BANKRUPTCY DISPUTES IN CAPITAL MARKET INVESTMENT CONTRACTS: LEGAL MECHANISMS, ECONOMIC IMPACT, AND THE ROLE OF REGULATORS
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Abstract
This normative legal study examines bankruptcy disputes within capital market investment contracts, focusing on the legal mechanisms, financial impacts, and regulatory intervention. Employing a qualitative literature review, the research analyses primary regulations including the Bankruptcy Law, the Capital Market Law, and the OJK Law. The findings reveal that bankruptcy proceedings fundamentally alter investor rights, subordinating shareholders and categorizing bondholders within a strict statutory claims hierarchy. The economic impact of an issuer's bankruptcy is severe, causing sharp price dislocations, evaporation of liquidity, and contagion of risk perceptions that threaten broader market stability. The Financial Services Authority (OJK) plays a critical yet circumscribed role, exercising oversight, enforcement, and coordination powers to mitigate systemic risk, while the Commercial Court retains exclusive authority over the bankruptcy process itself. The study concludes that the intersection of bankruptcy and capital market law creates a complex dispute landscape where investor recovery depends heavily on legal claim priority and regulatory effectiveness. It highlights the need for enhanced inter-agency coordination, robust early warning systems, and clearer resolution frameworks for non-bank financial institutions to manage failures efficiently. The research contributes to the academic discourse on business law and offers practical insights for regulators, investors, and corporate managers navigating bankruptcy risks in the capital market.
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