THE STANDINGS OF TAX RECEIVABLES IN BANKRUPTCY CASES: A STUDY ON MANAGING AND SETTLING ASSETS

Article Info Abstrak Received : 10/11/2021 Approved: 28/12/2021 DOI: 10.24815/sklj.v5i3.23347 The state's privilege right to tax receivables in bankruptcy cases is regulated differently under various laws and court decisions in Indonesia. In general, tax receivables in bankruptcy have privilege position over other creditors, including secured creditors such as banks, mortgage holders, fiduciary guarantees and finance companies, preferential creditors and concurrent creditors. The creditor’s tax debt to the state should be paid first before any payment to other creditors. However, the Director General of Tax under the Ministry of Finance of the Republic of Indonesia often faces problems in claiming the payment as the Ministry claims for the payment are always rejected by the Court. Each of the existing legal rules and decisions provides different answers to this problem, resulting in legal uncertainties. This research is conducted using the normative juridical approach and supported by the empirical analysis. The data collection is conducted by document studies and supported by court decisions. This research aims to inquire and analyse the position of tax receivables in the distribution of bankruptcy estate of debtors among other creditors, the role of the curators, both state and private curators, in the bankruptcy estate distribution in order to find a legal solution to the aforementioned issue according to the normative legal provisions that apply.


I. INTRODUCTION
The term "bankruptcy" originates from the Latin words bancus and ruptus, which means "bench or table" and "broken" respectively. This is said to arise from the inability of a banker, who in the beginning transacted his business in the marketplace on a workbench, to meet his contractual obligations. Symbolically, his bench is considered broken. The term is also believed to have roots in banco rotto, from medieval Italy, roughly translated to mean "broken bank." Similar speculation on the original word is ascribed to the French expression banque route, a metaphorical practice of leaving a sign at the site of an abandoned banker's table. Under the Islamic tradition, the Quran provides an opportunity for the debtor to be given time to offset his debts. The second chapter, Sura Al-Baqara, verse 281 provides that: "And if someone is in hardship, then let there be postponement until a time of ease. But if you give from your right as charity, then it is better for you, if you only knew". Onayoka and Ayooluwa Eunice Olotu, 2017;706). Bankrupt by definition is the state or condition of a person (individual, partnership, corporation, municipality) who is unable to pay its debts as they are, or became due. The term includes a person against whom an involuntary petition has been filed, or who has filed a voluntary petition, or who has been adjudged as bankrupt. Bankruptcy by definition is a statutory procedure by which a debtor obtains financial relief and undergoes a judicially supervised reorganization or liquidation of the debtor's assets for the benefit of creditors. (Bryan A. Garner, 2009;166).
Bankruptcy is an entitlement distribution system involving the distribution of a given asset, which is inadequate to meet and satisfy all the creditors' demands. Indeed, claims recovery may not be achieved by all creditors when a company becomes bankrupt because the assets are insufficient to satisfy all the demands. (Gary Sullivan, 2018;708).
Bankruptcy, at first glance, may be thought of as a procedure geared principally toward relieving an overburdened debtor from "oppressive" debt. (Thomas H. Jackson, 1982;857). However, bankruptcy has broadly failed to deliver "fresh starts" to debtors. Too often, debtors return to the states of financial distress following the bankruptcy. Although bankruptcy delivers a clean slate through the discharge of debts, the efficacy of a fresh start depends on a second factor: property exemptions. While discharge frees a debtor from his existing debts, property exemptions determine what property the debtor retains upon exiting bankruptcy. For many debtors, insufficient and suboptimal property exemption laws undermine fresh starts. (Gary Sullivan, 2018;335).
A central notion in bankruptcy theory is the distinction between economic and financial distress. Economically and financially distressed firms alike face unsustainable debts, but the significance of their debts differs. A company in economic distress lacks a viable business model. The demand for its products or services is insufficient to cover costs at anything like the current scale. (Vincent S.J. Buccola, 2019;838).
Tax is part of public law in which the State has a coercive authority. All citizens who are qualified taxpayers must fulfil the obligation to pay taxes. (Sri Pudyatmoko, 2009;65 In many cases, the portion of tax debt may exceed the liquidated bankrupt estate. If the payment of tax debt takes precedence, it may not be favourable to other creditors because they might not get a share to cover the receivables out of the liquidated estate. This is not in line with the philosophy of the bankruptcy law and the resolution of debts.
Tax debt is a bill that arises based on the General Taxation Law. This law gives tax officials special authority to carry out direct executions of tax debts without going through Court proceedings.
Tax collection in Indonesia is carried out by the Directorate General of Tax through the Tax Service Office (Kantor Pelayanan Pajak or hereinafter referred to as "KPP").
In practice, a lot of unequal understanding of Commercial Court decision is found in this regard. Another problem related to the implementation of separation rights when it is attributed to tax collection rights, where there is often legal uncertainty in its application where there is disparity between amount to be paid between the tax debt and the wage of workers. This happens because of the inconsistencies in the Tax Law and the Law on Manpower. (Rahayu Hartini, 2018;75).
KPP often faces problems in claiming the payment of tax receivables in bankruptcy proceedings. The Ministry of Finance claims for tax payment are often rejected by the Court. This is because of the existing legal rules and court decisions which provides different answers to this problem, resulting in legal uncertainty. Such legal uncertainty results in a dilemma for curators on the creditors that must be prioritized among other preferred creditors who also have a legal claim for bankruptcy payments.
This research will look at how bankruptcy itself is understood, who holds the rights within the company's assets, how it is managed in Indonesia, what is the government standing against a bankruptcy case, and the effect of Indonesia Commercial Court decision.

