Rethinking Indebtedness according to the Principles of Justice and Equality

Main Article Content

Suwinto Johan
https://orcid.org/0000-0002-8427-162X
Amad Sudiro
https://orcid.org/0000-0002-9481-8983
Ariawan Gunadi
https://orcid.org/0000-0002-1141-4394
Yuan Yuan Luo
https://orcid.org/0000-0001-5294-3594

Abstract

The law's objective is to uphold the principle of justice. Contractual debts, interest-bearing debts, unsecured debts, and debts with payment terms are all included in restructuring plans. All debts must be accompanied by a contract. If the business defaults, the contract serves as proof of debt. This research focuses on Indonesia's bankruptcy law. This study employs an empirical qualitative legal method.  The study recommends categorizing debt according to its source, duration, function, and collateral. Debts classified as restructuring must waive their collateral rights. This debt grouping is consistent with finance's capital structure theory. This research will revolutionize the current concept of debt restructuring. The study will serve as a resource for all business actors who have documented debt. Debt is uncommon in developing countries such as Indonesia. Entrepreneurs in developing countries have established business relationships based on mutual trust. The study's limitation is that it does not take industry type into account. Additionally, this research has implications for a firm's total cost of capital as a result of changes in the risk model and creditor roles, particularly in developing countries. This study proposes a system of debt classification based on principles of justice and equity. This classification is made not only on the basis of the guarantee's type, but also on the basis of the agreement's duration and financial principles. The purpose of this study is to examine bankruptcy law in developing countries. Knowledge of bankruptcy law will add value to investors and banks on a global scale.

Article Details

How to Cite
Johan, S., Sudiro, A., Gunadi, A., & Luo, Y. Y. (2022). Rethinking Indebtedness according to the Principles of Justice and Equality. Lex Scientia Law Review, 6(2), 443-478. https://doi.org/10.15294/lesrev.v6i2.55011
Section
Articles
Author Biographies

Suwinto Johan, Faculty of Business, President University

Suwinto Johan is a lecturer in the Business Faculty at President University, Indonesia. He has expertise in corporate restructuring. He also pursuing another bachelor’s degree Faculty of Law at Tarumanagara University.

Amad Sudiro, Faculty of Law, Tarumanagara University

Amad Sudiro is a Dean of the Faculty of Law at Tarumanagara University. He is also Professor at the Faculty of Law at Tarumanagara University. Professor Sudiro teaches alternative dispute resolution and legal research methods at Tarumanagara University's postgraduate program.

Ariawan Gunadi, Faculty of Law, Tarumanagara University

Ariawan Gunadi is the vice chancellor of Tarumanagara University. Ariawan Gunadi is a permanent lecturer and secretary of the Tarumanagara Foundation. Ariawan has expertise in business law.

Yuan Yuan Luo, China-ASEAN Legal Research Center, Southwest University of Political Science and Law

Luo Yuan Yuan is a research fellow at the China-ASEAN Legal Research Center, Southwest University of Political Science and Law, Yubei, Chongqing, People's Republic of China. Luo is interested in research related to ASEAN.

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