Government Reduces Fees for Receivers and Administrators

In order to enhance the ease of doing business across Indonesia,the Ministry of Law and Human Rights (“Ministry”) has issued Regulation No. 2 of 2017 (“Amendment”),which amendsMinistry Regulation No. 11 of 2016 [1] (“Regulation 11/2016”)on Guidelines for the Determination of Fees for Receivers and Administrators. [2] The Amendment redefinesthe relevant fee amounts for any administrators and receivers responsible for the management of debtors’ assets during bankruptcy proceedings or postponement-of-debt-payment trials, as mandated in Articles 76 and 234 (5) of Law No. 37 of 2004 on Bankruptcy and the Postponement of Debt Payment Obligations (“Law 37/2004”).New Administrators’ FeesLaw 37/2004 stipulates that if a debtor cannot make a payment within a given timeframe, then the debtor or creditor may apply for a debt-payment postponement at the commercial court. [3] If this is the case, then the debtor may also submit reconciliation proposals to their creditors in order to arrange for full or partial payment. [4] If this application is successful, then the court will appoint an administrator to manage the debtor’s assets. [5] The commercial court will determine the relevant administrator’s fees, which are to be calculated based on a given amount of debt. The Amendment reduces the maximum administrator’s fee if a case results in reconciliation to 5.5% of a debtor’s debt, down from its previous level of 6% of a debtor’s debt. Alternatively, if a reconciliation is not achieved, then the maximum administrator’s fee now amounts to 7.5% of a debtor’s debt, down from its previous level of 8% of a debtor’s debt. [6] New Receivers’ FeesIf a bankruptcy results in a debt settlement, [7] then the bankruptcy receiver’s fees are to be determined based on a percentage of the bankrupt debtor’s total settled assets, excluding the original debt. [8] In a manner similar to the new administrator’s fees, the Amendmentalso reduces fee percentages for receivers in comparison with its predecessor, as detailed in the table below: [9]