Jakarta, (Lei) – Experts sought a judicial review of Indonesian Law No. 37 of 2004 on Bankruptcy and Suspension of Debt Payment Obligation in a bid to ensure certainty in the country’s legal system and investment.
“The authority needs to immediately review the (bankruptcy) law, as it has failed to protect some debtors of bankrupt companies,” Lenny Nadriana, a business law expert, informed Antara in Jakarta.
Apart from the lack of protection, the law has also created uncertainty in the country’s legal system, as the judges would issue different verdicts on similar bankruptcy cases, she explained.
“In most trials, the judges have neglected the rights of the children and wives (as the debtors’ heirs) who inherit some bankrupt companies from their late husbands or parents,” she remarked while adding that in the country’s legal system, some inheritances will be automatically passed on to the descendants without their consent.
Nadriana further explained that the law has yet to provide a fair regulation to some individuals who were automatically dubbed as debtors or personal guarantors of a bankrupt company.
“As a consequence, in some trials that I had followed, a judge once had ruled to put a four-year-old child in debt for his late parent’s bankrupt company,” she noted, while adding, the verdict indicated that the law has failed to provide justice to the people.
Meanwhile, St. Laksanto Utomo, chairman of the Deans of Indonesian Law Schools Associations, stated that the unjust law will not only financially affect some individuals but also negatively impact the business and investment sectors in the country.
“Some foreign companies, for instance, will be apprehensive of investing in the country since its legal system (mainly in terms of resolving disputes on bankrupt businesses) has remained unclear and ambiguous,” he noted.
However, Utomo stated that conducting a judicial review of the law would take years, as the process involved some deals among politicians of the House of Representatives.
“First, reviewing a law would take years to be completed, so a regulation in lieu of law (Perppu) may be more practical to resolve some disputes related to bankruptcy, and second, I think, a judge should be more progressive in issuing a verdict or settling disputes between the creditors and debtors,” he remarked during the public defense of the dissertation on the “Responsibility of the Heir Holder Personal Guarantee of the Bankrupt Company in Indonesia” delivered by Nadriana at the Padjajaran University, Monday.
By saying progressive, Utomo said, the judge should back the very basic principles of the law: justice, equality, and welfare of the people.
Lesson learnt from Singapore
During the public defense on her dissertation, Nadriana highlighted some differences in settling disputes on bankruptcy in Indonesia and Singapore.
“In Singapore, for instance, the guarantors (on debt) have an equal responsibility along with the main debtors, while in Indonesia, the term is applied otherwise. All wealth belonging to the guarantors (as the debtors’ heirs) will be seized by the (court) executors to settle the debt owed by some bankrupt companies,” she remarked.
Nadriana explained that creditors in Singapore could not sue the debtors’ heirs, if they are not aware of the debts of their late parents or close relatives.
“However, in Indonesia, regardless of whether they know about this fact, the heirs, as the guarantors, have complete responsibility of paying off the debt of their late parents to the creditors,” she reiterated.
Examined by some professors of the Padjajaran University, including Eman Suparman, Sonny Dewi Judiasih, Isis Ikhwansyah, Nia Kurniati, Nyulistiowati Suryanti, Asep Iwan Iriawan, An An Chandrawulan, as well as the Research and High Education Ministry’s Inspector General Jamal Wiwoho, the dissertation on personal guarantee in a bankrupt company authored by Nadriana, has been defended with a “cum-laude” status. (Ant)