This study aims to analyze the implementation of the execution of SOEs in the form of Persero that were declared bankrupt, identify weaknesses in existing regulations, and reconstruct these regulations based on the value of justice. Using the constructivism paradigm with a socio-legal research approach, this study is descriptive and uses secondary data. The results of the study show that the execution regulations for bankrupt Persero SOEs still have fundamental weaknesses in terms of substance, structure, and legal culture, especially related to the protection of state assets and legal certainty. It was found that there was a disharmony between the Bankruptcy Law and a number of other laws. Therefore, a regulatory reconstruction based on the value of justice is needed to ensure the protection of state assets and legal certainty in the bankruptcy of Persero SOEs that carry out public functions.
The development of science and globalization have driven significant changes in various aspects of people's lives, so the role of law is needed to regulate and direct these changes in a positive direction. In the context of the national economy, SOEs (State-Owned Enterprises) play an important role as the implementer of Article 33 of the 1945 Constitution in order to realize the prosperity of the people.
SOEs are divided into two forms: Persero and Perum. Persero is in the form of a Limited Liability Company (PT) with the main orientation of making profits, while Perum aims to provide public services. In law, Persero is subject to the principle of separate legal entity, which is a legal entity separate from its owner, and is subject to the PT Law and the Bankruptcy Law.
However, a debate arose when the state-owned Persero faced the risk of bankruptcy. On the one hand, based on the Bankruptcy Law, SOEs in the form of PTs can be declared bankrupt and their assets can be settled by the curator. On the other hand, according to the State Finance Law and the State Treasury Law, state assets cannot be confiscated, including those included as state-owned capital.
Cases such as PT Dirgantara Indonesia, PT Iglas, and PT Istaka Karya show that bankruptcy applications against SOEs are often rejected because they are considered inseparable from their state assets. However, it is different from the case of PT Kertas Leces, where the Supreme Court declared the company bankrupt and assets were liquidated, with the judge basing the decision on the SOE Law and setting aside the State Finance Law and the State Treasury Law.
This creates a legal conflict between the principle of separate legal entity from a PT and state financial rules. This problem shows the existence of duality and regulatory insynchronization, which is important to be studied and resolved legally, so that there is no legal vacuum or uncertainty in the management of SOE assets if they experience bankruptcy.
The purpose of establishing Persero as a state-owned enterprise has the main goal of pursuing profits. However, in its development, SOEs, especially Persero SOEs, may be at risk of losses that have the potential to go bankrupt or bankruptcy if they are not managed professionally and are not in accordance with the principles of good corporate governance.
In Article 1 number 1 of Law Number 37 of 2004 concerning Bankruptcy and Suspension of Debt Payment Obligations, it is expressly stated that bankruptcy is a general confiscation of all assets of bankruptcy debtors whose management and disposal are carried out by the curator under the supervision of the supervisory judge. This means that when a PT is declared bankrupt, it means that directly the PT as a bankruptcy debtor loses its right to sell or transfer all assets and these rights become the rights of the curator.
The curator is one of the important parties in the process of settling the bankruptcy assets of a PT. The provisions of Article 1 number 5 of the Bankruptcy Law stipulate that the so-called curators are the Heritage Property Center (hereinafter referred to as BPH) and other curators. Other curators here are those who are eligible, namely individuals domiciled in Indonesia who have special
expertise and have been registered with the Ministry of Justice as Curators. The main task of the Curator is to manage and settle the assets of the bankruptcy debtor.
Diaturnya permohonan pernyataan pailit terhadap BUMN dalam UU Nomor 37 Tahun 2004 tentang Kepailitan dan Penundaan Kewajiban Pembayaran Utang (UUKPKPU) memperlihatkan bahwa pemerintah menyadari kondisi pasang surut keuangan BUMN.
This can be evidenced by several lawsuits and applications for bankruptcy declarations against Persero SOEs that occurred, including, PT. Dirgantara Indonesia (Persero), PT. Djakarta Llyod (Persero), PT. Hutama Karya (Persero) and PT. Iglas (Persero). However, the application for a declaration of bankruptcy against the Persero SOE was ultimately rejected on the grounds that the Persero SOEs have the capital owned by the State and are not divided into shares, so it is difficult to separate and distinguish between the company's assets and the State's assets.
