Question:
Can companies experiencing financial difficulties due to the pandemic or global economic changes immediately apply for debt restructuring through a PKPU, or must they first wait for a lawsuit from creditors?
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Answer:
- It is important to first understand the meaning of the Suspension of Debt Payment Obligations (PKPU) as regulated in Law Number 37 of 2004 concerning Bankruptcy and PKPU. A PKPU is a legal mechanism that provides debtors experiencing financial difficulties with the opportunity to postpone payment of their debts to creditors, with the aim of developing a composition plan so that their debts can be settled gradually without having to go through bankruptcy proceedings.
- According to Article 222 paragraph (1) of the Bankruptcy Law, a PKPU application can be submitted by either the debtors themselves or their creditors. This means that debtors do not need to wait for a lawsuit or application from creditors, as the law grants debtors the full right to voluntarily file a PKPU (Deferred Payment Order) application when they feel unable to meet their debt payment obligations that are due and payable.
- A debtor’s PKPU application must be accompanied by evidence of actual debt and a good intention to develop a restructuring plan with creditors. In practice, many companies impacted by the COVID-19 pandemic, global inflation, or rising interest rates are using the PKPU mechanism to renegotiate their financial obligations to banks, suppliers, and other financial institutions.
- The primary purpose of the PKPU is to provide business recovery space for debtors who still have business prospects but are experiencing temporary liquidity difficulties. This mechanism is expected to protect the debtor’s interests from immediate liquidation through bankruptcy proceedings, while also providing legal certainty for creditors through supervision by the Commercial Court and the appointed PKPU administrator.
- In principle, a PKPU application cannot be used as a tool to illegally avoid obligations. The court will assess the debtor’s good faith, including whether the debtor is still operating the business, has sufficient assets to support the restructuring plan, and demonstrates the ability to fulfill some of its obligations to creditors. If there are indications of abuse, the court may reject the PKPU application and proceed to bankruptcy proceedings.
- Based on the above description, it can be concluded that companies experiencing financial difficulties have the right to apply for a PKPU directly without having to wait for a lawsuit from creditors, as long as they meet the formal and material requirements as specified in Article 222 of the Bankruptcy Law. The PKPU is a preventative and solution-based mechanism to protect both parties: the debtor has the opportunity for restructuring, while the creditor receives certainty of repayment through a supervised legal process.
This legal opinion is presented based on the limited initial information we have received. For a more in-depth analysis of the financial condition and feasibility of restructuring, please schedule a consultation with our lawyer.
