Reformulating the Fresh Start Principle in Indonesian Bankruptcy Law for Small and Medium Enterprises (SMEs) to Ensure Business Continuity

DOI

10.2991/978-2-38476-519-5_9How to use a DOI?

Keywords

Bankruptcy law; Business continuity; Comparative law; Fresh start; SMEs

Abstract

The Fresh Start principle in bankruptcy law embodies an approach that grants debtors a second chance to continue their economic activities after insolvency, while safeguarding legal certainty for creditors. In Indonesia, Law No. 37 of 2004 on Bankruptcy and Suspension of Debt Payment Obligations has not fully addressed the specific needs of Small and Medium Enterprises (SMEs), which are crucial for the national economy yet remain vulnerable to debt risks. This research seeks to reformulate the Fresh Start principle within the Indonesian context through a functional comparative study of the United States, Singapore, and Germany. The findings highlight the relevance of the U.S. Subchapter V progressive discharge, Singapore’s Simplified Insolvency Programme (SIP), and Germany’s Restschuldbefreiung with its minimum asset protection, which can be selectively adapted to Indonesia. The reformulation is anchored in the Theory of Legal Certainty and the Theory of Law and Development, while aligned with the principle of social justice rooted in Pancasila. Based on this framework, the study proposes a conceptual roadmap that includes simplifying PKPU procedures for incorporated SMEs, inserting a special chapter on “SME Bankruptcy” into the law, ensuring regulatory harmonization across financial sectors, and establishing post-bankruptcy rehabilitation schemes to reduce stigma and secure business continuity. A contextual application of the Fresh Start principle is expected to foster a more inclusive bankruptcy regime, enhance SME resilience, and support sustainable national economic growth.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Sherly Nelsa Fitri
AU  - Emmy Latifah
AU  - Kukuh Tejomurti
PY  - 2025
DA  - 2025/12/29
TI  - Reformulating the Fresh Start Principle in Indonesian Bankruptcy Law for Small and Medium Enterprises (SMEs) to Ensure Business Continuity
BT  - Proceedings of the 3rd International Conference on Law, Economics & good Governance (ICLAW 2025)
PB  - Atlantis Press
SP  - 93
EP  - 116
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-519-5_9
DO  - 10.2991/978-2-38476-519-5_9
ID  - Fitri2025
ER  -