In contrast to Persero state-owned companies that filed lawsuits through bankruptcy lawsuits. The lawsuit through the PKPU lawsuit (Suspension of debt payment obligations) has great hopes that the state-owned company Persero can be declared bankrupt. This can be seen in Decision Number 5/Rev. Sus- Bankruptcy-Cancellation of Peace/2022/PN. Niaga Sby Jo. Decision Number 04/Pdt.Sus-PKPU/2018/PN. Niaga Sby, Decision Number 01/Pdt.Sus - Cancellation of Peace/2018/PN. Niaga Sby jo Decision Number 5/PKPU/2014/PN. Niaga Sby and Decision Number 26/Pdt.Sus - Cancellation of Peace/2022/PN. Jkt.Pst. Business, which is a Persero state-owned company, including PT. Kertas Leces (Persero), PT. Merpati Airlines and PT. Istaka Karya could be declared bankrupt because the peace proposal was rejected, so no further legal action could be taken.
Reconstruction in general means restoring or rebuilding something as it was, whether events, ideas, or legal structures. According to experts:
Chaplin: Reinterpreting data to explain personal development.
Marbun: Rearrangement of existing materials.
Mudhofir: In the philosophy of education, reconstruction means to form a new and better civilization.
In the legal context, legal reconstruction is the process of rearranging the structure, substance, and culture of law to conform to the will of the law (Recht Idee), society, and morality. The goal is not to create a new system, but to improve and restore the main values in the existing legal system, in accordance with the value of justice in Pancasila and the Indonesian legal system (Civil Law System). Reconstruction is also part of the law as a means of reforming society and bureaucracy.
Regulation means an arrangement or regulation made by the government or an authority authorized to control the behavior of the public. In law:
Regulation is a form of written law that is generally binding.
Maria Farida distinguishes regulations as a process of forming laws and the results of that process.
Based on Law No. 12 of 2011, regulations are written regulations that contain legal norms that are binding on the public, formed by official institutions through legal procedures.
In this study, regulation refers to the rules regarding the execution of court decisions that have permanent legal force, which have binding legal force to regulate and order legal actions in society.
Bankruptcy is regulated in Law No. 37 of 2004, which requires debtors to have two or more creditors and are unable to pay one debt that has matured and can be collected. The bankruptcy process is filed with the Commercial Court and is quick and simple. The legal objectives of bankruptcy include protecting creditors' rights, preventing asset grabbing, and avoiding fraud. According to Stiglitz, bankruptcy must prioritize company restructuring, creditor protection, and the interests of workers. Regarding SOEs, the law states that bankruptcy applications against SOEs engaged in the public sector can only be submitted by the Minister of Finance. However, the definition of SOEs in the public sector is still weak because it overlaps with the definition of Perum in the SOE Law.
State finance is a plan of government financial activities that is prepared quantitatively, usually for the next year, and is related to state expenditure and financing. This definition has been put forward by several experts with different points of view:
M. Ichwan: State finance as an activity plan with numbers (amount of money) for the future.
Definition in Laws and Regulations
Law No. 31 of 1999 & Law No. 20 of 2001 (UUPTPK):
State finance is all state assets (separated/not), including rights and obligations in the control of state institutions, SOEs/BUMDs, and third parties.
Law No. 17 of 2003 (UUKN):
State finance includes all the rights and obligations of the state that are valued in money, as well as goods that belong to the state. Can be reviewed as:
Objects: State money/goods, fiscal/monetary policy.
Subject: Central/regional governments, SOEs/D, other
agencies.
Process: From formulation to financial
accountability.
Purpose: For the implementation of state government. State Finance in a Broad and Narrow Sense
Broad meaning: Includes all the rights, obligations, and wealth of the state, including outside the official budget.
Narrow meaning: It only includes the State Budget that is determined annually through law.
According to Jimly Asshiddiqie, initially the definition of state finance in the 1945 Constitution only referred to the state budget. However over time it develops to become more extensive, although both (broad and narrow) must be juridically distinguished.
This research uses the constructivist paradigm, which views social reality as the result of social construction, not something natural. This paradigm is used to understand reality based on individual experience and interpretation, making it suitable for qualitative approaches.
The research was conducted using a case study method, which allows an in-depth analysis of the uniqueness of events, in this case related to the execution of the bankruptcy of Persero's SOEs. This method avoids generalizations and places more emphasis on understanding the individual's reception of social reality.
Socio-legal research approaches are used, which is a combination of normative and empirical juridical approaches. Data was collected through field observations and interviews, particularly at the Surabaya Commercial Court as well as from curators and academics, supported by a review of relevant legal documents and regulations.
Data Types and Sources
Primary Data: Obtained from direct interviews with sources such as curators and bankruptcy law experts.
Secondary Data: Includes primary legal materials (Law, 1945 Constitution, jurisprudence), secondary (literature, scientific articles), and tertiary (legal dictionaries and encyclopedias).
