Get to Know the Requirements of Summarily Proving in a Bankruptcy Case

The important role of the agreement that underlies the debt between creditors and debtors in court so that the requirements of evidence are met.

The summarily proving requirements demand that a petition for a bankruptcy declaration to be granted. Then, the Bankruptcy Petitioner must be able to provide legal and clear evidences which can show that the debtor as the Bankruptcy Petitionee has been in a condition that meets the requirements in Article 4. paragraph (1) of the Bankruptcy Law, namely the conditions for overdue debt and the condition for the existence of two or more creditors.

Do not let your bankruptcy petition be rejected because it cannot prove these two conditions, such as the case in verdict Number 30/Pdt.Sus.Pailit/2015/PN.Niaga.Jkt.Pst. The petition for bankruptcy declaration was rejected because the Bankruptcy Petitioner only provided evidence indicating that the Bankrupt Respondent had debts that had not been paid to the Bankruptcy Petitioner as evidenced by a subpoena as a form of debt collection and showed that the debt was matured. However, the Bankruptcy Petitioner did not show a legal relation between the Bankruptcy Petitioner and the Bankruptcy Petitionee, such as a loan agreement. If there is a loan agreement, you can see the due date for paying off the debt. Thus, the requirement for evidence that shows the debt is matured and become payable can also be fulfilled because the Bankruptcy Petitioner has stronger evidence.

In bankruptcy petition cases, judges always use the fulfillment of bankruptcy requirements as contained in Article 2 paragraph (1) of Law Number 37 of 2004 concerning Bankruptcy and Postponement of Debt Payment Obligations (“Bankruptcy Law”) to decide whether a debtor, individual or legal entity, is in bankruptcy. The article 2 paragraph (1) of the Bankruptcy Law reads as follows:

“A debtor that has at least two or more creditors, a debtor that does not pay off at least one of his debt to one of its creditors, and such debt is matured and become payable, is declared bankrupt by a court decision, either on his own request or at the request of one or more creditors.“

Based on this article, there are two main conditions to determine that a debtor is already in a bankruptcy or, at least, to apply for a bankruptcy declaration, namely:

1. There are two or more creditors who have receivables from debtors who are about to be bankrupted. The definition of creditor in this case is a party that has receivables from a debtor that arises from a legal engagement either through an agreement or through a law. In the case of a bankruptcy dispute as stipulated in the Bankruptcy Law, the creditor in question may be a concurrent creditor, a separatist creditor or preferred creditor. This condition is called as the concursus creditorium principle; and
2. There is a debt that has matured and become payable. The purpose of these terms refers to the existence of an obligation for the debtor to pay the debt according to the agreement between the debtor and creditor.

Although these two conditions are the main requirements in filing a bankruptcy petition, in the Bankruptcy Law, there are several other provisions that apply as conditions for filing a bankruptcy declaration and are also used by judges for consideration in their decision on a case for bankruptcy petition. One of the conditions that supports the fulfillment of the two main requirements as previously mentioned is the requirement of “summarily proving”. Thus, what is meant by summarily proving requirement in a bankruptcy case?

Summarily Proving in a Petition for Bankruptcy Declaration

Summarily Proving is one of the conditions that must be met in order for a petition for a bankruptcy declaration to be granted as stipulated in Article 8 paragraph (4) of the Bankruptcy Law which reads as follows:

“The petition for declaration of bankruptcy shall be granted if there are facts or circumstances summarily proving that the conditions for a declaration of bankruptcy as referred to in Article 2 paragraph (1) have been met.”

Based on these provisions, an explanation can be taken that summarily proving has two positions in the petition for a bankruptcy declaration. First, summarily proving is a supporting element to prove the fulfillment of the two main requirements in filing a bankruptcy petition as contained in Article 2 paragraph (1) of the Bankruptcy Law. In addition, summarily proving requirements also apply as absolute conditions that must be met in order for a judge to grant a bankruptcy declaration.

In this article, there is a phrase that becomes the key to the emergence of a summarily proving requirement, namely “summarily proving facts or circumstances “. Based on the explanation of Article 8 paragraph (4) of the Bankruptcy Law, the meaning of the phrase “summarily proving facts or circumstances” is the fact of two or more creditors and the fact of overdue and unpaid debts. Meanwhile, the difference in the amount of debt owed by the Bankruptcy Petitioner and the Bankrupt Respondent does not prevent the decision to declare bankruptcy. 

In principle, the provisions in this article are made to facilitate the process of resolving a case for a declaration of bankruptcy because the existence of this article has confirmed and made the scope of evidence in the petition for a bankruptcy declaration more specific. Thus, these provisions should be able to assist both the Bankruptcy Petitioner and the Bankrupt Respondent in sorting the evidence that will later be submitted at trial. 

In addition, the existence of summarily proving requirements is also a form of protection for the rights of creditors who have receivables from debtors. It is all because the existence of summarily proving requirements can ease the burden of proof from the creditor. As stipulated in the provision in Article 8 paragraph (4) of the Bankruptcy Law, it is sufficient for the creditor to provide clear evidence that the debtor has debts that are matured and become payables. Also, the debtor as the Petitionee for Bankruptcy is proven to have a debt that is unable to be paid to two or more creditors without having to think about other variables to prove it.

