Report of the Indonesian Private Business Initiative Regarding the Indonesian Insolvency Law

06/11/2001

Introduction

The Indonesian Private Business Initiative (the "IPBI") is a group of over twenty major Indonesian Business entities who are concerned that the present insolvency system of Indonesia is not serving the needs of creditors, employees, Indonesian businesses and the Indonesian economy. The current system is little used by either debtors or creditors, does not promote reorganization of distressed business entities, does not preserve going concern value for the benefit of creditors, employees, taxing authorities and others and is not contributing to the recovery of the Indonesian economy.

A functioning reorganization system must include all parties and be flexible enough to accommodate the financial restructuring of entities ranging from small individual debtors with few creditors and simple problems to large businesses with thousands of creditors and complex corporate structures. The current Indonesian system does not include all of the parties and does not provide an appropriate degree of flexibility. Consequently, debtors do not voluntarily enter the system and creditors have become so frustrated that they now ignore the system.

Fortunately, the Indonesian insolvency statute can be amended to encourage reorganization, preserve value for creditors and others and prevent unnecessary loss of employment.

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