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Legal Protection of Solvent Companies from Bankruptcy Abuse in Indonesian Legal System

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  • M. Hadi Shubhan

Abstract

In bankruptcy legal system in Indonesia, the court can issue bankruptcy verdict without assess a company’s solvency condition, whether the company is solvent or insolvent. The provision of this law is very prone to be misused by creditors with bad faith. Insolvency test is able to protect debtors and to prevent the abuse of bankruptcy by malice creditors. This paper aims to analyze the legal protection of solvent companies from bankruptcy abuse in Indonesian legal system. By using normative and juridical approach, the results showed that the insolvency test can be included in the future amendment of Indonesian bankruptcy law. The implementation of insolvency test therefore is not administered outside the bankruptcy proceedings, but still in the respective bankruptcy proceedings. Insolvency test can be implemented by judges based on convincing evidences such as money report made by registered Public Accountant Office. A debtor, with bad faith, should not be eligible to get protection to avoid himself from bankruptcy with the insolvency test, although the debtor has good solvability.

Suggested Citation

  • M. Hadi Shubhan, 2020. "Legal Protection of Solvent Companies from Bankruptcy Abuse in Indonesian Legal System," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 9, March.
    • Handle: RePEc:bjz:ajisjr:1884
    DOI: https://doi.org/10.36941/ajis-2020-0031
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    References listed on IDEAS

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    1. Timothy Lindsey, 1998. "The IMF and Insolvency Law Reform in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 34(3), pages 119-124.
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