Receiver & Administrator

Written by David James Oliver on 05/08/2024
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

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Introduction

Due to instability in today’s economy, some companies may struggle with financial management, leading to an inability to pay debts and eventual bankruptcy. Bankruptcy occurs when a company has debts to two or more creditors and cannot settle these debts upon maturity. In such cases, a Receiver is appointed to manage and arrange the debtor’s assets. This article delves into their role in bankruptcy, the importance of their services, and how they can assist companies in distress.

Definition

A Receiver, as defined by Regulation Number 37 of the year 2004 concerning Bankruptcy and Postponement of Debt Payment Obligations, is an individual or entity appointed by the Court to manage and arrange the assets of a bankrupt debtor under the supervision of a supervising judge. They must possess specific skills and special education to handle the debtor’s assets effectively and must be registered with the Judiciary Department and Human Rights. In some cases, an Administrator is also appointed to focus on the postponement of debt repayment obligations.

The role can be proposed by either the debtor or the creditor. If neither party proposes it, the Commercial Court judge will appoint Balai Harta Peninggalan as the Receiver. The Commercial Court judge will also appoint a supervising judge to oversees the actions of the Receiver to ensure compliance with legal requirements and protect the interests of all parties involved. This supervisory role is grounded in Article 22 of Regulation Number 37 of the year 2004 concerning Bankruptcy and Postponement of Debt Payment Obligations, which outlines the responsibilities and authority of the supervising judge in the process.

The role has some duties and authorities:

  1. Temporary Receiver:
    Prevents the debtor from taking actions detrimental to their property until a judgment is declared.

  2. Administrator:
    Appointed during the postponement of debt repayment obligations (PKPU). The Administrator manages the PKPU process independently, ensuring no conflict of interest with debtors or creditors.

  3. Receiver:
    Takes over the management of the debtor's assets once bankruptcy is declared by the Commercial Court. The debtor loses the right to control and arrange their wealth, necessitating the Receiver's intervention.

Types of Receivers and Administrators in Indonesia:

  • Balai Harta Peninggalan (BHP): Government-appointed receivers and administrators operating under the Ministry of Law and Human Rights.
  • Private Receivers and Administrators: Individuals or entities, such as debtors or creditors, typically found in law firms and hired for their expertise.

The Importance of Receiver and Administrator

Receiver Administrator

The role is crucial in the bankruptcy process for several reasons:

  1. Asset and Financial Management:
    They ensure that the debtor's assets are managed and arranged efficiently, providing expert financial oversight to maximize the value for creditors and prevent further mismanagement.

  2. Legal Compliance:
    They ensure that the process complies with legal requirements, protecting the interests of all parties involved.

  3. Conflict Resolution:
    By acting as an impartial third party, they help resolve conflicts between debtors and creditors.

The role becomes necessary when a company is unable to pay its debts and is declared bankrupt by a Commercial Court. The appointment is essential to manage the assets of the debtor, prevent further financial deterioration, and ensure that creditors receive their due payments.

According to Articles 1131-1132 of the Civil Code, all movable and immovable property belonging to the debtor, both existing and future, becomes collateral for the debtor’s engagements. The proceeds from the sale of these assets are divided among creditors based on the ratio of their respective receivables, with certain costs taking priority as per Article 1139 of the Civil Code.

The legal framework governing this issue in Indonesia is primarily based on Regulation Number 37 of the year 2004 concerning Bankruptcy and Postponement of Debt Payment Obligations. This regulation outlines the roles, responsibilities, and qualifications required for the roles.

The Best Time to Appoint a Receiver

The appointment of this role is most appropriate under the following circumstances:

  1. Debt Maturity:
    When a debt of a debtor has exceeded its maturity and remains unpaid, indicating financial distress.

  2. Insolvency Signs:
    When there are clear signs of insolvency, such as the inability to meet financial obligations, continuous losses, or negative cash flow.

  3. Court Proceedings:
    When a petition has been filed in the Commercial Court, and the court is likely to declare the debtor bankrupt.

