Insolvency 2025

INDONESIA Trends and Developments Contributed by: Farih Romdoni Putra, Aditya Bagus Anggariady, Ghifar Hilmi and Andhika Kusumonegoro, KARNA

Legal standing of foreign creditors Law 37/2004 does not distinguish between local and foreign creditors. Pursuant to Article 2 paragraph (1), as long as there are two or more creditors (regardless of nationality) and at least one due and payable debt, a debtor may be petitioned for bankruptcy or PKPU. Consequently, a foreign creditor has full legal stand - ing to: • file a bankruptcy or PKPU petition; and/or • register its claim in the verification process before the Indonesian Commercial Court. Acknowledgment of debt in all currencies Based on Article 1 point 6 of Law 37/2004, the Law 37/2004 expressly provides that a debt may be expressed in a sum of money, whether in Indonesian currency or in foreign currency. This explicit formula - tion reinforces the recognition of claims submitted by foreign creditors, since debts denominated in foreign currencies are commonly found in cross-border legal relationships between debtors and foreign creditors. Accordingly, the inclusion of both domestic and for - eign currencies within the statutory definition of “debt” demonstrates the legislature’s intent to ensure that foreign-denominated obligations are fully recognised and enforceable within Indonesia’s bankruptcy and PKPU framework. In the context of cross-border financing, the acknowl - edgment of debts in all currencies serves several important legal and economic functions. First, it reflects Indonesia’s alignment with the prin - ciples of monetary neutrality and creditor equality, ensuring that creditors holding claims in US dollars, euros or other foreign currencies are afforded the same legal protection and procedural rights as credi - tors whose claims are in rupiah. This parity strengthens Indonesia’s credibility as a jurisdiction open to foreign investment and financing. Second, the inclusion of foreign-denominated obliga - tions prevents the exclusion of significant classes of creditors from insolvency proceedings, particularly

• co-operation among the courts of states where the debtor’s assets are located and co-ordination of concurrent proceedings. Conversely, in its development, insolvency decisions on companies in Indonesia have been recognised in several countries that have adopted the UNCITRAL Model Law on Cross-Border Insolvency. The most recent case is the Garuda Indonesia insolvency case, which involved many foreign creditors. The Garuda Indonesia PKPU decision was recognised by the Sin - gapore International Commercial Court (SICC) and the United States Bankruptcy Court. This provides certainty and security for stakeholders involved in the Indonesian PKPU process, because with this recog - nition of the Garuda Indonesia insolvency decision, Garuda Indonesia obtained relief or a stay in those countries. The Indonesian government has drafted a revision to the bankruptcy law in Indonesia. The House of Representatives of the Republic of Indonesia has also included the Bill on Bankruptcy and PKPU in the National Legislation Program List for 2025–29. It is hoped that this bankruptcy law can be amended soon to adopt the UNCITRAL Model Law on Cross- Border Insolvency in order to provide greater comfort for stakeholders, especially foreign stakeholders. Recognition of Foreign Creditors’ Claims Under the Indonesian Bankruptcy and PKPU Law The issue of a debtor’s default that results in debt restructuring is not limited to relationships between debtors and creditors domiciled within Indonesia. Such circumstances may also arise in situations involving cross-border financing or debt relationships between an Indonesian debtor and a foreign creditor. In principle, under the bankruptcy and PKPU regimes applicable in various jurisdictions, the participation of foreign parties in insolvency proceedings constitutes a matter of cross-border insolvency, that is, an insol - vency proceeding involving foreign elements where the debtor, its assets or its creditors are situated in more than one jurisdiction.

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