NEWS

In the course of pandemic time, there are many corporations coming to bankrupt. This bad economic condition has been worsened due to COVID-19 is a massive and highly spreading disease without any cure internationally accepted by World Health Organization as a safe and effective medicine for the patients. Many passed away and more should be taken care of in the hospital having very limited room capacities (numerous patients in need must be queuing to take turns). Consequently, people are more afraid of being infected by COVID-19 (Corona Virus Disease 2019) than performing their daily activities notwithstanding the government has issued the regulation to prevent the contagion by maintaining physical distancing, PCR tests, self-isolation, new travel rules, minimizing number of people on-site, etc. All business activities are deteriorating into an economic crisis. In fact, many business entities are going to bankrupt or insolvent either declared voluntarily or through a third party’s petition in the commercial court. They want to strike-off the corporation to halt the expenses and losses due to the company’s operating costs are greater than its earnings. Unfortunately, the terminology of striking-off of the corporation not recognized in Indonesian regulation but the dissolution of the company. The striking-off is merely pivoted at the administrative works as required by the government, among others, submission of the company strike-off form but all financial liabilities shall be paid beforehand to creditors, no need formal creditor’s meeting, no company’s transaction within three months, no sale of company assets for three months, no formal insolvency procedures initiated, etc.

 

THE INDONESIAN LIQUIDATION PROCEDURES

According to Indonesian Company’s Law (UU No.40/2007), matters leading to the dissolution of the Company:

- EGMOS’ resolution;

- Expiry of the Company’s duration;

- Court order;

- Revocation of the bankrupt declaration issued by a final and binding commercial court decision, bankrupt estate do not suffice to cover bankruptcy’s cost;

- Bankrupt estate is under insolvent condition pursuant to Indonesian Bankruptcy and Suspension of Debt Payment Obligation (UU KPKPU);

- Company’s business license revoked.

 

 

STAGES OF VOLUNTARILY LIQUIDATION (Art.142-152 Indonesian Company Act)

           

Stage One: EGMS

The company must perform an Extra-Ordinary General Meeting of Shareholders (EGMS) with the following resolution:

- Dissolution of the company

- Acquittal and discharge of the BOC and BOD during their term of office

- Appointment of a director (or capable person) to act as a liquidator.

- Giving approval and full power to the liquidator (with substitution right) in carrying out necessary stewardship during the process of

liquidation.

 

Stage Two: 1st announcement (max 30 days upon the date of dissolution)

Announcement to creditors in 2 the daily newspapers and the State Gazette containing dissolution of the company with its legal basis, liquidator’s name and address, procedures to file claims, and its period (no later than 60 days following the announcement).

Official Notification to the Minister of Law and Human Rights (MOLHR) so as to the dissolution is recorded in the Company Register as “company in liquidation process”. This notification must be submitted together with the legal basis of the company’s dissolution and the announcement to creditors in a daily newspaper.

 

Stage Three: 2nd Announcement

Announcement to creditors in the daily newspaper and the State Gazette with respect to draft of distribution over liquidation estate and record of the remaining liquidation estate. The creditors shall have 60 days following the 2nd announcement to raise a protest concerning the said draft of distribution. Should the protest be refused, the creditors have the right to file a civil claim in the court no later than 60 days following the refusal.

In the event that the liquidator assumes the company’s liabilities are greater than the company’s estate, then he must submit a bankruptcy petition for the company, provided that, all creditors with identities and addresses agree to the settlement out of court and the relevant regulation doesn’t determine otherwise.

           

Stage Four: Distribution of the Nett Proceed of the Liquidation Estate 

The deed of Dissolution shall be made not later than 60 days upon the 2nd announcement setting out payments to creditors and a proportional amount earned by shareholders from the remaining net proceeds of the liquidation.

 

Stage Five: 3rd Announcement

The liquidator must notify the Minister of Law and Human Rights (MOLHR), and announce in the newspaper with respect to liquidation final proceeds not later than 30 days following the EGMS' resolution grants acquittal and release to the liquidator in connection therewith.

MOLHR records the ending of the legal entity for the company and deletes the company’s name out of Company Register and then the MOLHR announces it in the state gazette. This MOLHR duties apply same to the ending of the company due to merger, acquisition, and separation.

 

After the compliance with all stages above, the MOLHR will send a reply letter to the liquidator stating the company is formally dissolved. Given the reply letter from MOLHR, the liquidator shall notify the Tax Office at the Company's domicile and request for revocation of the Company’s Taxpayer Registration Number (NPWP).