1. INTRODUCTION
    Business has long been an essential aspect in supporting the community’s economy. Nevertheless, it is sometimes encountered that debtors are no longer able to repay their debts (default) to their creditors. In Indonesia, this issue poses a significant challenge for the business world, particularly in resolving debts and continuing business activities. Additionally, the monetary crisis situation has had unfavourable effects on the sustainability of the national economy. Consequently, in 1998, Government Regulation in Lieu of Law No. 1 of 1998 concerning Amendments to the Bankruptcy Law was enacted, which was later promulgated as Law based on Law No. 4 of 1998, ultimately repealed by Law No. 37 of 2004 concerning Bankruptcy and Suspension of Debt Payment Obligations (Bankruptcy & PKPU Law).1Twenty years have passed since the Bankruptcy & PKPU Law was enacted and became legally binding. During this time, various legal issues have arisen due to technological advancements, legal vacuums, and practices affecting several business sectors, including Apartment/ Condominium Developer Company. This is reflected in the recent Supreme Court Circular Letter No. 3 of 2023 (Circular 3/2023), which has sparked debates among practitioners and academics. According to Circular 3/2023, application for bankruptcy and PKPU declarations against Apartment/Condominium Developers do not meet the criteria for simple evidentiary as referred to in Article 8 paragraph (4) of the Bankruptcy and PKPU Law.2

    This article will discuss the principle of Simple Evidentiary according to the Bankruptcy and PKPU Law regime, specifically in relation to Circular 3/2023, particularly concerning Bankruptcy and PKPU petition for Apartment/ Condominium Developer Company.

  2. DISCUSSION AND ANALYSIS
    The Principle of Simple Evidentiary
    The Bankruptcy and PKPU Law regulates the requirements for Bankruptcy Application, including those for PKPU Application, as stipulated in Article 2 paragraph (1) and Article 8 paragraph (4), as follows:3

    1. The debtor has two or more creditors;
    2. fails to fully pay at least one debt that has been due and is payable; and
    3. there is a fact or condition which proves in a simple way that the requirements to be declared bankrupt as referred to in Article 2 paragraph (1) have been fulfilled.

    According to the explanation of Article 8 paragraph (4) of the Bankruptcy and PKPU Law, the term “a fact or condition which proves in a simple way” refers to the existence of two or more creditors and the fact of a debt that has been due and unpaid.4

    Although the principle has been stipulated, there is no further explanation regarding the application of this principle, including its limitations. Therefore, some experts provide explanations about the principle of Simple Evidentiary. According to Kartini Muljadi and Gunawan Widjaja, the essence of simple evidentiary lies in the existence of the debtor’s debt that is requested Bankruptcy or PKPU being overdue and the existence of two or more creditors of the debtor.5 Furthermore, according to Ricardo Simanjuntak, simple evidentiary is an absolute requirement to limit the authority of commercial courts in proving that a debtor requested Bankruptcy or PKPU is proven to have at least one overdue and payable, and the inability of the debtor to settle their overdue and payable debts.6

    In other words, from a theoretical perspective, the principle of simple evidentiary tends to emphasize the existence of facts or conditions that clearly and substantively meet the requirements of Bankruptcy or PKPU as stipulated in Article 2 paragraph (1) of the Bankruptcy and PKPU Law.

    The Principle of Simple Evidentiary in Bankruptcy / PKPU Cases for Apartment / Condominium Developer Company
    The application of simple evidentiary principle to Bankruptcy/PKPU cases involving Apartment/Condominium Developers before Circular 3/2023 is exemplified in Supreme Court Decision No. 236 K/Pdt.Sus/2010. This case involves a dispute between the Bankruptcy Petitioners, as buyers of Palazzo Apartments, and PT Pelita Propertindo Sejahtera as the Bankruptcy Respondent. The main issue was the failure of the Bankruptcy Respondent, as the developer of Palazzo Apartments, to fulfill its obligation to deliver the apartment units as agreed in the Addendum to the Sale and Purchase for Land and Building Agreement (PPJB). At the first instance, through Decision No. 73/Pailit/2009/PN.Niaga.JKT.PST, the Panel of Judges granted the bankruptcy petition in its entirety and declared PT Pelita Propertindo Sejahtera bankrupt with all its legal consequences. The Bankruptcy Respondent then filed cassation application. However, the Panel of Judges at the cassation level agreed with the first-instance judges, stating that based on the hearing evidence, it was simply proven that the Bankruptcy Respondent could not deliver the apartment units to the Petitioners and other buyers as promised. Additionally, the Panel of Judges explained that the Bankruptcy and PKPU Law applies a broad definition of debt, meaning that the seller’s unmet obligations to the buyer as agreed are considered the seller’s debt to the buyer because these obligations can be easily quantified in monetary terms, equivalent to the amount paid by the buyer. Thus, the Panel of Judges rejected the cassation application of the Bankruptcy Respondent.