II. RESEARCH METHOD
According to the perspective of legal theory, the science of law is divided into normative law and empirical law. The positivist view creates empirical law, while the normative view creates normative law. Thus, the study of law can be conducted normatively and can also be conducted empirically, each of which has different characteristics and methods. A research method is a procedure and technique to answer the research problems. Therefore, the use of the research method is always adapted to research needs. (Asmuni, Kurniawan and Eduardus Bayo, 2019;255).
This research uses the normative juridical approach supported by the empirical juridical approach. Based on the strength that binds it, legal material can be qualified as primary, secondary, and tertiary legal resources.
The primary legal resource is binding legal material obtained from the inventory of laws in Medan commercial court rulings on bankruptcy, which are gathered by document studies, the purpose of which is to gather the secondary data. The secondary legal resource is a legal material that explains primary legal resources such as books, research findings, scientific journals, and articles. Secondary legal resources in the form of books, scientific journals, and other articles were identified throughout the research both online and offline.
The tertiary legal resource is a legal material that can provide guidance and explanation of primary and secondary legal resources such as legal dictionaries, encyclopaedias, and the Black's Law Dictionary, etc.
The empirical data gathering is used to receive primary data which was gathered directly from the respondent by conducting questionnaires and interviews.
After legal resources have been collected, they are then processed through: structuring, describing, systematizing and analysing the legal resources like the common legal research; i.e.
through legal reasoning processes that are logical, systemic and coherent by abstracting the laws and regulations relating to the regulation of bankruptcy and tax receivables. The method of analysing legal resources in this research is a normative method in prescriptive optics with deductive-inductive reasoning to produce propositions or concepts in response to the problems or research results or findings.

