Legal Analysis of Debt Conversion into Mandatory Convertible Bonds in Credit Restructuring

Abstract

This study aims to analyzes the Supreme Court's legal considerations in Decision Number 2555 K/Pdt/2025 regarding the conversion of PT Bank DKI's debt into Mandatory Convertible Bonds (MCB) by PT Waskita Beton Precast, Tbk. as a credit restructuring instrument. The main problem of this study is how the Supreme Court considerations on debt conversion validity and MCB limits for banks under prudential banking principles. This study uses a normative juridical method with a statutory regulatory approach, a conceptual approach, and a case approach to the series of decisions related to the PKPU (Subsidiary Suspension of Payment) process, homologation, and Decision Number 2555 K/Pdt/2025. The results show that the Supreme Court considers the debt conversion into Mandatory Convertible Bonds to be a legitimate form of credit restructuring based on three main considerations: the binding force of the homologated peace agreement, compliance with credit restructuring regulations, and the failure to fulfill the elements of an unlawful act. However, the ruling leaves unresolved the distinction between corporate legality and banks’ prudential compliance. This study concludes that the legality of converting debt into Mandatory Convertible Bonds must comply with bankruptcy law, corporate law, banking prudential principles, and information disclosure to provide comprehensive legal certainty.