Legal responsibility for developers of flats filed for bankruptcy in the perspective of SEMA number 3 of 2023

Abstract

This paper discusses the legal position of flat developers who have two or more creditors and are unable to fulfill their obligations to pay debts that are due. Under the provisions in the Bankruptcy Law, a debtor who is unable to pay its debts that have matured may be declared bankrupt by a court decision, provided that the requirements outlined in Article 8 paragraph (4) are fulfilled, namely, that the debt is directly provable. If the debt can be simply proven, the court is obliged to grant the bankruptcy application. However, the Supreme Court has adopted a policy in the form of a circular providing guidance. In particular, Supreme Court Circular No. 3 of 2023, in subparagraph (2) of paragraph 2 of letter B, states that bankruptcy or suspension of debt payment applications against unqualified developers cannot be categorised as cases supported by mere evidence. This research employs normative legal methods using a statute-based approach. The findings of the study indicate that a Supreme Court circular has a lower hierarchical position than a law, and its legal force depends on its compliance with the law. Therefore, if a circular is found to be contrary to higher law, it may be invalidated and any decision based solely on such a circular may be appealed. In practice, developers or debtors who fail to meet their obligations to creditors will have their assets treated as bankruptcy estate, distributed based on the principle of equal treatment among creditors. Ultimately, this paper concludes that bankruptcy law remains the most efficient legal solution due to the simple mechanism of proof it offers, and that the Supreme Court circular letter has no authority to override the law as established by statutory law.