(a) In relation to each type of insolvency procedure available in the legal system of Indonesia, what powers are given to, or duties imposed upon, each type of administrator to investigate, discover and report to a Court or to regulatory authorities of the government any breaches of the law by former management of the corporate debtors?

Article 101(1) of the Bankruptcy Law provides that the bankrupt debtor is obligated to appear before the Supervisory Judge, the Receiver or the Creditors Committee to provide all and any relevant information, if the bankrupt debtor is summoned for such purpose. In the event the debtor is a corporate debtor, its representative is the Board of Directors of the company and is the party that should answer the summons. Therefore, this provision applies to members of the Board of Directors and Board of Commissioners (if they assume management responsibilities) of the corporate debtor.

With respect to the liability of the former management of a company, Article 85 paragraph 1 of the Company Law stipulates that any member of the Board of Directors shall act in good faith and with full responsibility for the performance of its duties for the interest and benefit of the company. Paragraph 2 of the same Article stipulates that each member of the Board of Directors shall be fully personally liable if such member either commits a breach of law or is neglectful in performing his duties. This provision will be applicable to the management of the company, including the former management. (Please also refer to our response to Section K.2.(b) above.)

Article 90 Paragraph 2 of the Company Law further stipulates that the members of the Board of Directors shall be jointly and severally liable for any losses of the bankrupt company if the bankruptcy was caused by the members’ wrongful act or negligence in performing their duties. Therefore, the former management of the company would be liable for the bankruptcy of a company if there is evidence of such a wrongful or negligent act.

(b) What methods are available to each type of administrator to exercise such powers or discharge such duties? (for example examinations of directors, powers to inspect books and records, obligations to report to government authorities.)

Articles 84 through 88 of the Bankruptcy Law provide that that the bankrupt debtor can be put in custody (either in a prison or other detention institution, or in the house of a creditor under supervision of the authorities), upon the order of the District Court after examining a proposal by the Supervisory Judge or one or more creditors after having heard the Supervisory Judge. Enforcement of this provision must be carried out by the public prosecutor.

The period of custody is limited to not more than thirty days after the date of the order. Such custody may be extended for not more than thirty days.

Pursuant to Article 86 of the Bankruptcy Law, if there is evidence that a bankrupt debtor intentionally neglected and without valid reasons failed to fulfill its obligations, a request for the detention of the bankrupt debtor must be approved.

During the bankruptcy, the bankrupt debtor is prohibited from leaving his domicile without permission from the Supervisory Judge.

It is possible under the Bankruptcy Law for the bankrupt estate to be sealed. For this remedy, the receiver should obtain the approval from the Supervisory Judge pursuant to Article 90 of the Bankruptcy Law. Any other claims in relation to the annulment as mentioned in Section M (a) above, should be filed by the receiver with the Supervisory Judge.