LEGAL ANALYSIS ON THE DEBT TO EQUITY CONVERSION IN SUKUK IJARA DEFAULT: A CASE STUDY OF THE DEBT RESTRUCTURING IN PT BERLIAN LAJU TANKER TBK

Abstract

Indonesia has been projected as the future largest market of Islamic finance. Since its incorporation of first Islamic institution in 90s, the government keeps being productive in preparing comprehensive legal frameworks to meet the market needs. However, the dispute settlement provision might have been missed the authority, causing uncertainty in the dispute in Islamic finance. The first Sukuk Ijara default in Indonesia has drawn attention of Islamic financiers in the world. On the institutional level, various organization are addressing the issue, there are also tendencies towards standardization of Islamic debt restructuring. This phenomena are combining many aspects of law substance, culture and structure in many jurisdiction to for a new legal system, albeit one with particular characteristics. This system has matured sufficiently to merit categorization as a separate field of bankruptcy, insolvency and debt restructuring: a standard of debt to equity conversion in Islamic finance. Therefore, to provide certainty in the Islamic finance specifically in the dispute settlement is integral, should be incorporated to meet the market needs.