Legal Action for Cassation for Debtors Whose Draft Settlements are Rejected by Creditors in PKPU

“The legal action of Cassation can be limited to PKPU cases that are submitted by Creditors with an offer of settlement from the Debtor rejected by the Creditor.”

The Constitutional Court of the Republic of Indonesia (Mahkamah Konstitusi or “MK”) has stated that the inability to take legal action against the Suspension of Debt Payment Obligations (Penundaan Kewajiban Pembayaran Utang or “PKPU”) was unconstitutional. This provision was confirmed by the Court after the reading of the Decision of Case number 23/PUU-XIX/2021.

In the decision, the Constitutional Court stated that Article 235 paragraph (1) and Article 293 paragraph (1) of the Law No. 37 of 2004 regarding Bankruptcy and Suspension of Debt Payment Obligations (“Law 37/2004”) contradicted Article 28D of the 1945 Constitution. This application was submitted by PT. Sarana Yeoman Sembada, represented by Sanglong alias Samad as the President Director. PT. Sarana Yeoman Sembada is a debtor that has been applied for PKPU by the same creditors 4 times in a row.

In the first 3 (three) decisions, namely the following, the creditors’ PKPU application on PT. Sarana Yeoman Sembada was rejected.

1. Decision on Case Number 30/Pdt.SusPKPU/2019/PN.NIAGA.Medan;
2. Decision on Case Number 8/Pdt.Sus-PKPU/2020/PN.NIAGA.Medan; and 
3. Decision on Case Number 18/Pdt Sus-PKPU/2020/PN.NIAGA.Medan,

Then, in the fourth application in the PKPU Case Decision Number 42/Pdt.SusPKPU/2020/PN.NIAGA.Mdn, with the four application materials and the same evidence, the judge granted the request of the creditors.

In response to this, the Court finally decided that Article 235 paragraph (1) and Article 293 paragraph (1) of the Law 37/2004 were unconstitutional. The Constitutional Court is of the view that in order to provide justice for debtors whose draft reconciliation was rejected by creditors, one more room is opened for cassation. This is to prevent mistakes in decisions that occur at the level of the commercial courts.

The Constitutional Court emphasized that the cassation that can be submitted by the debtor is only limited to the PKPU case submitted by the creditor with the offer of reconciliation from the debtor rejected by the creditor. So in the event the draft reconciliation has been accepted by the creditor, it is still not possible to file a cassation.

Although there was an appeal against PKPU, the Constitutional Court still did not approve of the opening of a judicial review. This is so that there will be no swelling of the PKPU case at the Supreme Court level, which will have an impact on uncertainty for the parties themselves in which the judicial nature of PKPU is speedy trial. So that when the Supreme Court has decided on the PKPU case, the decision is final and binding.

This decision raises pros and cons among legal experts. Some stated that this decision actually created uncertainty for creditors, this was because basically the debtor already had a debt that was already collectible. The nature of the imposition of PKPU is not a punishment for the debtor, unlike bankruptcy, the debtor is only required to make a settlement plan. The Constitutional Court actually gives strength to debtors who have bad intentions in not paying their debts.

On the other hand, some argue that it seems that the Court is trying to restore the dignity of PKPU itself as an effort for the parties to restructure the debt. In practice, some state that it is the creditors themselves who sometimes have bad intentions, carry out PKPU against debtors so that the debtor reconciliation plan is rejected, so that the debtor in question goes bankrupt.

Law is a representation of society. Meanwhile, people have different intentions, depending on their interests and the way the community views a problem. Nothing is perfect from a legal provision. As practitioners and business actors, we should only be able to respect the decisions of the Constitutional Court that have been made and protest according to the applicable legal channels.

We will continue to provide information related to the conditions that must be met by business actors. If you seek legal advice to restructure your company, including consultation on liquidation, bankruptcy and suspension of debt obligations (PKPU), please contact us via ask@bplawyers.co.id or 082112341235.