  4. Preventive Measures:
    When a company anticipates potential financial difficulties and seeks to proactively manage its assets.

Benefits of Appointing a Receiver

The benefits of appointing a the role are:

  1. Expert Management:
    They bring specialized knowledge and skills in managing and arranging debtor assets, ensuring optimal outcomes.

  2. Impartial Conflict Resolution:
    As neutral parties, they mediate disputes between debtors and creditors, providing unbiased oversight and fostering a cooperative resolution process.

  3. Legal Protection:
    They ensure compliance with legal requirements, reducing the risk of legal complications and penalties.

Appoint a Receiver Process

Receiver Administrator Process

The processes necessary to appoint a the role include:

  1. Filing for Bankruptcy
    A debtor or creditor files a bankruptcy petition with the Commercial Court. The petition must meet administrative and substantive requirements, including proof of debt maturity and the existence of multiple creditors.

  2. Court Evaluation
    The Commercial Court evaluates the petition to determine if the conditions for bankruptcy are met. If the court finds the debtor insolvent, it will declare the debtor bankrupt.

  3. Appointment of Receiver
    The debtor or creditor can propose this role. If no proposal is made, the court appoints Balai Harta Peninggalan as the Receiver. The appointed role must be registered and possess the necessary qualifications and skills.

  4. Appointment of Temporary Receiver
    Initially, a temporary role may be appointed to prevent the debtor from taking actions detrimental to their property until a final judgment is made.

  5. Appointment of Administrator
    If there is a postponement of debt repayment obligations (PKPU), this role is appointed to manage the PKPU process independently.

  6. Roles
    Once bankruptcy is declared, they take over the management and arrangement of the debtor's assets. They oversee the liquidation of assets and ensures that proceeds are distributed to creditors according to legal priorities.

How We Can Help

Our Services in Receiver and Bankruptcy Management include:

  1. Private Receiver Services: We offer professional services to manage and arrange the assets of bankrupt debtors, ensuring compliance with legal requirements and maximizing asset value for creditors.
  2. Business and Financial Management: Our experts provide comprehensive business and financial management services to help companies avoid bankruptcy. This includes financial planning, debt restructuring, and strategic business advice.
  3. Loss Minimization: We focus on minimizing losses for companies in financial distress by implementing effective asset management and liquidation strategies.
  4. Legal Compliance: Our team ensures that all actions taken during the process comply with relevant laws and regulations, protecting the interests of all parties involved.
  5. Conflict Resolution: We mediate disputes between debtors and creditors, fostering a cooperative environment for resolving financial issues.
  6. Preventive Measures: We assist companies in identifying potential financial risks and implementing preventive measures, ensuring long-term financial stability.

FAQs

According to Regulation Number 37 of the year 2004, only individuals with special education and abilities are permitted to handle bankruptcy cases as Receivers and Administrators. Furthermore, the regulation authorizes Balai Harta Peninggalan to act as a Receiver.
Balai Harta Peninggalan (BHP) is a government-appointed entity operating under the Ministry of Law and Human Rights. If neither the debtor nor the creditor proposes it, the Commercial Court judge will appoint BHP as one. BHP manages and arranges the debtor’s assets, ensuring compliance with legal requirements and protecting the interests of all parties involved.

Costs that have the right to be prioritized include:

  1. Cost of the case
  2. Rent
  3. Unpaid price
  4. Costs incurred
  5. Cost of handyman
  6. Lodging costs
  7. Freight wages and surcharges
  8. Construction and renovation costs
  9. Reimbursement of expenses to general officials
According to the Regulation Number 37 of the year 2004, they must be Indonesian citizens, possess specific skills necessary for managing debtor assets, and be registered with the Ministry of Law and Human Rights.
The types of judgements in a bankruptcy case are:
  • Negative Judgment: Declares a lawsuit unacceptable or states that the court is not authorized to adjudicate.
  • Positive Judgment: Either rejects the lawsuit in its entirety or grants it in part or in full.

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