Legal Certainty of Banks’ Security Enforcement in Bankruptcy: Interpreting Article 59(1) of the Bankruptcy Law

Abstrak

Article 59 paragraph (1) of Law Number 37 of 2004 requires creditors holding security rights over assets to exercise their enforcement rights no later than two months after the commencement of insolvency. This provision creates difficulties for banks when the date of the bankruptcy declaration, the expiration of the stay on enforcement, and the commencement of insolvency do not coincide. This normative legal research analyzes the relationship among Articles 55, 56, 59, 60, 178, and 292 of the Bankruptcy Law through statutory, conceptual, and case-law approaches. The findings demonstrate that the two-month period is calculated from the commencement of insolvency rather than automatically from the date of the bankruptcy declaration. The time limit restricts the secured creditor’s authority to enforce the security independently but does not extinguish the bank’s preferential right to the proceeds from the sale of the collateral. Constitutional Court Decision Number 181/PUU-XXIII/2025 further clarifies the commencement of insolvency in bankruptcy proceedings arising from Suspension of Debt Payment Obligations (PKPU): insolvency takes effect when it is declared by operation of law by the supervisory judge at a creditors’ meeting and recorded in the minutes of the meeting. This article proposes the recording of a verifiable triggering date, written notification to creditors, and early coordination of auction procedures. It also proposes an amendment to Article 59 to expressly specify the enforcement actions that must be completed within the two-month period.