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A panel preliminary examination hearing of the judicial review of the Law of Bankruptcy and Suspension of Debt Payment (Bankruptcy Law), Thursday (5/11/2020) in the Plenary Courtroom of the Constitutional Court. Photo by Humas MK/Gani.

JAKARTA, Public Relations of the Constitutional Court—The Constitutional Court (MK) held a preliminary examination hearing of the judicial review of Law No. 37 of 2004 on Law of Bankruptcy and Suspension of Debt Payment (Bankruptcy Law) on Thursday, November 5, 2020. The petition No. 88/PUU-XVIII/2020 was filed by Ashvin Bayudewa and 19 other individuals. They challenge Article 55 paragraph (1) of the Bankruptcy Law, which reads, “With due observance to the provisions of Articles 56, 57, and 58, any Creditor holding lien, fiduciary security, security right, mortgage, or other collateral rights on property, may execute their rights as if no bankruptcy occurred.”

The Petitioners bought units of Apartemen Antasari 45 from developer PT Prospek Duta Sukses (PDS) since 2014 and should’ve had ownership of the units in 2017. However, until early 2020, construction of the units wasn’t finished. The Petitioners’ attorney Fuad Abdullah stated that the Petitioners were disadvantaged by the Central Jakarta Commercial Court ruling that granted PT PDS’ request for suspension of debt payment.

“Article 55 paragraph (1) of Law No. 37 of 2004 contradicts Article 1 paragraph (3), Article 27 paragraph (1), Article 28D paragraph (1), Article 28E paragraph (1), Article 28G paragraph (1) Article 28H paragraph (1), Article 28H paragraph (2), Article 28H paragraph (4), Article 28I paragraph (2), Article 28I paragraph (4), Article 28J paragraph (1), Article 33 paragraph (2), and Article 33 paragraph (3) of the 1945 Constitution, and potentially cause legal uncertainty, considering there is no clear and unequivocal interpretation of the clause ‘collateral rights over other objects’ regarding the position the buyer of apartment units,” said another attorney Achmad Umar before the bench led by Constitutional Justice Suhartoyo.

The Petitioners also argued that Article 55 paragraph (1) of the Bankruptcy Law and what had transpired had harmed them as concurrent creditors and the last party to receive and even potential will not receive compensation if the developer goes bankrupt. With the exclusion of buyers of apartments as separatist creditors, besides potentially losing the apartment units they have purchased, the Petitioners also potentially loses part or the entire installments for the units because they are only positioned as concurrent creditors, not separatist or preferred creditors. They believe the developer could easily use their bankruptcy to take profits from the buyers’ installments.

In the event that the developer goes bankrupt, during the settlement of the bankruptcy estate, concurrent creditors (apartment/tenement buyers) will only receive a percentage and not even receive their rights according to provisions on consumer loss. Therefore, legal protection for apartment buyers is imperative to keep irresponsible developers from filing for bankruptcy to avoid their obligations to consumers, by protecting the position of consumers/apartment buyers in Article 55 paragraph (1) of the Bankruptcy Law.

This, according to the Petitioners, can be achieved by including consumers/apartment buyers as collateral rights holders for other assets, so that their position will not harm them in the event of developer going bankrupt. They stressed that the rights of consumers/apartment buyers shouldn’t be passed by any other parties even if the developer goes bankrupt, so they wouldn’t lose their right to their payment installments prior to the bankruptcy.

The Petitioners also argued that according to Article 2 letter c of Law No. 20 of 2020 on Tenement confirms that tenement is based on national values to provide maximum ownership benefits for the national interest. They emphasized that, based on the article, compensation for consumers/apartment buyers of Indonesian nationality needs to take precedence over that of foreign separatist creditors.

Therefore, the Petitioners requested that the Constitutional Court declare Article 55 paragraph (1) of the Bankruptcy Law unconstitutional and not legally binding if not interpreted as buyers being separatist creditors. They also requested that the Constitutional Court declare the article unconstitutional if not interpreted as compensation for consumers/apartment buyers being prioritized.

In response, Constitutional Justice Enny Nurbaningsih advise the Petitioners to detail their legal standing and constitutional loss, and advise echoed by Constitutional Justice Daniel Yusmic P. Foekh, as well as to observe the Constitutional Court Decisions No. 2/PUU-XVIII/2020 and 18/PUU-XVIII/2020, which also used Article 28D paragraphs (1) and (2) of the 1945 Constitution as touchstone. Meanwhile, Constitutional Justice Suhartoyo asked them to elaborate on the subject matter of the petition.

Before concluding the hearing, Constitutional Justice Suhartoyo reminded the Petitioners they were given 14 workdays to revise the petition and submit it by Wednesday, November 18, 2020 at 10:00 WIB to the Registrar’s Office.

Writer: Utami Argawati
Editor: Nur R.
PR: Raisa Ayuditha
Photographer: Gani
Translator: Yuniar Widiastuti (NL)

Translation uploaded on 11/11/2020 9:57 WIB

Disclaimer: The original version of the news is in Indonesian. In case of any differences between the English and the Indonesian version, the Indonesian version will prevail.

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