Field interviews were conducted in Surabaya and Jakarta.
Literature studies are conducted on legal documents and literature.
The data was analyzed qualitatively descriptively, with reference to legal norms, field facts, and interpretation of interview results. The analysis process takes place simultaneously with data collection and is carried out interactively through three components: data reduction, data presentation, and conclusion drawn.
Execution is the implementation of a court decision that is punishing (condemnatoir) forcibly against the losing party. In the context of bankruptcy according to Law No. 37 of 2004, execution is carried out through the management and settlement of the bankruptcy debtor's assets by the curator under the supervision of the supervisory judge.
Bankruptcy can be filed by debtors, creditors, prosecutors, or other parties on the condition that:
The debtor has at least two creditors,
There is one debt that is due and can be collected but has not been paid,
It can be proven simply (simple proof).
If the application is granted, the debtor's property becomes public confiscation and is managed by the curator for debt repayment.
Creditors are grouped into:
Separatist Creditors: Holders of tangible collateral (e.g. fiduciaries, mortgages) whose right of execution is not affected by bankruptcy.
Preferred Creditors: Have statutory privileges.
Concurrent Creditors: Ordinary creditors who get repayment proportionately after separatist and preferential creditors.
The bankruptcy declaration is immediate and constitutive, resulting in the debtor losing the right to manage his assets. The curator takes over and divides the proceeds of the property auction to pay creditors. The debtor is not in custody, but his right to manage his wealth is revoked for the sake of the law.
Execution in bankruptcy differs from ordinary civil execution:
Not done by the bailiff, but by the curator,
Covering the management and auction of all debtors' assets,
The proceeds are used to pay debts according to creditors' priorities.
In the ordinary civil system, execution is distinguished in several types such as: Payment of money,
Execution or replacement of certain acts,
Environmental execution,
Real execution (emptying, handing over of goods, etc.).
The execution was carried out by the bailiff on the order of the Chief of the District Court.
The duties and authority of the curator in the management and settlement of bankruptcy assets in accordance with the Bankruptcy Law and PKPU.
Return of Bankruptcy Assets (Article 49):
Goods received by a third party before bankruptcy can
be reclaimed by the curator through an actio pauliana
lawsuit.
If the goods are exhausted or lost, they must be
replaced with money worth the goods.
Returns are only made if it benefits the bankruptcy
property.
Recording of Assets and Receivables (Articles 102-103):
The curator records assets, receivables and debts and
announces them.
The creditor is required to submit the bill along
with evidence and mention the right to bail.
Bills filed over time can only be matched if there
are no objections.
Debt Matching (Articles 116-117):
The curator matches the receivables to the debtor's
records and can request additional evidence from the
creditor.
Acknowledged receivables are recorded in a
provisional list and are announced to the public for 7
days.
Curator Actions to Increase the Value of Bankruptcy Property: Based on Article 25 and others, the actions include:
Continuing the business of the bankrupt debtor (going
concern).
Sealing or selling bankruptcy assets that burden
costs.
Keeping funds in the bank for interest.
Canceling the act of harming the bankrupt
property.
Reclaiming goods or value from a third party (actio
pauliana).
Terminate a lease or employment relationship.
Demanding the proceeds of the sale or remaining
collateral from separatist creditors.
Filing an objection to an invalid bill from a
creditor.
Going Concern (Pasal 104, 179, 181):
The curator can continue the debtor's efforts to
increase the value of the bankruptcy property with the
permission of the creditor committee or the supervisory
judge.
If the business is continued, only non-productive
assets can be liquidated.
Liquidation of Bankruptcy Assets (Article 16, 178):
It starts if the assets are insolvent (unable to
pay).
Insolvency conditions occur if: there is no peace,
peace fails, or homologation is denied.
This process is in the form of selling all bankruptcy
assets to pay off debts and bankruptcy costs.
Execution is the implementation of a court decision to fulfill the obligations of the losing party by force. In bankruptcy cases, execution means the management and settlement of bankruptcy assets to be auctioned and paid creditors. There are different types of executions in district courts, such as execution of money payments, certain acts, environmental executions, and real executions.
The execution of bankruptcy assets involves a curator who manages and settles the debtor's assets since the bankruptcy decision. The curator's duties include securing assets, recording, collecting creditor bills, and auctioning bankruptcy assets to pay off debts.
SOEs, especially Persero, are separate legal entities whose capital is mostly owned by the state. As a profit-oriented entity, BUMN Persero is subject to the Limited Liability Company (PT) Law. However, even though the capital and assets of SOEs come from state wealth, the execution of assets of bankrupt SOEs is contrary to the State Treasury Law which prohibits the confiscation of state assets.
