Comparison Between Indonesia And The United States’ Bankruptcy Arrangements For Companies During Covid19 Pandemic

Abstract

Many Companies and industries have been bankrupted during the covid-19 pandemic. Therefore, the existence of adequate regulations and facilitating bankruptcy legal issues that occurred during the COVID-19 pandemic became an urgent matter, by studying through comparison to the United States’ regulations during pandemic to make Indonesia’s regulations and policies better in the future. This also could work in a state of crisis and is expected to prevent a surge in bankruptcy filings. This research aims to identify similarities and differences in bankruptcy arrangements for companies during the pandemic in Indonesia and the United States and to find out how should corporate bankruptcy arrangements be made in Indonesia in the future based on the experience of corporate bankruptcy in the USA during the Covid-19 pandemic. The type of research is normative legal research that is supported by library materials. This research concludes similarities between the bankruptcy laws of the two countries, namely the condition of a person or business in applying for bankruptcy, and the definition of creditor and debtor. Bankruptcy filings and declaration of bankruptcy must be conducted through the courts, and parties who can file for bankruptcy are creditors and debtors. Although the two countries adopted policies during a pandemic, the policies that cover the wider community and their impact on bankruptcy issues are different. In the U.S., according to data during the pandemic, CARES Act can help small businesses and individual debtors. Besides, through other policies, the government has also assisted large businesses or corporations in dealing with a pandemic by creating many programs that provide facilities for obtaining loans. Indonesia also issued a regulation through the Financial Services Authority (OJK) that focuses on communities affected by COVID-19. Indonesia could learn from the the U.S. pandemic bankruptcies experience to better prepare for crises and help bankruptcy parties. Indonesia bankruptcy arrangement needs some changes for the future. Even though Indonesia cannot adopt 100% of the USA’s regulations because the economic development and legal system are different, Indonesia can learn by harmonizing the USA’s regulations to Indonesia's conditions. First, Indonesia could apply Chapter 11 on Reorganization of the U.S. Bankruptcy Law. Second, Indonesia may implement a mechanism for debt relief (discharge) and the separation of corporate and individual bankruptcy. Third, “automatic stay” because it is highly helpful for debtors not to be charged outside of court during pandemics. Fourth, an insolvency test. However, there will be debate over whether the lesson from the United States' bankruptcy arrangements should be applied. This thesis recommendations are Indonesia may adopt regulations related to bankruptcy that cover a wider community and also providing loan facilities. Indonesia may make regulatory changes in the future by implementing some similar regulatory substance that established in the United States