Bankruptcy and the Legal Implication
Bankruptcy is a device provided by law to settle debts between debtors and their creditors.
(Jerry Hoff, 2001;230). It has become a central feature in society. Bankruptcy law is deliberately designed to distribute assets-and losses-when a business cannot meet its outstanding obligations.
A bankruptcy system has the ability to capture the going-concern value of a business; for many analysts, the function of bankruptcy and the measure of its viability begins and ends here. This feature is undoubtedly a significant part of the bankruptcy scheme, but the opportunity to preserve the full value of the business has broader implications than simply capture of going-concern rather than liquidation valuations. (Elizabeth Warren, 1993;350).
Good corporate management will have an impact on the progress of the company and its ability to meet its obligation timely. However, when a company experiences a setback, it can result in delay in returning the loan so that the creditor can file a bankruptcy application. For instance in Indonesia, Bankruptcy law has been in existence, although intermittently, for almost as long as credit. Its origins can be traced back to Roman Era where its name is derived from statutes of Italian city-states, where it was called banca rupta after a medieval custom of breaking the bench of a banker or tradesman who absconded with the property of his creditors. (Treiman, 2010;232).
In the course of its development, the Bankruptcy Law has become necessary in the business world for selecting businesses that are not effective, as companies that are not efficient can potentially affect the national economy and pose a burden on the economic system itself. It leads to an on-going process of business for social benefits and the existence of business continuity. (Treiman, 2010;189).
Once a company is in financial distress, individual creditors have an incentive to rush to enforce their claims against the company's assets to be paid out before further distribution. If this happens, the company will be broken up piecemeal. This prevents two things from happening. First, it prevents the creditors from agreeing to restructuring or a new deal amongst them, so that the company can continue to trade. (Sarah Paterson, 2015;697). Secondly, where restructuring is not in prospect, it prevents the business from being sold as a whole or as a going concern, notwithstanding that this would be likely to attract a higher price than a piecemeal realization of the individual assets. (Michelle M. Harner, 2015;510).
In general, bankruptcy laws aim to secure equitable division of the insolvent debtor's property among all his creditors and to prevent the insolvent debtor from malicious dealing with the asset in detriment to in detriment to the interest of his creditors. (Louis E Levinthal,2015;510). Many still consider bankruptcy as something that must be avoided. On the contrary, it can release debtors from most debts, provide relief, and allow them to make a fresh start. In other words, bankruptcy provides a solution.
For instance, the fresh start philosophy of US bankruptcy law, which embraced a more forgiving attitude, focusing on the reintegration of the insolvent debtor into society, substantially free of debt, after he has filed for bankruptcy and surrendered his non-exempt property for distribution among his creditors. (Jacob Ziegel, 2006;299 Dion and Barbara Curatolo, 2018;198).
The nature of the general bankruptcy confiscation is to stop the action against the seizure of bankrupt estate by creditors and to stop the traffic of transactions involving bankrupt estate by debtors that might harm creditors' repayment. (Hadi Subhan, 2009;164). Immediately after the bankruptcy decision is read, the bankrupt debtor is no longer authorized to administer any kind of legal actions regarding his assets included in the bankruptcy. Under the law, the authority or capacity to manage the assets is transferred to the curator assigned by the court. (J. Andy Harianto, 2015;74). On some occasions controversy rather focuses on the extent to which, and the way in which, corporate bankruptcy law should concern itself with how value is distributed or how the pie is shared. (Elizabeth Warren, 1987;775).
Investors losing their money, creditors not being given their money in full, suppliers brought into bankruptcy, the government not being able to receive due tax revenue, and employees losing their Thus the purpose of all corporate bankruptcy law is to impose a stay or a moratorium to prevent creditors from taking individual enforcement action to 'grab' assets so that the business can either be restructured or (and) its assets sold. (Thomas H. Jackson, 1990;857). The basis of those avoiding powers is to protect the advantages of bankruptcy's collective proceeding. It is important to consider the trustee's power to assert the rights of a "hypothetical" lien creditor the so-called "strong-arm" power. The creditors' bargain rationale for bankruptcy's collective and compulsory proceeding clearly explains the basic role of that power. (Thomas H. Jackson, 1984;732).
In bankruptcy, the law acknowledges 3 types of creditors; separatist or secured creditors, preferred creditors, and concurrent creditors. (Imran Nating, 2005;43). Separatist creditors are creditors who hold material security rights, which can act on their own without being affected by the debtor's bankruptcy. The execution rights of the separatist creditor can still be exercised as if there is no debtor bankruptcy. Separatist creditors can sell their own. The debtor takes the proceeds of the sale as much as his receivables and deposits the remaining into the bankruptcy estate. A creditor whose interests are secure by any rem right is usually entitled to cause the foreclosure of the collateral, without judgment, to satisfy his claim from the proceeds with priority over the other creditors. The  If capital is withdrawn from businesses that are failing and redeployed in businesses that are succeeding, it is expected that other benefits in terms of jobs and prosperity will accrue to the economy. On the other hand, the concern is that if corporate bankruptcy law pursues the protection of jobs as an independent objective, capital may continue to be deployed in less-efficient producers in the economy. (Thomas H. Jackson and David A. Skeel Jr, 2013;29).
Bankruptcy law, moreover, because it affects all areas of the legal landscape, adjust rights among creditors and other owners. Similarly, it interface with labour law, environmental law, and tax law to secure creditors and other property claimants. (Thomas H. Jackson, 1986; 2).

Taxpayers' Obligation to Pay Taxes
Taxes can be interpreted as a source of funds for a country to overcome problems such as social issues, welfare improvement and national prosperity. It is a social contract between the government and its citizens. (Asrinanda and Yossi Diantimala, 2018;540).
To understand the fact that taxes from the state binds its nationals to pay their taxes, the 1945 Law. In the elucidation, it is stated that all actions that place a burden on the people, such as taxes and others must be determined by law i.e., with the approval of the parliament.

