On Thursday, 12 January 2023, the President of the Republic of Indonesia passed and signed Draft Law Number 4 of 2023 on the Development and Strengthening of the Financial Sector to become Law Number 4 of 2023 on the Development and Strengthening of the Financial Sector (“P2SK Law”).
The purpose of establishing the P2SK Law is to support and facilitate the development and strengthening of the financial sector in Indonesia so that it can keep abreast of industrial developments, particularly in the financial sector. To achieve this goal, the P2SK Law has amended, revoked, or stipulated several laws and regulations in the financial sector.
One of these provisions of the laws and regulations amended after the P2SK Law was enacted are those set out in Articles 2 and 223 of Law Number 37 of 2007 on Bankruptcy and Suspension of Debt Payment Obligations (“Indonesian Bankruptcy Law”). Through the P2SK Law, there are amendments regarding the provisions for filing petitions for Bankruptcy and Suspension of Debt Payment Obligations as in Article 327 of the P2SK Law which reads:
“At the time this Law comes into effect, the provisions regarding:
a. petitions for bankruptcy against Banks, Securities Companies, Stock Exchanges, Clearing and Guarantee Institutions, Depository and Settlement Institutions, and Pension Funds as regulated in Article 2; and
b. petitions for suspension of debt payment obligations against Banks, Securities Companies, Stock Exchanges, Clearing and Guarantee Institutions, Depository and Settlement Institutions, Insurance Companies, Reinsurance Companies, and Pension Funds as stipulated in Article 223,
Law Number 37 of 2004 on Bankruptcy and Suspension of Debt Payment Obligations (State Gazette of the Republic of Indonesia of 2004 Number 131, Supplement to the State Gazette of the Republic of Indonesia Number 4443) are revoked and declared null and void.”
Given the provisions of Articles 2 and 223 of the Indonesian Bankruptcy Law are declared revoked and null and void, the procedures or provisions for filing petitions for bankruptcy or suspension of debt payment obligations against debtors in the form of Banks, Securities Companies, Stock Exchanges, Clearing and Guarantee Institutions, Depository and Settlement Institutions, Insurance Companies, Reinsurance Companies, and Pension Funds (“Financial Services Debtors”) become subject to the provisions of the P2SK Law.
With reference to Article 8 Number 5 of the P2SK Law which regulates additional provisions of Law Number 21 of 2011 on the Financial Services Authority (“OJK Law”), it has emphasized that petitions for bankruptcy or suspension of debt payment obligations against debtors can only be filed by the Financial Services Authority (“OJK”) as the only party authorized to file the petition. Thus, creditors can only file a petition for bankruptcy and suspension of debt payment obligations against the Financial Services Debtors to the commercial court through OJK.
Provisions and procedures regarding filing petitions for bankruptcy and suspension of debt payment obligations against Financial Services Debtors are contained in several OJK Regulations and laws that have also been amended by the P2SK Law. Under Article 326 of the P2SK Law all regulations that are implementing regulations of various amended laws, including the implementing regulations of the OJK Law in the form of OJK Regulations, are still valid to the extent that they do not conflict with the provisions of the P2SK Law.
Although the provisions and procedures for filing petitions for bankruptcy and suspension of debt payment obligations against Financial Services Debtors are regulated in various OJK Regulations, these provisions essentially regulate that petitions for bankruptcy and suspension of debt payment obligations against Financial Services Debtors as stated in Article 327 of the P2SK Law must be filed by their creditors to the OJK accompanied by supporting evidence regarding the existence of debt to be first reviewed by the OJK.
After the review, OJK will decide whether the petition for bankruptcy or suspension of debt payment obligations is appropriate to be filed to the commercial court by looking at the financial capacity of the relevant Financial Services Debtor. If OJK considers that the petition for bankruptcy or suspension of debt payment obligations against the relevant Financial Services Debtor is inappropriate to be filed to the court, then the debt arising between the Financial Services Debtor and the creditor is resolved through mediation, one of which is as stipulated in OJK Regulation Number 21 of 2022 on Procedures for filing petitions for Bankrupt Declaration and Suspension of Debt Payment Obligations of Securities Companies’ Debts.
If the results of OJK review state that a petition for bankruptcy or suspension of debt payment obligations against a creditor is eligible to be filed, then it will be filed to the court by OJK while still referring to the provisions on procedures for filing petitions for bankruptcy and suspension of debt payment obligations under the OJK Regulations. It should be noted that the OJK position in filing a petition for bankruptcy or suspension of debt payment obligations is not as a creditor of the Financial Services Debtor but as a supervisory agency in the financial services sector.
For debtors that are not included in the form of business as stipulated in Article 327 of the P2SK Law, the provisions for filing petitions still refer to the provisions set out in the Indonesian Bankruptcy Law, bearing in mind that Article 327 of the P2SK Law does not revoke the Indonesian Bankruptcy Law, which only revokes the provisions for filing petitions for bankruptcy and suspension of debt payment obligations against debtors that are in the form of Banks, Securities Companies, Stock Exchanges, Clearing and Guarantee Institutions, Depository and Settlement Institutions, Insurance Companies, Reinsurance Companies, and Pension Funds as stipulated in Articles 2 and 223 of the Indonesian Bankruptcy Law.
1 Omnibus Law on Finance, the Fourth Law Jokowi Passed This Year, Wibi Pangestu Pratama, published on 14 January 2023, https://ekonomi.bisnis.com/read/20230114/9/1618006/omnibus-law-keuangan-undang-undang-keempat-yang-jokowi-sahkan-tahun-ini accessed on 27 March 2023.
