INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Ulyarta Naibaho and Bilal Anwari, ABNR Counsellors at Law
pany being declared bankrupt or under PKPU. In other regulatory regimes (outside the IBL), a director found guilty of causing a company’s bankruptcy may lose qualification to become a director in certain other businesses, such as in the banking sector. While creditors may assert direct fiduciary breach claims against the directors outside bankruptcy, such claims can only be asserted by the receiver in bank - ruptcy proceedings. 8. Setting Aside or Annulling a Transaction 8.1 Circumstances for Setting Aside a Transaction or Transfer The IBL provides that the bankruptcy receiver could request nullification of a transaction carried out by the debtor before its bankruptcy. The receiver must prove that: • the transaction was performed by the debtor before it was declared bankrupt; • the debtor was not obligated by contract (an exist - ing obligation) or by law to perform the transaction; • the transaction prejudiced the creditors’ interests; and • the debtor and third party had or should have had knowledge that the transaction would prejudice the creditors’ interests. While there is no strict look-back period, the IBL imposes the burden of proof on a third party (to the transaction) for denying the existence of knowledge that the transaction was detrimental to creditors for a transaction conducted within one year before the bankruptcy declaration. For transactions conducted prior to one year before the bankruptcy declaration, the burden of proof rests with the receiver. If the transaction was concluded within one year of the bankruptcy declaration (when the transaction was not mandatory for the debtor unless it could be proven otherwise), both the debtor and the third party with whom the transaction was concluded would be deemed to know that the transaction was detrimental to the creditors if:
• the consideration that the debtor received was substantially less than the estimated value of the consideration given; • there was a payment or grant of security for a debt that was not yet due; and • a transaction was entered into by the debtor with a relative or related party (eg, a member of the BOD or BOC, or a majority shareholder). 8.2 Claims to Set Aside or Annul a Transaction or a Transfer The IBL provides that claims to set aside or annul a transaction can only be asserted by the receiver in bankruptcy proceedings. Outside bankruptcy pro - ceedings, any concerned creditor may request the nullification of a detrimental transaction carried out by the debtor based on a lawsuit under the ICC, in which case the burden of proof rests with the creditor. The IBL does not specify the consequences of a suc - cessful annulment claim by the receiver. However, a notable example of a successful annulment claim can be found in the 2015 bankruptcy case of a local air - line company, PT Metro Batavia (Batavia Air). In this case, the receiver filed an annulment claim regarding a transaction that occurred within one year prior to the bankruptcy, between the company’s director and the purchaser of a plot of land that the receiver claimed was part of the bankruptcy estate. The panel of judges at the Supreme Court (at the civil review level) found that the object of the transaction belonged to the company and decided to grant the claim. The court further ruled that the transaction was conducted in bad faith and was therefore deemed to have never existed. As a result, the purchaser was ordered to vacate the land, and the object was declared to be part of the bankruptcy estate. In addition, the director of PT Metro Batavia was ordered to return the pur - chase money to the purchaser.
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