Misuse of bankruptcy petitions by creditors: The case of Indonesia

This study aims to examine the principles and practices of Indonesian bankruptcy law. It is crucial for investors who will put their capital in Indonesia, so that they do not become subject to the misuse of bankruptcy law instruments in Indonesia. Indonesia bankruptcy law has a number of weaknesses that allow creditors to misuse bankruptcy instruments for their own benefit at the expense of debtors. The weakness is twofold. First, there is no minimum debt limit that can trigger an application for bankruptcy. Second, insolvency tests before the bankruptcy request is made, are absent. Some misuse of bankruptcy laws has led to solvent companies acting as bankrupt debtors.