Consequences of Bankruptcy

Pursuant to Article 24 Paragraph (1) of Law No. 37 on The Bankruptcy and The Suspension of Obligation for Payment of Debts (Bankruptcy Act), since the declaration for bankruptcy decision is rendered and during bankruptcy process, the Debtor has lost its right to possess and manage his assets included in the assets of bankrupt. Thereby, the debtor is declared to have lost its power or authority to manage and divert its assets and not be able to take legal actions regarding his assets.

Any commitment made by a Debtor after the bankruptcy declaration may not be paid from the bankruptcy assets, unless the commitment will be a benefit to the bankruptcy estate. Since the date of the bankruptcy decision, all powers and authorities to manage and transfer the assets included in the bankruptcy estate shall pass to the curator. Any legal actions concerning the rights and obligations on bankruptcy assets shall be filed by or against the Curator. A lawsuit that is filed with the Court against the Debtor in order to enforce the Debtor’s obligations from the bankruptcy estate and is still ongoing shall become null and void once bankruptcy declaration decision is rendered against the Debtor.

If the debtor still conducts any legal action regarding his assets whether in managing or transferring its assets, such debtor's actions shall be considered as a tort. In Article 41 Paragraph 1 of Bankruptcy Act, for the interest of the bankruptcy assets, annulment may be requested to the Court for all legal acts of the Debtor who has been declared bankrupt which prejudice the interests of the Creditors, which were conducted before the declaration of bankruptcy was rendered.

Suria Nataadmadja & Associates Law Firm

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