Supreme Court Improves Handling Efficiency and Transparency for Bankruptcy Cases and Suspension-of-Debt-Payment-Obligation Cases

The Supreme Court has issued Circular Letter No. 2 of 2016 on Handling Efficiency and Transparency for Bankruptcy Cases and Suspension-of-Debt-Payment-Obligation Cases by Courts (“Circular Letter”).In essence, the Circular Letter aims to ensure greater legal certainty and efficiency as regards the processing of bankruptcy or suspension-of-debt-payment-obligation (Penundaan Kewajiban Pembyaran Utang/”PKPU”) cases by commercial courts. In order to achieve this objective, the Circular Letter sets out two main provisions, namely: 1) a redefining of working procedures and the requirement to appoint receivers (for bankruptcy cases) or administrators (for PKPU cases); and 2) a reaffirmation of the timeline for hearing bankruptcy or PKPU cases.The Circular Letter is of relevance to all parties which are currently involved in, or which intend to become involved in, bankruptcy cases.Appointment of Receivers or AdministratorsAs a general rule, applicants in bankruptcy or PKPU cases may supply the name of a receiver or administrator responsible for the management of the debtor’s assets throughout the period of the legal proceedings. The Circular Letter states that any prospective receiver or administrator should be independent, should not have any conflicts of interest with the disputing party, and should not currently be handling more than three bankruptcy/PKPU cases.Moreover, if the applicant proposes more than one receiver, then the Commercial Court may establish a Receiver Team based on the interests of the parties concerned. [1] Progress Reports and Working Schedule from ReceiversIn order to ensure efficiency and transparency during the handling of bankruptcy cases, the supervising judge has the authority to: 1) request information on the ongoing cases from the receivers; and 2) oblige the receiver to submit a working schedule at a creditor’s meeting. [2] If the receiver fails to provide information relating to the case after receiving two requests from the judge, or fails to adhere to the working schedule, then the supervising judge has the authority to: [3]