This conflict can be seen when curators face difficulties in executing SOE assets, especially land that is considered state-owned and requires the permission of the Minister of Finance to be sold. The difference in attitude of government officials in handling the execution of bankrupt SOE assets has resulted in an unclear and protracted asset settlement process. In short, the execution regulations for state-owned enterprises (SOEs) that have been declared bankrupt have not accommodated the value of justice because of the overlap of laws between the Bankruptcy Law, Limited Liability Companies, and the State Treasury, thereby hindering the effectiveness of the execution of bankruptcy assets.
The indecisiveness of legal norms in the Bankruptcy Law and the SOE Law causes legal uncertainty related to the status and execution of bankruptcy against Persero's SOEs.
The Bankruptcy Law only allows the Minister of Finance to file a bankruptcy application against SOEs engaged in the public interest. However, the interpretation of public vs. commercial SOEs is still ambiguous.
The difference in interpretation between judges, curators, and ministries causes confusion, especially if SOE assets are considered state assets.
The Bankruptcy Law does not take into account the public service function of the Persero SOEs, so there is a risk of disrupting public services in the event of bankruptcy.
The disharmonization of legislation (SOE Law, State Finance, Limited Liability Companies, State Treasury) exacerbates the legal vacuum regarding the separation of state assets and SOEs.
As a result, it is difficult to implement the bankruptcy principle which should confiscate all debtors' assets, because there is a prohibition on confiscating state assets.
This creates injustice for creditors and reflects the absence of legal certainty.
The lack of synchronization between regulations creates ambiguity between the status of SOEs as public or private entities.
The State Finance Law equates the wealth of SOEs as part of state finances, while the Bankruptcy Law does not distinguish between private and public subjects.
The absence of a firm boundary between state wealth and the wealth of Persero SOEs in the SOE Law and the PT Law makes it difficult for law enforcement to execute bankruptcy assets.
The unpreparedness of the legal apparatus (judges, curators, advocates, Ministry officials) in understanding the hybrid nature of the Persero SOEs (private but carrying out public functions) results in inconsistent legal treatment.
This hurts the principle of equality before the law.
In the opinion of Soerjono Soekanto (further details not available), aspects of legal culture include legal values and awareness that affect law enforcement.
An indication of weakness in the legal culture can be seen from the weak understanding, awareness, and integrity of law enforcers on the principle of justice in SOE bankruptcy disputes.
China
Background: After the 1949 era, all SOEs were owned by the state. Reforms occurred in the 1980s–2000s, including the privatization of some SOEs.
Regulation: Regulated in the Bankruptcy Law of P.R. China. A major revision was carried out in 2007.
Key features:
Assessment of cash flows and financial balance sheets
as the basis for bankruptcy.
The administrator (trustee of the bankruptcy) is
appointed by the court.
Reorganization (restructuring) as an alternative to
bankruptcy.
Practice: SOE bankruptcy is difficult to do because of social risks (massive layoffs), so the government implements protective policies before bankruptcy, such as employee compensation and gradual asset liquidation.
United States
SOEs (GSEs): Known as Government-Sponsored Enterprises (GSEs), such as Fannie Mae, Freddie Mac, and Sallie Mae.
Objective: Support strategic sectors such as housing, education, and agriculture.
Bankruptcy regulation:
Originally regulated in the Bankruptcy Act of 1898,
it now uses the Bankruptcy Code (since 1979).
Chapter 11 for corporate reorganization.
Chapter 9 for municipal entities.
Exceptions: Not applicable to railroad, insurance and
bank companies.
Singapore
Legal basis: Companies Act dan Bankruptcy Act Revised Edition 2009.
Definition of bankruptcy: Inability to pay debts ≥ SGD 15,000, can be filed
by creditors or debtors.
Types of creditors:
Secured creditor: Gets the right to precede the
guarantee, but loses that right if you file for
bankruptcy.
Unsecured creditor: No special collateral.
Conditions for bankruptcy application:
Debts are due and not paid.
Insolvent debtors (unable to pay).
Mechanism:
Automatic stay on the debtor's assets, if deemed
necessary by the court.
Actio Pauliana: Cancellation of fraudulent
transactions before bankruptcy (5 years or so).
The management of the debtor's assets is carried out
by the Official Assignee.
Progressive legal principles: Emphasizing the value of justice, responsiveness, on the side of the people, and carried out with a legal conscience.
