Limited Liability Company’s Status After Insolvency: Dissolution or Rehabilitation?

Bankruptcy and postponement of debt payment obligations are facilities given by law to encourage collective debt settlement for debtors that are experiencing financial distress and therefore on a status of bad credit. After the debt settlement process is over, the debtor according to Article 215 - 221 Indonesian Law Number 37 Year 2004 (“Indonesia Insolvency Law”) may request for financial rehabilitation. However, towards debtors whose form of legal entity is a limited liability company (“LLC”) it is regulated in Article 142 paragraph (1) letter e Indonesian Law Number 40 Year 2007 (“Indonesia LLC Law”) for such debtors to be dissolved after being condemned insolvent. These two variations of regulation allows room for conflict especially towards an LLC that is both capable and willing to continue their business after the removal of the insolvency status but is hindered by the Indonesia LLC Law. Therefore, this research is conducted in order to analyze the legal consequences of an LLC that–after being released from insolvent status–wishes to continue its business and has sufficient capability of doing so, based on both the Indonesia Insolvency Law and the Indonesia LLC Law. This research is normative research that uses statute approach and conceptual approach. The result of this research is that the dissolution regulation may be ruled out if the LLC has the ability to continue its business post-insolvency, under the condition that the LLC must plead for rehabilitation, having a written proof of payment satisfaction from the creditors.

Bankruptcy and postponement of debt payment obligations are facilities given by law to encourage collective debt settlement for debtors that are experiencing financial distress and therefore on a status of bad credit.After the debt settlement process is over, the debtor according to Article 215 -221 Indonesian Law Number 37 Year 2004 ("Indonesia Insolvency Law") may request for financial rehabilitation.However, towards debtors whose form of legal entity is a limited liability company ("LLC") it is regulated in Article 142 paragraph (1) letter e Indonesian Law Number 40 Year 2007 ("Indonesia LLC Law") for such debtors to be dissolved after being condemned insolvent.These two variations of regulation allows room for conflict especially towards an LLC that is both capable and willing to continue their business after the removal of the insolvency status but is hindered by the Indonesia LLC Law.Therefore, this research is conducted in order to analyze the legal consequences of an LLC thatafter being released from insolvent status-wishes to continue its business and has sufficient capability of doing so, based on both the Indonesia Insolvency Law and the Indonesia LLC Law.This research is normative research that uses statute approach and conceptual approach.The result of this research is that the dissolution regulation may be ruled out if the LLC has the ability to continue its business postinsolvency, under the condition that the LLC must plead for rehabilitation, having a written proof of payment satisfaction from the creditors.

A. Introduction
There are only one goal in doing business: to gain profit.However, there is no insurance that one's business will forever flourish and its sales chart upraises every year.
When faced with hiccupsspecifically loss-under extreme conditions the business may halt and even stop.All is well if it stopped without any lingering responsibilities left behind.Reality is not as beautiful, however, as usually the state of loss itself may be followed by a ginormous amount of debt.When it reaches the peakhaving exhausted all non-litigation possibilities to no avail-one may find themselves in a position of insolvency (for companies) or bankruptcy (for individuals).This litigation mechanism will then provide a way out to fulfill their responsibilities/debts while trying to retain the fairest outcome for the creditors who had not gotten their part of the deal.Once all is said and done, if there are still some potential left for the business to The collateral needs to be appraised every year, keeping in mind the relevant factors such as the value depreciation or increase over time. 6This is all done to protect the bank from gaining loss when the debtor is unable to pay the loan back.In addition, banks usually refrain from lending money to debtors who had planned to use the amount of money obtained from the credit agreement as their primary source of income. 7This action is the embodiment towards the "Capital" part of the 5 C's of Credit. 8The bank prefers debtors that are self-financing as it is a great risk and moral hazard otherwise.After the distribution of debt- Indonesia Insolvency Law's

History and Amendments
Roman-Dutch civil law is the system that Indonesia uses. 23The usage of it originates from the history of Dutch colonization that took place in Indonesia before Indonesia's Independence in 1945.
As such, the Indonesian civil law system is an institutional "transplantation" from the Dutch influenced by various customary and Islamic law. 24One of the regulations adopted from the Dutch was in regards to insolvency and it was adopted with little to no reformation as it was not popularly used. 25The rarity of insolvency There exists several clauses that provide a chance for the debtor to experience rehabilitation post-insolvency and attain their ability to proceed with doing their business once again.

