COMPANY LIQUIDATION SERVICE

Written by Gio Saputra on 09/07/2024
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

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Introduction

The decision to dissolve a Limited Liability Company (LLC) shouldn’t always signal financial distress; various factors can influence this choice. Apart from financial challenges, reasons for dissolution might include disagreements among stakeholders, restructuring within a corporate group, or strategic exits from local markets. It’s crucial to recognize that liquidating a company can be a strategic move rather than a failure. 

Definition

Company liquidation, as per Indonesian regulations governed by Law Number 40 Year 2007 concerning Limited Liability Company, involves dissolving a company as a legal entity. This process encompasses settling obligations to creditors and distributing remaining assets to shareholders. Initiated when a company ceases operations, liquidation indicates a definitive decision not to resume business in the future. 

Foreign Representative Office (KPPA): Foreign representative offices serve promotional purposes, such as trade promotion and marketing, without engaging in commercial transactions like sales or import-export activities.

Foundation: A foundation is a legal entity aimed at achieving specific social, religious, or humanitarian goals. It does not have members and is often used for charitable purposes.

The Importance

Company dissolution can result from various triggers, including resolutions of the General Meeting of Shareholders, expiration of incorporation periods, court decisions, bankruptcy, or revocation of business licenses. Understanding these triggers is vital as they dictate the legal and procedural requirements for liquidating a company, ensuring compliance with Indonesian laws. 

Benefits

Understanding the process of company liquidation in Indonesia provides several benefits: 

  1. Legal Compliance
    Ensures compliance with legal regulations, preventing potential legal issues or disputes during the dissolution process.

  2. Efficient Debt Settlement
    Facilitates the efficient settlement of outstanding debts and the proper distribution of remaining assets to creditors and shareholders.

  3. Smooth Process
    Allows companies to navigate the dissolution process smoothly, minimizing disruptions and uncertainties for stakeholders.

How to / The Process

Entering into company liquidation involves several key steps: 

  1. Announcement Phase
    Announcement: Publish in newspapers and the State Gazette to inform stakeholders about the company's dissolution.
    Details: Include legal grounds for dissolution, claim submission procedures, deadline, and liquidator appointment.
    Purpose: Initiates the formal liquidation process and notifies creditors of the opportunity to file claims.

  2. Claim Submission Period
    Submission: Creditors have a designated period, typically 60 days, to submit claims for debts owed by the company.
    Assessment: Claims are assessed and verified by the liquidator to determine their validity and priority in debt repayment.
    Purpose: Allows creditors to assert their claims and initiates the process of debt settlement.

  3. Asset Liquidation
    Appraisal: Liquidator appraises the company's assets with the help of independent appraisers to determine their fair market value.
    Sale: Assets are sold to generate proceeds, which are used to settle the company's outstanding debts.
    Priority: Priority is given to secured creditors, followed by unsecured creditors, in the distribution of proceeds.
    Purpose: Converts company assets into cash to repay creditors and facilitate the dissolution process.

  4. Creditor Payment
    Distribution: Proceeds from asset sales are distributed among creditors based on the priority of their claims.
    Order: Secured creditors are typically paid first, followed by unsecured creditors.
    Purpose: Settles outstanding debts owed by the company and fulfills its financial obligations.

  5. Surplus Distribution
    Return: Any remaining surplus from the liquidation process is returned to the company's shareholders.
    Timing: Surplus distribution occurs after all creditors have been fully compensated for their claims.
    Purpose: Ensures fair treatment of shareholders and maximizes value from the liquidation process.

  6. Accountability Report and Finalization
    Review: General Meeting of Shareholders reviews and approves the liquidator's accountability report.
    Summary: The report summarizes the entire liquidation process, including debt settlement, asset distribution, and other relevant actions.
    Completion: Upon approval, an announcement is made in newspapers, and notification is sent to the Minister of Law and Human Rights, indicating the completion of the liquidation process.
    Purpose: Formalizes the conclusion of the liquidation process and acknowledges stakeholders' roles and responsibilities.

How We Can Help

At Putranto Alliance, we specialize in providing comprehensive support for company liquidation, offering expert consultation, strategic planning, procedural guidance, stakeholder representation, resource access, and continuous support. Our team of legal experts tailors personalized solutions to your company’s needs, guiding you through the complexities of the liquidation process while ensuring compliance with regulatory requirements. From developing a customized liquidation strategy to representing your interests in negotiations and interactions, we are committed to simplifying the process and safeguarding your rights. 

FAQs

Creditors who have not submitted their claims within the specified period may still do so through the district court within two years of the announcement of the company’s dissolution. These claims can be made to access remaining assets from the liquidation that are intended for shareholders.

In cases where creditors submit claims within the designated period but are rejected by the liquidator, they have the option to file a lawsuit with the district court within 60 days from the date of rejection.

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