Reformulation of the Principles of Balance and Business Continuity in Indonesian Bankruptcy Law: Legal Protection for Debtors Acting in Good Faith and the Application of the Ultimum Remedium Principle in Bankruptcy Petitions

Abstract

This research examines the weak implementation of the principle of balance and the principle of business continuity (going concern) under Law Number 37 of 2004 concerning Bankruptcy and Suspension of Debt Payment Obligations (PKPU). The ease and simplicity of the requirements for proving a bankruptcy petition (easy-entry) frequently create opportunities for abuse by creditors, thereby undermining the protection of debtors acting in good faith who are otherwise prospective but merely experiencing temporary liquidity difficulties. This research aims to analyze the weaknesses in the current legal framework governing bankruptcy and to formulate legal policy reforms that accommodate debtor protection in order to achieve commercial justice. This research employs normative legal research, utilizing statutory, conceptual, and case approaches, particularly through an examination of Supreme Court Decision Number 1714K/Pdt.Sus-Pailit/2022 as a landmark decision. The research demonstrates that the current bankruptcy system remains imbalanced because it is overly oriented toward the liquidation of assets without requiring a condition of actual insolvency. Therefore, an ideal reformulation of bankruptcy law should expressly integrate an insolvency test and position bankruptcy proceedings strictly as a last resort (ultimum remedium). Such reform is urgently needed to provide proportional opportunities for business rescue, thereby ensuring a balanced and equitable resolution of debts while strengthening legal certainty.