Pancasila as the basis of the state contains the value of justice which is the basis for the formation of the national legal system. Justice is understood as a moral norm and principle to respect human rights and dignity. In the legal context, justice is a benchmark in conflict resolution and law enforcement, including in bankruptcy cases. Bankruptcy is a general seizure of all the debtor's assets to pay debts to creditors through a curator under the supervision of a judge. Execution of bankruptcy assets involves actions against debtors, debt- receivables matching, and asset auctions. The curator plays a major role in managing and clearing the bankruptcy property since the bankruptcy judgment was issued, although it has not yet had permanent legal force.
BUMN Persero is a legal entity in the form of a Limited Liability Company (PT) whose capital is mostly owned by the state, but aims to pursue profits. Based on the SOE Law and the PT Law, Persero SOEs are subject to PT law and are separated from state assets, so they can be insolvent.
Conflicts arose when state officials still considered Persero SOEs' assets as state assets. Article 50 of the State Treasury Law prohibits the seizure of state assets, which makes it difficult for curators to execute immovable assets such as land. In practice, some cases such as PT. Kertas Leces and PT. Merpati Airlines shows a difference in the treatment of the Ministry of Finance in asset settlement.
The disharmony between the Bankruptcy Law, the SOE Law, the PT Law, and the State Finance Law caused confusion in the execution of the bankrupt
Persero SOEs. Some consider SOE assets to be state assets, even though according to PT law, the company's assets are the assets of separate entities. This creates legal uncertainty and injustice for creditors.
The reconstruction of regulatory norms related to the execution of State- Owned Enterprises (SOEs) Persero that was declared bankrupt needs to be carried out based on the progressive legal approach of Satjipto Rahardjo, who emphasizes that the law must be in favor of substantive justice and can be interpreted creatively for the benefit of the people. In this perspective, legal actors are expected not only to adhere to normative texts, but also to be able to adapt law enforcement to social conditions and justice values.
SOEs, especially those in the form of Persero, have a strategic role in the national economy and are the embodiment of Article 33 of the 1945 Constitution. Although its capital comes from the separated state wealth, Persero is subject to the Limited Liability Company (PT) law, which contains the principle of separate legal entity — that is, the company's wealth is separate from the state wealth. Problems arise when there is a clash of regulations between the concept of state wealth (in the State Finance Law and the State Treasury Law) which prohibits the confiscation of state-owned assets, and the legal character of PTs which allow company assets to be used to pay off debts during bankruptcy. This disharmony poses obstacles in the execution of the assets of the bankrupt Persero SOEs, because on the one hand the assets come from the state (cannot be confiscated), but on the other hand it is subject to the corporate law regime that allows the execution of assets.
To resolve this normative conflict, a reconstruction was carried out of:
SOE Law by adding the phrase "or more" to Article 1 paragraph 2 so that there is no mistake in interpreting share ownership by the state.
The State Treasury Law by adding an exception to Article 50, namely that the prohibition of confiscation does not apply to state assets in SOEs in the form of Persero.
The State Finance Law needs to be harmonized so that state wealth separated from Persero does not become an obstacle in the implementation of bankruptcy execution, while maintaining state financial accountability.
The regulation of the execution of the bankruptcy of the Persero SOEs is not fair, because Law No. 37 of 2004 has not expressly regulated SOEs engaged in the public interest, and has not clearly regulated the state assets in SOEs, which causes the process of settling bankruptcy assets to be long and uncertain.
The regulatory weaknesses include:
Legal substance: different interpretations of Article 2
paragraph 5 of Law No. 37/2004, as well as
disharmonization with the State Finance Law, the SOE Law,
the PT Law, and the State Treasury Law.
Legal structure: the authorities have not fully
understood the substance of the rules for the execution of
SOE assets.
Legal culture: society and law enforcement have not
fully understood the rules, leading to losses and
conflicts.
The regulatory reconstruction is divided into:
Value reconstruction: from unjust to value-based
justice.
Norm reconstruction: changes and additions to
provisions in several laws such as the SOE Law, the
Bankruptcy Law, the State Treasury Law, and the State
Finance Law, to clarify the status of Persero SOEs' assets
and the protection of public interests.
The government and the House of Representatives need to revise a number of important articles in the SOE Law, the State Treasury Law, and the State Finance Law.
Law enforcement must consider social and public service aspects, not just the text of the law.
SOE management must improve governance and financial risk mitigation to prevent bankruptcy.
Academics need to continue the study of SOE execution laws so that the law is more responsive and fair.
Further research can be focused on international comparative studies related to BUMN bankruptcy, legal analysis of regulatory disharmony, empirical studies of BUMN asset execution practices, socio-legal approaches to the understanding of officials and the community, and the development of a regulatory model based on value justice and protection of public interests.