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Indonesian Bankruptcy Law
In early 1995, a, meeting took place in a conference room of one ofrnHong Kong's leading hotels to complete the final negotiations for Indonesia's first independent power project. This project had as its aim the construction and subsequent operation of a 1200 Mw power utility in East Java. Present in the meeting were the usual players: representatives of multilateral agencies, bankers, sponsors and lawyers. The meeting was focusing on the type of security and collateral to be provided to the lenders of this US$ 2 billion project.. The security consisted of government support letters, the types of collateral commonly demanded by lenders such as mortgages on property, fiduciary assignments of receivables and irrevocable powers of attorney to control and dispose of goods and chattels.rnThe parties discussed the consequences of a possible insolvency of the project-company, mainly in view of whether or not further support or comfort should be demanded from the Government of Indonesia and the off-taker of electricity. Realising that this type of issue could very well arise, local Indonesian counsel had conducted some research as to the possible impact of the Indonesian Bankruptcy Ordinance and in particular the frequency over the past few years of applications filed in the Indonesian courts for the bankruptcy of commercial enterprises.
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