Should I File a Warning Letter before Bankruptcy Petition?

Question:

If, as a creditor, I want to file a bankruptcy petition against my debtor, should I first send a warning letter to my debtor?

Definition of Warning Letter 

Before answering the essence of your question, we should first understand what is referred to as a warning letter. Warning letter (somasi) according to M. Khoidin is a warning so that the debtor performs his obligations in accordance with the warning for negligence addressed to him by the creditor. In the warning letter, the creditor states his intention that the agreement must be implemented within a certain period.[1]  Meanwhile, according to Joko Sriwidodo and Kristiawanto, warning letter is a reprimand from the creditor to the debtor so that the debtor can fulfill his obligations in accordance with the contents of the agreement agreed between the two parties.[2]

The term warning letter itself is not known in the Civil Code; however, the legal basis for warning letter is regulated in Article 1238[3] which reads as follows:

The debtor is declared negligent by an order, or by a similar deed, or based on the power of the agreement itself, namely, if this agreement causes the debtor to be considered negligent with the lapse of the specified time.

In article 1238 of the Civil Code, it is expressly stated that if an agreement does not specify a time limit to perform agreed obligations, the debtor can only be considered negligent after the creditor declares that the debtor is negligent based on an order. According to Wirjono Prodjodikoro, an order under Article 1238 of the Civil Code means a reprimand or claim by a party entitled to be addressed to the authorities through a bailiff so that the authorities fulfill their obligations immediately or within the time specified in the warning letter.[4]

In addition, Subekti is of the view that usually a warning or sommatie is carried out by a bailiff from the Court, who makes a verbal process about the work, or it is also sufficient with a registered letter or wire letter, to the extent that it is not easily denied by the debtor.[5]

Article 1238 of the Civil Code stipulates that a statement of negligence is substitutive, in which a warning letter is required in the event that an agreement does not specify a time limit to perform obligations. Nevertheless, in practice even though an agreement has determined a specified time to perform obligations, the creditor will still send a warning letter as a sign that the debtor has been warned and/or declared negligent in writing.[6]

R. Setiawan believes that if the agreement specifies a certain time for the debtor to perform his obligations, this does not mean that by violating the specified time the debtor has been in default. For this reason, a declaration of negligence is still needed.[7]

Basically, there are 3 (three) conditions for a warning letter to be issued, viz:[8]

1. The debtor performs [his obligations] wrongly;
2. The debtor does not perform [his obligations] on the agreed day; and
3. The performance [of obligations] by the debtor is no longer useful for the creditor due to expiry.

Further, the contents that must be included in a warning letter, among other things:[9]

1. what is demanded;
2. what is the basis of the demand; and the latest date to perform [the obligations].

Meanwhile, the following events do not require a warning letter:[10]

1. the debtor refuses to perform [his obligations];
2. the debtor acknowledges [his]] negligence;
3. the performance [of obligations] is not possible;
4. the performance [of obligations] is no longer meaningful (zinloos); and
5. the debtor performs [his obligations] improperly.

Legal Connection between Warning Letter and Bankruptcy

In relation to a bankruptcy petition, the filing of a bankruptcy petition is regulated in Law 37/2004. 

Article 2 paragraph (1) of Law 37/2004 stipulates that:

A debtor who has two or more creditors and does not pay off at least one debt that is due and collectible is declared bankrupt by a court decision, based on either his own petition or the petition filed by one or more of his creditors.

Based on the provisions above, we can conclude that in order for a bankruptcy petition to be granted, there are several elements that must be met, namely:

1. The debtor has 2 (two) or more creditors;
2. The debtor does not pay off at least 1 (one) debt that is due and collectible.

In connection with the element ‘the debtor does not pay off at least 1 (one) debt that is due and collectible’ in our opinion, one of the things that can prove that the debtor has indeed been negligent in making payments on a debt that is due and collectible is the existence of a warning letter that has been filed beforehand by the creditor against the debtor.

In conclusion, a warning letter is a reprimand from the creditor to the debtor in order to perform his obligations based on the contents of the agreement that has been agreed upon. Further, before filing a bankruptcy petition, the creditor should first send a warning letter to the debtor and demand that the debtor fulfill his obligations. In the event that the creditor has sent a warning letter to the debtor, and the debtor remains negligent in fulfilling his obligations, then the warning letter can be used as a sign that the element ‘the debtor does not pay off at least 1 (one) debt that is due and collectible’ is met. Therefore, this becomes one of the elements so that a bankruptcy petition can be granted.

Legal Bases:

1. Indonesian Civil Code;
2. Law Number 37 of 2004 on Bankruptcy and Suspension of Payment Obligations as amended by Law Number 4 of 2023 on Development and Strengthening of the Financial Sector.

References:

1. Joko Sriwidodo and Kristiawanto. Understanding Contract Law (Memahami Hukum Perikatan). Yogyakarta: Published by Kepel Press, 2021;
2. M. Khoidin. Accountability in Civil Law (Tanggung Gugat dalam Hukum Perdata). Yogyakarta: Laksbang Justitia, 2020;
3. Setiawan. Principles of Contract Law (Pokok-Pokok Hukum Perikatan). Bandung: Published by Binacipta, 2007
4. Subekti. Principles of Civil Law (Pokok-Pokok Hukum Perdata). Jakarta: Published by PT. Intermasa, Cetakan XXXI, 2003;
5. Wirjono Prodjodikoro. Bunga Rampai Hukum Karangan Tersebar. Jakarta: PT Ichtiar Baru, 1974.

[1] M. Khoidin. Accountability in Civil Law (Tanggung Gugat dalam Hukum Perdata). Yogyakarta: Laksbang Justitia, 2020, page 43.

[2] Joko Sriwidodo and Kristiawanto. Understanding Contract Law (Memahami Hukum Perikatan). Yogyakarta: Published by Kepel Press, 2021, page 20.

[3] Joko Sriwidodo and Kristiawanto. Understanding Contract Law (Memahami Hukum Perikatan). Yogyakarta: Published by Kepel Press, 2021, page 20.

[4] Wirjono Prodjodikoro. Bunga Rampai Hukum Karangan Tersebar. Jakarta: PT Ichtiar Baru, 1974, page 120.

[5] Subekti. Principles of Civil Law (Pokok-Pokok Hukum Perdata). Jakarta: Published by PT. Intermasa, Edition XXXI, 2003, page 147.

[6] Setiawan. Principles of Contract Law (Pokok-Pokok Hukum Perikatan). Bandung: Published by Binacipta, 2007, page 20.

[7] Setiawan. Principles of Contract Law (Pokok-Pokok Hukum Perikatan). Bandung: Published by Binacipta, 2007, page 20.

[8] Joko Sriwidodo and Kristiawanto. Understanding Contract Law (Memahami Hukum Perikatan). Yogyakarta: Published by Kepel Press, 2021, page 20.

[9] Joko Sriwidodo and Kristiawanto. Understanding Contract Law (Memahami Hukum Perikatan). Yogyakarta: Published by Kepel Press, 2021, page 20.
[10] Joko Sriwidodo and Kristiawanto. Understanding Contract Law (Memahami Hukum Perikatan). Yogyakarta: Published by Kepel Press, 2021, page 20.