Bankruptcy & PKPU (Suspension of Debt Payment Obligations)

A Definite Way Out for Settling Uncollectible Debt Through Payment Restructuring & Asset Liquidation

Concept of Debt Settlement Through Bankruptcy & PKPU

PKPU (Suspension of Debt Payment Obligations) is a settlement of overdue & collectible debts, proven in a simplified manner, by restructuring all debts through filing a PKPU application in the Commercial Court. This allows the debtor to propose a restructuring payment plan.

Bankruptcy is a settlement of overdue & collectible debts, proven in a simplified manner by filing a bankruptcy petition to execute a public seizure & liquidation of assets.

Both methods share the same goal, which is to find the best solution in situations of insolvency, but their approaches differ:

Bankruptcy focuses on the liquidation of assets to repay debts.
PKPU focuses on debt restructuring.

Bankruptcy involves selling assets to pay as much debt as possible. Whatever cannot be paid off is written off, and the debtor is legally released from further obligations.

The bankruptcy process begins with a petition by the creditors or the debtor to the commercial court. If the court determines that the debtor is indeed unable to pay their debts, the court will appoint a curator. This curator is responsible for managing & selling the debtor's assets to pay the creditors.

PKPU gives the debtor time to restructure their debts by making a new agreement with their creditors. PKPU enables the debtor to improve their financial position.

PKPU consists of two (2) phases:

The first stage is Temporary PKPU, during which the debtor is given a grace period from their debt payment obligations. During this period, the debtor & creditors attempt to formulate a payment plan that both parties can agree upon.
If successful, they move to the Permanent PKPU stage, where the agreed-upon payment plan is implemented.

If PKPU fails, then the debt settlement is carried out through the bankruptcy process.

In Indonesia, the laws of Bankruptcy & Suspension of Debt Payment Obligations are regulated in Law No. 37 of 2004.

Condition for Choosing Bankruptcy & PKPU for Debt Settlement

BANKRUPTCY

Bankruptcy becomes an option when the debtor's financial condition is deplorable & they are no longer able to pay their debts. Bankruptcy can be a good choice for both debtors & creditors under these conditions:

For Debtors
Debtors choose to file for bankruptcy if they believe their debt cannot be repaid, even after attempts at debt restructuring.
For Creditors
Creditors choose to file for bankruptcy against the debtor if they believe this is the best way to recover some of the money they loaned.

PKPU (Suspension of Debt Payment Obligations)

PKPU becomes an option when the debtor is facing financial difficulties but still has the capability or potential to pay their debt if given additional time and/or if their debt payment conditions are restructured. PKPU can be a good choice for both debtors and creditors under these conditions:

For Debtor
PKPU allows them additional time to pay their debts and formulate a more realistic payment plan with creditors.
For Creditors
PKPU can provide them with the opportunity to receive a larger repayment compared to what they might receive through the bankruptcy process, especially if they believe the debtor has the potential for financial recovery.

In the end, the choice between bankruptcy & PKPU will largely depend on the debtor's financial conditions, the creditors' expectations & the assessment of the debtor's future prospects.

In both cases, it will be critically important for all parties involved to seek legal advice before making a decision.

Advantages of Debt Settlement Through Bankruptcy & PKPU

Advantages of Bankruptcy

1

Final Settlement

For debtors, the bankruptcy process offers a final solution to challenging financial circumstances. Once concluded, the debtor is discharged from any unpaid debts, offering a chance to start fresh.

2

Protection from Creditors

Creditors can no longer take independent legal action to collect debts from a debtor declared bankrupt. All claims are submitted through a trustee, who distributes the debtor's assets proportionately.

3

Avoiding Delays

For creditors, the bankruptcy process can prevent the debtor from prolonging debt payments, which could ultimately harm the creditors.

Advantages of PKPU

1

Avoid Bankruptcy

PKPU provides an opportunity for debtors to avoid bankruptcy by restructuring their debts.

2

Saving The Business

PKPU allows the debtor's company to continue operating, preserving existing jobs & economic value.

3

Mutual Agreement

PKPU allows the debtor & creditors to reach a mutual agreement on how the debt will be paid, which might benefit both parties more than bankruptcy.

Timeline for Debt Settlement Through Bankruptcy & PKPU

The timeline for debt settlement through Bankruptcy is approximately 180 days at most:

Initial Hearing - 60 days
Cassation - 60 days
Review - 60 days

The timeline for debt settlement through PKPU is approximately 315 days at most:

Temporary PKPU - 45 days
Permanent PKPU - 270 days

The Role of CHP Law Firm as a Bankruptcy & PKPU Attorney

The Role of CHP as a Bankruptcy Litigation Attorney

As a Bankruptcy Litigation Attorney, the CHP Law Firm is tasked with:

Providing legal consultation to creditors regarding the prospects of the bankruptcy lawsuit.
Conducting investigations to gather evidence supporting the bankruptcy petition, including reviewing the debtor's financial circumstances.
Representing creditors in bankruptcy hearings in the Commercial Court.
Assisting creditors in enforcing decisions, including pursuing the sale of the debtor's assets to settle debts.
Handling cassation and review processes if they are initiated by the debtor.

CHP also plays a role in negotiations with the debtor and related parties to achieve a settlement advantageous to the creditor.

In addition, CHP performs administrative functions such as composing & filing bankruptcy petitions against the debtor in court.

Equipped with this knowledge & expertise, CHP is committed to safeguarding the interests of creditors & maximizing asset recovery.

The Role of CHP as a PKPU Attorney

As a PKPU (Suspension of Debt Payment Obligation) Attorney, the CHP Law Firm is entrusted with:

Providing legal consultation to creditors regarding the prospects of the PKPU lawsuit.
Undertaking investigations to gather evidence supporting the PKPU application, including reviewing the debtor's financial circumstances.
Representing creditors in PKPU hearings at the Commercial Court.

Furthermore, CHP assumes the responsibility to:

Negotiate the debt settlement plan between the debtor & creditors, securing court approval for the proposed plan.
Once the debt settlement plan has been ratified by the court, ensure the debtor complies with the prescribed plan.

Additionally, CHP carries out administrative tasks such as drafting & filing the PKPU petition to the court.

With this specialized knowledge & expertise, CHP is committed to assisting creditors in maximizing debt recovery & safeguarding their interests.