Even though Article 2 paragraph (1) of the Bankruptcy Law jo Article 8 paragraph (4) of the Bankruptcy Law has stipulated the conditions that must be fulfilled so that the petition for a bankruptcy declaration can be granted and has also accommodated the scope of variables that need to be proven in the case of petition for a bankruptcy declaration with a summarily proving requirement, often times, this summarily proving requirement becomes a legal consideration for judges to reject a request for a bankruptcy declaration in trial.

Why is that? The cause is related to the strength of the evidence presented by the Bankruptcy Petitioner at trial. This is because in several cases, the Bankruptcy Petitioners provided irrelevant evidences to fulfill the requirements stipulated in Article 4 paragraph (1) jo Article 8 paragraph (4) of the Bankruptcy Law. In addition, there are also cases where the summarily proving requirements are not fulfilled due to the evidence presented that does not clearly and firmly fulfill the requirements for the petition for a bankruptcy declaration as stated in Article 4 paragraph (1) of the Bankruptcy Law. One example of a case where the petition for a bankruptcy declaration was rejected due to the failure to fulfill the summarily proving requirements is the case in verdict Number 30/Pdt.Sus.Pailit/2015/PN.Niaga.Jkt.Pst.

The verdict is an issuance of a bankruptcy declaration case involving PT. Multiline Shipping Service as the Bankruptcy Petitioner (“Bankruptcy Petitioner”) against PT. Multilintas Agung Perkasa as the party of the Bankruptcy Petitionee (“Bankruptcy Petitionee”). In short, this case arose on the basis of the Bankruptcy Petitioner who in this case was one of the shareholders of the Bankruptcy Petitionee from 2012 to 2015 and had paid the obligations of the Bankrupt Petitionee with a value of IDR 147,353,714,651. The Bankruptcy Petitioner considered that the payment he made of the obligations of the Bankruptcy Petitionee as a form of debt so that it created an obligation for the Bankruptcy Petitionee to return the payment to the Bankruptcy Petitioner.

In their lawsuit, the Bankruptcy petitioner claimed that he had sent subpoenas three times to the Bankruptcy Petitionee. The main content of was to remind the Bankruptcy Petitionee to immediately carry out his obligations. Then, responding to the subpoena sent by the Bankruptcy Petitioner, on August 27 2015 the Bankruptcy Petitionee sent a letter to the Bankruptcy Petitioner which essentially stated that the company’s financial condition of the Bankruptcy Petitionee had not made it possible for him to fulfill his debt payment obligations to the Bankruptcy Petitioner. Based on these facts, the Bankruptcy Petitioner felt that the Bankruptcy Petitionee had debts that had matured and became payable so that it became one of the reasons for the Bankruptcy Petitioner to file a bankruptcy declaration against the Bankruptcy Petitionee.

In addition, one of the things that underlay the filing of the issuance for bankruptcy declaration was that the Bankruptcy Petitionee also had debts that were matured and had not been paid apart from the Bankruptcy Petitioner, namely the debt to PT Multilintas Sentra Bahari amounting to IDR 26,460,250,527. Thus, the Bankruptcy Petitioner felt that in addition to the maturing and collectable debt requirements, the condition that the debtor, in this case, was the Bankrupt Petitionee who owed two or more creditors was also fulfilled. 

Upon the said Bankruptcy petition, the Judge was in consideration to determine whether the petition for bankruptcy declaration against the Petitionee party could be granted or not. On the considerations in the subject matter of the case, the judge adhered to fulfilling the requirements for bankruptcy petition as regulated in Article 4 paragraph (1) jo Article 8 paragraph (4) of the Bankruptcy Law, namely:

1. There are debts that are matured and become payable:
   In his consideration, the judge considered that the debt element that had matured and became payable in this case was not fulfilled. One of the reasons was based on documentary evidence in the form of a Debt Bill (First Subpoena), Debt Bill (Second Subpoena), and Debt Bill (Third Subpoena) from the Bankrupt Petitioner to the Bankruptcy Petitionee that was signed by the Legal Manager of the Bankruptcy Petitioner, not by the Main Director of the Bankrupt Petitioner. Moreover, the proof of P-4 letter was a response to the debt bill (First Subpoena) which was immediately drawn up and signed by the President Director of the Bankruptcy Petitionee, dated August 27, 2015.Then there was the evidence that shows that the President Director of the Bankruptcy Petitionee was also the Director of the Bankruptcy Petitioner as well as the direct shareholder and indirect shareholder of the Bankruptcy Petitioner. Thus, it could be said that the President Director was full of a conflict of interest in the case.Apart from that, one of the reasons the judge considered that this element was not fulfilled was that there was no evidence underlying the arising of the debt up to IDR 147,353,714,651.
2. The existence of other creditors (condition that the debtor owes two or more creditors):
   The panel of judges considered that the documentary evidences submitted by the Bankrupt Petitioner and the Bankrupt Petitionee turned out to be a matter of the position of PT. A as another creditor for the Bankruptcy Petitionee that cannot be proven. Thus, the conditions for having two or more creditors in this case were also not fulfilled.

Based on the legal considerations, the panel of judges in the case gave a verdict to completely reject the Bankruptcy Petitioner’s petition.

 

Author: Degha Mulia/Hasyry Agustin

Unlike its name, summarily proving in a petition for a bankruptcy declaration cannot be done simply. Of course, this proof requires precision and accuracy so that your petition for a bankruptcy declaration does not end up being rejected by the judge. BPLawyers can assist you so that your petition for bankruptcy declaration can run well. Contact us at ask@bplawyers.co.id or 081212341235 for further consultation.