Commercial Dispute Resolution Jakarta Client Alert September 2015 Supreme Court Ruling on Bankruptcy of Bumi Asih Jaya On 9 September 2015, the Republic of Indonesia Supreme Court gave its ruling on the cassation application submitted by the Financial Services Authority ("OJK") regarding the bankruptcy petition against PT Asuransi Jiwa Bumi Asih Jaya ("BAJ"), one of the oldest insurance company in Indonesia. The Supreme Court ruled in favour of OJK and approved the bankruptcy petition against BAJ. Under the previous regime, Law No. 37 of 2004 on Bankruptcy and Suspension of Payment ("Bankruptcy Law") states that the Minister of Finance has the authority to submit bankruptcy petition against insurance companies. With the issuance of the new insurance law, i.e., Law No. 40 of 2014 on Insurance ("Insurance Law"), the authority to submit bankruptcy petition against insurance companies is now held by OJK. This is the first time OJK, as a regulator, has bankrupted a financial service company, in this case, an insurance company. As a background, on 18 February 2015, OJK filed a bankruptcy petition against BAJ at the Commercial Court in Central Jakarta District Court for the following reasons: a) BAJ no longer has the ability to meet its payment obligations to its policy holders or creditors; b) BAJ has violated prevailing insurance regulations by having its solvency level below the minimum requirements; and c) BAJ was unable to restore its solvency level back to the required level despite multiple warnings and restriction of business activities, which eventually led to the revocation of BAJ's business licenses. However, the Commercial Court ruled in favour of BAJ and rejected OJK's bankruptcy petition against BAJ. OJK, then, filed a cassation application to the Supreme Court in an effort to appeal the Commercial Court's ruling in this matter. As mentioned above, the Supreme Court ruled in favour of OJK and BAJ is now declared bankrupt. http://www.hhp.co.id For further information please contact Timur Sukirno Senior Partner +62 21 2960 8500 firstname.lastname@example.org William Muliawan Associate +62 21 2960 8606 email@example.com Hadiputranto, Hadinoto & Partners The Indonesia Stock Exchange Building, Tower II, 21st Floor Sudirman Central Business District Jl. Jenderal Sudirman Kav. 52-53 Jakarta 12190 Indonesia Tel: +62 21 2960 8888 Fax: +62 21 2960 8999 ©2015 Hadiputranto, Hadinoto & Partners. All rights reserved. Hadiputranto, Hadinoto & Partners is a member of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm. This may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.