The provisions of Article 1 number 1 of Law Number 37 of 2004 concerning Bankruptcy and Suspension of Debt Payment Obligations (UU KPKPU), mean that bankruptcy is a general confiscation of all assets of a bankrupt debtor whose management and settlement are carried out by a curator under the supervision of a supervisory judge as regulated in Constitution.

A curator is an Inheritance Property Office or an individual appointed by the court to manage and settle the assets of a bankrupt debtor under the supervision of a supervisory judge in accordance with the KPKPU Law .

One of the principles in the KPKPU Law is the going concern principle . This principle is the principle of business continuity of the debtor (bankrupt company) which is regulated in Article 104 of the KPKPU Law , which reads:

1. Based on the approval of the temporary creditors’ committee, the curator can continue the business of the debtor who is declared bankrupt even though the decision to declare bankruptcy is submitted for cassation or judicial review.
2. If a creditors’ committee is not appointed in bankruptcy, the curator needs permission from the supervisory judge to continue the business.

So, the curator can still run the business of the bankrupt debtor , of course if the bankrupt company is still able to operate and can pay debts from creditors. A bankrupt company can be purchased by another company in the same way as a company acquisition or takeover.

Acquisition is legal action carried out by a legal entity or individual to take over company shares which results in the transfer of control over the company. Although it is not regulated in detail in the KPKPU Law, in practice the acquisition of a bankrupt company by another company is permitted and commonly occurs in the process of submitting a peace plan submitted to creditors.

The biggest achievement in the bankruptcy process is peace between the debtor and creditors. One peace scheme that can be offered to creditors is by bringing in a company acting as an investor that will take over the bankrupt company, and convince the creditors that the bankrupt company can continue its business and that their receivables will be paid off.

Then what about employee rights if the company goes bankrupt?

In the event that a company is declared bankrupt, employees can terminate their employment relationship unilaterally and conversely the curator also has the right to dismiss the employee while still adhering to statutory regulations in the field of employment. As regulated in Article 39 paragraph (1) of the KPKPU Law and its explanation, which is included in Part Two of the KPKPU Law concerning the Consequences of Bankruptcy. The article reads as follows :

Workers who work for the Debtor can terminate their employment relationship, and conversely the Curator can dismiss them by observing the time period according to the agreement or applicable statutory provisions, with the understanding that the employment relationship can be terminated with a minimum of 45 (four five) days’ prior notice.

Confirmation of this is also contained in Article 81 number 45 of the Job Creation Perppu which amends Article 154A paragraph ( 1) letter f of the Manpower Law which explains that one of the reasons for termination of employment (“PHK”) is because the company goes bankrupt , however In the event of layoffs, employers are obliged to pay severance pay and/or gratuity pay and compensation for rights that should have been received .

The status of wages and other employee rights that have not been paid in the event that the company is declared bankrupt is a debt whose payment takes priority, in accordance with the provisions in Article 81 point 36 of the Job Creation Perppu which amends Article 95 of the Manpower Law with the following provisions :

1. In the event that a company is declared bankrupt or liquidated based on statutory provisions, wages and other rights that have not been received by workers/laborers are debts whose payment takes priority.
2. Workers/laborers’ wages are paid first before payments to all creditors.
3. Other rights of workers/laborers have priority in payment for all creditors except creditors holding material security rights.

Legal basis :

1. Law Number 13 of 2003 concerning Employment;
2. Law Number 37 of 2004 concerning Bankruptcy and Postponement of Debt Payment Obligations ;
3. Law Number 40 of 2007 concerning Limited Liability Companies ;
4. Government Regulation in Lieu of Law Number 2 of 2022 concerning Job Creation which has been enacted as law through Law Number 6 of 2023 .

Reference:

1. Related laws.
2. Related Government Regulations.
3. Hukumonline.com