News & Events

Rehabilitating Companies after Bankruptcy

Author: Gracia Monica, Thu, Apr 22nd 2021, 16:39

Companies that are operating, of course, try to collect as many assets as possible and get as much profit as possible. But of course, in an operating company, debt is a common thing to keep the company going. It is a different scenario if the company loses money and reaches a point where debt accumulates until the state of insolvency. As legal protection for creditors, the creditor may submit a request for bankruptcy of the debtor companies to the court of law. In this situation, if the court approves, an administrator will be appointed to manage all assets owned by the debtor to settle debts to the creditors.

Of course, bankruptcy is not an ideal circumstance, especially for the company's reputation. Then what happens if in a bankruptcy the debtor is able pay off all his debts, can the company's reputation be restored?

According to Indonesian Bankruptcy Law, this may be done through bankruptcy rehabilitation. Based on Article 215 of the Bankruptcy Law, rehabilitation is the restoration of the good name of a debtor who was originally declared bankrupt, through a court decision containing information that the debtor has fulfilled his obligations. If rehabilitation is carried out, the company will return to its original position as if it had never experienced bankruptcy.

In this regard, the intended rehabilitation must be requested at the court which has decided the debtor's bankruptcy. Pursuant to Article 205 of the Bankruptcy Law, only a bankruptcy that ends with an ammicable settlement or bankruptcy ends with full payment can be requested for rehabilitation. It also must meet other requirements, namely that it must be announced in the State Gazette and two daily newspapers on rehabilitation.

Recovery of good name after fulfilling its obligation to pay bankruptcy debt is the right of the debtor.


Armila & Rako is a law firm in South Jakarta that provides a comprehensive range of legal and professional services for clients of both local and international. Our clients include public and privately-held companies, large and emerging businesses, as well as public sector entities. While we focus and corporate and commercial matters, the principal industries we represent include energy, mining, electricity, oil and gas, plantation and forestry, infrastructure, financial technology, consumer products as well as other manufacturing industries.