Monday, August 16, 2021 - 10:01


The Asian Business Law Institute discusses with Emmanuel Chua, Local Principal of Baker McKenzie Wong & Leow, about the significance of the recognition of a Singapore moratorium by an Indonesian court in an ongoing restructuring exercise.


Emmanuel Chua



On 27 July 2021, the Central Jakarta District Court issued an order recognising the moratorium granted by the Singapore High Court in June 2021 in relation to the restructuring of Indonesian conglomerate PT. Pan Brothers Tbk, possibly a first by any Indonesian court. The Asian Business Law Institute (ABLI) discusses with Emmanuel Chua, Local Principal of Baker McKenzie Wong & Leow who is advising the debtor in this matter, about the significance of this landmark decision.


ABLI: The restructuring of PT. Pan Brothers, which is ongoing, has so far involved you helping the debtor obtain a moratorium from the Singapore High Court under section 64 of the Insolvency, Restructuring and Dissolution Act. Is the "in personam" nature of the moratorium what makes it particularly attractive?

Emmanuel Chua (EC): The "in personam" nature of a Singapore moratorium is an elegant response to a perennial issue: ensuring that foreign jurisdictions recognise an order of a domestic court, even one expressed to have extra-territorial scope. The current formulation reflects the input of the Committee to Strengthen Singapore as an International Centre for Debt Restructuring, which recommended that the appropriate balance be struck by having the order bind persons having sufficient nexus to Singapore, such as to invoke the jurisdiction of the Singapore courts.

Singapore is a leading global and Asian financial centre, with most of the world's major financial institutions having a presence here. This, together with the in personam nature of a Singapore moratorium order, means that the Singapore moratorium will often be able to bind a significant number of creditors in a major restructuring exercise.

ABLI: The recognition of the moratorium by the Indonesian court in essence prevents any creditor from filing any PKPU (or suspension of debt payment obligations) proceeding against the debtor in Indonesia, whilst the Singapore moratoria orders are in place. Were you pleasantly surprised at being able to obtain the recognition, especially since Indonesia is neither signatory to the Model Law on Cross-border Insolvency nor party to any cross-border insolvency cooperation network such as the Judicial Insolvency Network?

EC: The Indonesian decision is certainly very welcome. Essentially, as we understand the decision, the court recognised that the petitioning creditor was prohibited by way of the Singapore moratorium from commencing proceedings in Indonesia. At the same time, the Indonesian court also took the view that, because of the Singapore moratorium, the application did not satisfy the requirement that the debt be a "simple case", which is a pre-requisite for the commencement of PKPU proceedings in Indonesia. It also highlighted the risk of overlapping proceedings and findings in Singapore and Indonesia.

This decision demonstrates the pragmatism of the Indonesian courts and the ever-growing sophistication with which they deal with proceedings with a cross-border element. In the sphere of cross-border restructuring in particular, the awareness of, and support for, the concept of modified universalism is key. This in turn lends to greater confidence on the part of investors and debtor entities alike.

ABLI: This recognition is arguably even more significant because as a principle, Indonesia does not recognise and enforce any foreign judgment. Would you be bold enough to say this recognition may signal some relaxation in the attitude of the Indonesian courts towards judgments in commercial matters?

EC: This decision was fairly fact-specific and made in the context of a cross-border restructuring proceeding. I would therefore be hesitant to say that it necessarily heralds a shift in the attitude of the Indonesian courts in relation to foreign judgments in general. Further, Indonesia being a civil law country, its courts are not bound by previous decisions.

That being said, this decision clearly shows that the Indonesian courts are well equipped, and will not hesitate, to thoroughly examine and grapple with issues relating to parallel cross-border proceedings and issues of comity.

ABLI: The Singapore moratorium has now been recognised in at least two foreign jurisdictions (including under the now repealed section 211B of the Companies Act). Do you expect this to further enhance Singapore's appeal as a regional restructuring hub for foreign companies?

EC: This is certainly a welcome decision for the "enhanced" Singapore restructuring regime, which is still fairly new in the larger scheme of things considering that the sweeping changes incorporating elements of US Chapter 11 were only introduced in 2017. The fact that the moratorium has been expressly recognised in at least two key foreign jurisdictions can only be positive from the perspective of potential user confidence. In fact, at the time of writing, we understand that the courts of a third jurisdiction - Brazil - has recognised a moratorium order made by a Singapore court.


More about the recognition of the moratorium order by the Central Jakarta District Court could be read here. More about the corporate restructuring regimes in Indonesia and Singapore can respectively be found in Corporate Restructuring and Insolvency in Asia published by ABLI in 2020 here.

ABLI continues to monitor the progress of PT. Pan Brothers Tbk's restructuring exercise.