Tax Debt in Bankruptcy Proceedings
Prominent theories of bankruptcy support the claim that state governmental entities should not be treated as private parties in bankruptcy. If bankruptcy law should generally respect the property rights and entitlements created under non-bankruptcy laws, states will inevitably enjoy a broad power to define their entitlements in bankruptcy. (Adam Feibelman, 2003;185). precedence, orderly exercise of such rights, is regulated in various special laws regarding it ". (Rahayu Hartini, 2018;76).
Article 21 of the General Taxation Law states that the state has a privileged right to goods belonging to the taxpayer based on a tax debt. The elucidation of the article explains the position of the State as preferred creditors which are declared to have privilege rights to the goods owned by the taxpayer to be auctioned in public. Payments to other creditors are settled after the tax debt is paid.
The privilege rights, which cover the principal tax, interest, administrative penalties, increases, and billing fees, exceed all kinds of preferential rights. The law further stipulates that in the event of taxpayer's bankruptcy, dissolution or liquidation, the curator, liquidator, or person or body assigned to do the settlement is prohibited from distributing the taxpayer's assets in bankruptcy, dissolution or liquidating to shareholders or other creditors before using the asset to pay the tax debt. The same arrangements are also stipulated in the Law on Tax Collection by Force Letter.
This is in line with Article 1134 paragraph (2) of the Civil Code that regulates the privilege right based on the law that provides the holder a higher level and privilege right over other creditors.
Articles 1139 and 1149 regulate the exceptions to this privilege right, including court fees and execution costs. The exception is logical because the incurring legal costs are necessary for the first act to save the debtor or taxpayer's assets. (Titik Tejaningsih, 2016;128).
Although the law has established the State's position as a preferred creditor in connection with tax debt, in practice there is still legal uncertainties. In some cases, KPP had to file Judicial Review to the Supreme Court in connection with the debtor's tax debt not fully paid by the bankruptcy curator.
For example, Supreme Court Decision No. 015 K/N/1999 ruled that KPP was not considered as a creditor in the bankruptcy proceedings. This is due to the fact that: (Susanti Adi Nugroho, 2018;198) 1. The Law No. 9 of 1994 mentioned that KPP shall enjoy the authority of executing the tax debt directly without any intervention from the Court.
2. The tax debt has to be executed outside the bankruptcy proceedings; this is because according to the court decision, the KPP enjoys a special right in executing tax debt. When past its deadline and yet to be paid in full, tax debt collection needs to follow certain measures namely: (Billy Ivan Tansuria, 2010; 294)

Warning Letter
Tax debt collection is carried out firstly by issuing a warning letter by an official. The warning letter will not be issued if the tax bearer has agreed to pay in instalments or delayed its tax payments.

Force Letter
As mentioned above, force letter, issued by an official and notified by a tax bailiff to the tax bearer will be issued if the amount of tax is yet to be paid and it is overdue by 21 days since the warning letter was issued.

A warrant for Confiscation (SPMP)
A warrant for Confiscation is issued by officials if a debt is overdue by 2 x 24 hours since the force letter was issued to the tax bearer and the amount of tax debt was also yet to be paid in full. According to SPMP, the tax bailiff will conduct the seizure of the tax bearer's property.

Auction Announcement
The auction announcement will be conducted by officials if by the period of 14 days, after the confiscation of property, the tax bearer has yet to pay the tax debt and the tax collection fee in full. The auction announcement for a movable object will be conducted once, while for the immovable object, the auction announcement will be conducted twice.

The Sale of Confiscated Property
The Sale of tax bearer's Confiscated Property will be conducted by the officials through the state's auction office if the tax bearer failed to pay the tax debt and the tax collection fees after 14 days since the Auction Announcement was announced.

IV. CONCLUSION
Tax has a very important role in the implementation of State or government functions.
Outstanding tax payments are important as a source of state revenue to be used to finance development and efforts to improve people's welfare. Laws and regulations have stipulated that the State has privilege rights for the payment of tax debt from taxpayers. In the case of taxpayers' bankruptcy, these rights precede all kinds of payment claims from the bankruptcy estate. However, this regulation has not become a strong legal basis as can be seen in the existing decisions. The amount of fund paid and received by the State for the payment of tax debt is by far much less than the actual amount. The ruling of the constitutional court regarding the position of the employee's claim on wages and other unpaid rights further weakens the position of the State as a creditor with privilege rights. This has resulted in legal uncertainties in debt settlement through a bankruptcy mechanism.
The government needs to revise and synchronize existing laws to reposition and clarify the status and standings of each party who has the right to claim payment on bankruptcy cases.