     

    The Principle of Simple Evidentiary concerning Apartment/Condominium Developer Company post Circular 3/2023
    As discussed previously, the essence of simple evidentiary lies in the existence of facts or circumstances that clearly meet the requirements for Bankruptcy and PKPU according to the law. However, the principle of simple evidentiary has experienced dynamic application as regulated in Circular 3 / 2023. Based on the formulation of the special civil chamber, which addresses Bankruptcy and PKPU, it is stipulated that bankruptcy and PKPU petitions against apartment/condominium developer company do not meet the simple evidentiary requirements as regulated in Article 8 paragraph (4) of the Bankruptcy and PKPU Law.

    This Circular 3/2023 subsequently sparked debates among practitioners and academics. One of them, M. Hadi Shubhan, stated that considering the complexity of the Bankruptcy/PKPU implications as a reason to declare Apartment/Condominium Developer Company ineligible for Bankruptcy/PKPU application is an inappropriate consideration. He argued that simple evidentiary constitutes tangible evidence, while apartment ownership credit is straightforward and clear.7 Advocate & Receiver Lucas S.H., C.N. has a different view. According to him, in this matter, the Supreme Court considers the principles of justice and legal certainty because many buyers of apartment and condominium units feel deceived by developers. Lucas believes that Circular 3/2023 does not conflict with the Bankruptcy & PKPU Law, as there is a greater interest in achieving justice. On the other hand, the government and the House of Representatives (DPR), as the lawmakers, have not kept up with the times, including addressing this issue.8

    As of the time this article was written, there has been no further explanation from the Supreme Court regarding the basis or reasons for this provision. However, practitioners and academics have speculated on several occasions that this provision is intended to protect consumers from the consequences of Bankruptcy/PKPU for Apartment/ Condominium Developer Company.9

    Commercial Court Decisions post Circular 3/2023
    One example of a Commercial Court Decision that used Circular 3 / 2023 as the basis for the Panel of Judges’ considerations is Decision Number 97/Pdt.Sus-PKPU/2024/PN Niaga Jkt Pusat. This decision involves a dispute between Sky House Jo, a joint operation between China State Construction Engineering Co. Ltd and PT Dacheng Engineering Indonesia as the PKPU Petitioner, against PT Sunny Garden Property as the PKPU Respondent. The core issue of this dispute is that the Petitioner claims the Respondent still has payment obligations under the Decoration Work Contract for the Sky House BSD+ Phase 1 Project and the Additional Agreement to the Main Building Contract for the Sky House BSD+ Phase 2 Project. In this case, the Panel of Judges considered that, according to the provisions of Circular 3 / 2023, “Bankruptcy or PKPU petitions against Apartment and/or Condominium Developer Company do not meet the requirements for simple evidentiary as referred to in Article 8 paragraph (4) of the Bankruptcy and PKPU Law.” Furthermore, according to the Panel of Judges, based on the petitioner’s claims and witness statements, the legal relationship between the Petitioner and the Respondent is in the context of the Sky House Apartment Development Project, with the Petitioner as the contractor and the Respondent as the developer. Based on witness statements that the units already have buyers and are occupied by their owners, the Panel of Judges concluded that this PKPU petition does not meet the formal requirements for submitting a PKPU petition. Therefore, the Panel of Judges rejected the PKPU petition.

    Would the upcoming similar application have the same fate?

Daffa Fahrizky Mahardhika

Sources

  1. Considerations Bankruptcy & PKPU Law
  2. Formulation of Special Civil Chamber Circular 3/2023
  3. Article 2 paragraph (1) and Article 8 paragraph (4) of the Bankruptcy and PKPU Law
  4. Explanation of Article 8 Paragraph (4) Bankruptcy & PKPU Law
  5. Kartini Muljadi and Gunawan Widjaja, Pedoman Menangani Perkara Kepailitan, PT. Raja Grafindo Persada, Jakarta, 2004, Page. 141
  6. Ricardo Simanjuntak, Esensi Pembuktian Sederhana Dalam Kepailitan, dalam : Emmy Yuhassarie (ed.), Undang-Undang Kepailitan dan Perkembangannya, Pusat Pengkajian Hukum, Jakarta, 2004, Page. 52.
  7. https://www.hukumonline.com/berita/a/sebut-pengembang-tak-bisa-dipailit-pkpu–sema-3-2023-dinilai-tak-sejalan-uu-kepailitan-lt65eee651b9ad2/?page=1, last accessed on April 25 2023, at 13.00 WIB
  8. https://hukumid.co.id/sema-no-3-tahun-2023-mahkamah-agung-cawe-cawe-di-sektor-properti/ , last accessed on May 28 2023, at 10.00 WIB
  9. https://www.hukumonline.com/berita/a/resha-agriansyah-partnership-ajak-masyarakat-pahami-kontroversi-sema-no-3-tahun-2023-lt65f16a7487904/?page=2, last accessed on April 25 2023, at 13.30 WIB
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