INSURANCE COMPANY’S BANKRUPTCY FILING REGULATED BY OJK

The Financial Services Authority or OJK introduces the Regulations on Dissolution, Liquidation and Insolvency of Insurance Company, Sharia Insurance Company, Reinsurance Company, and Sharia Reinsurance Company pursuant to oJK Regulation Number 28/ PoJK.05/2015 dated December 11, 2015 (“POJK 28/2015”).

In this regard, creditors who consider an insurance company meet the bankruptcy requirements under the Bankruptcy Law may submit an application to OJK in order for the authority to file a request for a bankruptcy statement to the commercial court.

Filing of bankruptcy by creditors

Applications are made in writing by creditors to OJK by including at least the following:

a. the identity of the creditor, at least including the full name and address of the creditor;

b. the name of the company being requested to be declared bankrupt by the commercial court;

c. a description of the basis of the petition:

1. the authority of the commercial court;
2. creditor’s legal position containing a clear description of the creditor’s right to apply; and 3. the reasons for the petition for declaration of bankruptcy are clearly and detailed;

d. the items being petitioned for; which is addressed to the Chairman of the Board of Commissioners of OJK with a copy directed to the Chief Executive of the Insurance Supervisor, Pension Fund, Financing Institution, and Other Financial Services Institution OJK.

Evidence of bankruptcy

The proof of application for bankruptcy statement from the creditor, other than in writing, shall be filed in a compact disk (CD) format, containing at least the following:
a. Proof of creditor’s ID
b. Letter or written evidence

relating to the reason for the

request
c. List of witness and/or expert

candidates with a brief summary of the reasons for the petition, and a statement willing to attend the hearing, in the event that the creditor intends to present witnesses and/or experts; and

d. List of other evidences, they can be information in or sent through electronic media, if required

Time frame of bankruptcy petition

OJK approves or refuses the application within 30 days from the date the file is received completely. If the documents are incomplete, the creditor is obligated to complete them within 10 days from the date of receipt of the notification, and shall be terminated upon such period.

The consequences of bankruptcy petition
As long as the bankruptcy decision has not been pronounced, OJK may apply to the court to:
a. Puts securitization against some or all of it corporate wealth; or b. Designate the curator (BHP or other curators) to monitor:

1. The business management; and
2. Payments to creditors, transfers, or the use of company’s wealth as the collateral that in the case of bankruptcy is the authority of the curator.

Follow-up at the end of bankruptcy
the rights of the policy holder, the insured, or the participant have the highest position on the distribution of funds from the bankrupt assets of the company so they should take precedence.

If funds are inadequate, payments are made proportionately. However, if there is an excess, funds may be used for those entitled to insurance benefits, other than the above three parties.

-TWK-