THE BANKRUPTCY PETITION AGAINST THE INSURANCE COMPANY MUST BE FILED BY THE FINANCIAL SERVICES AUTHORITY (OJK)
The Insurance company does not have an authority to submit a bankruptcy petition even when the business license has been revoked. The petition can only be filed by the Financial Services Authority (OJK)
A Bankruptcy petition against the insurance company has already accepted in Indonesia since the establishment of the Commercial Court in Indonesia. The main business of an insurance company is similar to a bank. Therefore, the government pays the attention to insurance companies because their business is related to public funds.
According to Law No. 37 of 2004 regarding Bankruptcy and Suspension of Obligation for Payment of Debts (“Bankruptcy Law”), there are requirements to file a bankruptcy petition against a certain debtor:
- In the event that the debtor is in the form of a bank, the petition for a declaration of bankruptcy may only be filed by Bank Indonesia;
- In the event that the Debtor is in the form of a Securities Company, Stock Exchange, Clearing and Custodian Institution, Settlement and Depository Institution, the petition for a declaration of bankruptcy may only be filed by the Capital Market Supervisory Board;
- In the event that the debtor is in the form of Insurance Company, Reassurance Company, Pension Funds or State-Owned Enterprise engaged in the sectors of public interest, the petition for a declaration of bankruptcy may only be filed by the Minister of Finance.
According to regulations mentioned above, the creditor (public) could not file a bankruptcy petition against insurance company as the debtor. Only the Minister of Finance has the authority to conduct a petition.
Nevertheless, since Law No. 40 of 2014 regarding Insurance Company has been enacted, bankruptcy petition against the insurance company is no longer proceeded by the Minister Finance. The authority is now under the Financial Services Authority as stipulated in Article 50 paragraph (1) of Insurance (“Insurance Law”):
Application for a declaration of bankruptcy against the Insurance Company, Insurance Company Sharia, reinsurer or sharia Reinsurance Company under the Law can only be filed by the Financial Services Authority (Otoritas Jasa Keuangan [OJK]).
In 2010, one of an insurance companies filed a bankruptcy petition by voluntary. At that time the insurance company’s business license had been revoked. But, the judges at the Commercial Court and Supreme Court still rejected the petition, because it was not filed by the Minister of Finance. According to Bankruptcy Law and Law No. 2 of 1992 regarding Insurance Company, the insurance company as a claimant does not have any authority to file a bankruptcy petition even when the business license has been revoked.
At present, any creditor who has a claim to an insurance company, can submit a report or an application to the OJK to file a bankruptcy petition to the Commercial Court. OJK has the authority to approve or reject the application submitted by the creditor.
Basically similar to other bankruptcy petitions, the insurance company has to meet the requirements as stipulated in Bankruptcy Law before declaring bankrupt. According to Article 2 paragraph (1) jo. Article 8 paragraph (4) of Bankruptcy Law the requirements are as follows:
- The debtor has two or more creditors. The creditor shall mean concurrent creditor, separated creditor and preferred creditor;
- The debtor has failed to pay at least one debt which has matured and became payable. Debt which has become due and payable shall mean the debtor already has an obligation to pay the debt, either based on contract as the legal basis, accelerated, due to the sanctions imposed by the regulation, court decision or arbitration award.
Bankruptcy petition requires a simple substantiation. It means that there are two or more creditors and indebtedness that have become due and payable but remain outstanding. The differences in the value of the indebtedness as argued by the claimant and respondent shall not prevent the issuance of bankruptcy decision.
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