Fairness
In its connection with both paritas creditorum and pari passu pro rata parte in BW, the insolvency law ought to prevent self-assertive acts of the creditors and arranging debtclaim through collective debt settlement.

Integration
The insolvency law coordinates various regulations and integrates it into one legitimate framework.This shows that insolvency law does not stand on its own and is in a ceaseless relationship with other regulations such as Herziene Indonesisch Reglement ("HIR").
It can be concluded that the insolvency law's main objective is to ensure that every creditors receive equal distribution of their rights via the debtor's insolvent assets pool. 39Other than that,   business, the law provides a rehabilitation facility with several terms and conditions.This is in line with the business continuity principle as stated above, in the general section of the Indonesian Insolvency Law.

Post-Insolvency
The curator will liquidate and distribute the debtor's insolvent assets towards the respective creditors according to the receivables list, as regulated in Indonesia Insolvency Law.
Afterwards, there may occur one of the two resulting events: one where the debts are fully paid off, and another in which the debts are still unsettled. 46In case of the first event, the debtor will then be able

D. Conclusion
In Indonesia there are two different regulations that govern the status of an LLC after the curator finishes dividing the liquidated assets to the creditors.
rights; based on 1131 BW, every creditor-be it secured, preferred, or unsecured-has their right to receive their debt-claim from the debtor.This principle is called the paritas creditorum principle, and along with the pari passu pro rata parte principle in 1132 BW, it begets the establishment of the insolvency law.Pari passu means that every creditor will be and Macfarlanes LLP, "International Comparative Legal Guides: Restructuring and Insolvency 17th Edition," (2023): 80. previous paragraph, the insolvency law based its regulations towards the idea of protecting the creditors' debt-claim.As such, all of the debtor's assets are regulated to be added to the asset pool that will later be liquidated and distributed to all creditors by the of stay".As there is the lex specialis derogat legi generali 15 M. Hadi Shubhan, Hukum Kepailitan: Prinsip, Norma, dan Praktik di Peradilan, (Jakarta: Sinar Grafika, 2009), 172.principle, in case of an insolvency the creditors must obey the "period of stay" rule.They may use their right to sell the collateral after the period of stay is over, within the timeframe of two months and only through the process of auction.Once the time reaches its limit, the execution right is automatically taken from the creditors and given to the curator(s) in charge.The philosophy of this regulation is to avoid the creditors selling the collateral with lower-than-market price just to fulfill each of their own debt-claims while neglecting the other creditors, especially the unsecured creditors and in certain situations the unpaid workers. 16 , Vol. 18 Issue 1 (Jan 2023): 265-274. 40B. Haryantho, M. Hadi Shubhan, & M. M. Zaidun, "The Principle of Solvency as Consideration for Judge in Solving protection for debtors with good faith and honesty against their creditors is also its equally important objective. 40Insolvency verdict made by the judges in court can be done towards debtors who complies with the conditions to request it in Article 2 paragraph (1) Indonesia Insolvency Law, which regulates two conditions: a.That the debtor must have at least 2 (two) creditors; and b.That the debtor has become default to at least one of the credit agreements, and said credit agreement has gone past the promised repayment's due date.
they own.44These rights are passed to the curator(s) that are chosen as stated in the court's verdict, under the surveillance of the supervising judge.45The right to make legal agreements under the company's name is also under the curator(s) list of abilities given by the Indonesia Insolvency Law, while keeping in mind that the actions must be for the best of the debtor-mainly an increase of the insolvent assets pool.Secured creditors during the division of insolvent assets have the highest priority.This means that during the division by the curator, secured creditors are first in line.The second priority goes to the preferred creditors that had this position given by the law.The last priority is given to the unsecured creditors and will receive their share based on pari passu pro rata parte.the wages are crucial for the workers' daily lives it is then put first and foremost.This is limited to only the workers' wage and does not include the workers' insurance and other bonuses.Once the process of insolvency has reached the endproven by the finished action of liquidating the debtor's insolvent assets, dividing the sum based on each unpaid credits and other obligations, and sending out the portions to all creditors listed in the accounts receivable list-if the debtor is willing to continue their 46 Shubhan, Hukum Kepailitan: Prinsip, Norma, 145-146.

First
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