Secured Financing in Indonesia
Pledge A pledge is a security right in rem . A pledge (in Dutch term: “ pandrecht ”) is security over moveable assets to secure a specified debt, granting the pledgee priority over other creditors in respect of that asset. In this regard, if the borrower/pledger goes bankrupt, the pledgee/lender, is still entitled to exercise his rights under the pledge as if there was no bankruptcy. Another principle of pledge under Indonesian law is that a pledge gives the pledgee a preference right over other creditors by permitting the repayment of a debt from the sale proceeds of the pledged object. Accordingly, it is not lawful to agree in the pledge agreement that the pledgee will become the owner of the pledged goods in the event of default on the part of the debtor. Any agreement to that effect is null and void. Pledged assets are subject to “ droit de suite ”. In this regard, the pledgee may exercise its rights against the pledged property even ...