deem appropriate under the circumstances as to the applicable laws of that jurisdiction. In practice, there is a precedent where the commercial court followed a foreign court (moratorium) judgment raised by a party in deciding a PKPU case. In this regard, the Indonesian courts have very broad fact-finding powers and a high level of discretion in relation to the manner in which those powers are exercised. A court ruling that drew considerable attention was issued in 2025, involving the enforcement of an inter -
Under court-supervised restructuring/insolvency pro - ceedings, the secured creditors’ right to enforce their security is subject to a stay for a maximum of 90 days after a bankruptcy declaration is rendered in bank - ruptcy proceedings. After the stay period has expired, the secured creditor is free to enforce its security, but must be able to complete the enforcement process within two months of the bankruptcy estate being in a state of insolvency. Otherwise, the receiver will take over security enforcement, and the bankruptcy costs (including the receiver’s fee) will need to be deducted from the sale proceeds. The automatic stay in this provision is aimed at: • increasing the possibility of composition; • increasing the possibility of optimising the bank - ruptcy estate; or • enabling the receiver/curator to perform its duties optimally. During the stay period, no legal actions to obtain pay - ment in respect of receivables may be brought before a court. Unsecured Creditors’ Rights and Remedies See 4.6 The Position of Shareholders and Creditors in Restructuring, Rehabilitation and Reorganisation . 6. Cross-Border Issues in Insolvency 6.1 Sources of International Insolvency Law The IBL is the only source of law related to the inter - national aspect of restructuring and insolvency; only three articles are stipulated regarding the matter, mainly focusing on the elaboration of the IBL’s uni - versality principle. Indonesia has not ratified any treaties related to inter - national insolvency proceedings in another country, nor has it adopted the UNCITRAL Model Law on Cross-Border Insolvency.
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