Homologation is the ratification by the judges on the agreement between debtor and the concurrent creditor to terminate the bankruptcy. If the reconciliation proposed by the debtor is received by the concurrent creditor based on the number of votes specified under the law, the reconciliation still needs to be ratified by the Commercial Court. The reconciliation ratification is carried out with the ratification and the court proceedings. Such ratification referred to as homologation of the reconciliation stipulated in the Article 144 to Article 177 of Law No. 37 year 2014 on the Bankruptcy and the Suspension of Obligation for Payment of Debts (Bankruptcy Act).
The Provisions regarding the homologation pursuant to Article 156 and 159 of the Bankruptcy Act are as follow:
- Court shall ratify the reconciliation proposal at the earliest 8 (eight) days and at the latest 14 (fourteen) days after the consensus on the reconciliation proposal is achieved,
- The court to discuss the ratification of reconciliation proposal is made open to the public
- The decision of homologation shall be given no later than 7 (seven) days after the date of the court hearing,
If the commercial court rejects the ratification of the reconciliation at the court hearing of homologation, pursuant to article 161 paragraph (1) of the Bankruptcy Act, it is possible to take the procedure of cassation to the Supreme Court for the parties who object to such rejection. However, if the reconciliation is rejected, the bankruptcy process immediately enters the insolvency stage. In the court hearing of such homologation, the commercial court may reject the ratification of a reconciliation if there is a reason for it. Furthermore, if the debtor is unable to fulfill the judgement of the homologation, the creditors may file the claim for cancellation of the agreement of reconciliation. The cancellation of reconciliation claim is stipulated in Article 170 paragraph (1) Jo. Article 171 Jo. Article 291 Jo. Article 294 of the Bankruptcy Act. The ratified reconciliation applies to all creditors who do not have the right to precedence, without exceptions, no matter whether they have or have not appeared in the bankruptcy (Article 162 of the Bankruptcy Act).
Suria Nataadmadja & Associates Law Firm
Advocates & Legal Consultants