18 Sep 2026
‘Denied by LPS? See You in Court’: New Commercial Court Procedures for Deposit Insurance and Bank Liquidation Disputes

On 28 April 2026, the Supreme Court promulgated Regulation of the Supreme Court No. 1 of 2026 on Guidelines for the Settlement of Bank Disputes in Liquidation and Post-Liquidation in the Commercial Court ("SC Regulation 1/2026") which came into effect on 13 May 2026. The regulation is intended to fill a procedural gap by establishing a dedicated framework for the handling of disputes involving banks whose business licenses have been revoked, including disputes arising from deposit insurance determinations by the Deposit Insurance Corporation (Lembaga Penjamin Simpanan or "LPS").

The issuance of SC Regulation 1/2026 reflects the increasing importance of legal certainty in bank resolution and deposit insurance matters following the enactment of Law No. 4 of 2023 on Financial Sector Development and Strengthening, as amended by Law No. 4 of 2026. The regulation aims to safeguard financial system stability, provide legal certainty for depositors whose deposits are declared ineligible for payment by LPS, and ensure disputes are resolved through a process that is fast, simple, and cost-efficient. In particular, the regulation introduces strict timelines, electronic case administration, virtual hearings, and a fast-track procedure for lower-value disputes. The new framework is relevant to banks, depositors, creditors, shareholders, directors, commissioners, liquidation teams, and parties dealing with bank assets or liabilities in a liquidation context. 

Exclusive Jurisdiction

One of the key features introduced under SC Regulation 1/2026 is the vesting of exclusive jurisdiction in the Commercial Court (Pengadilan Niaga) to adjudicate disputes concerning banks undergoing liquidation and post-liquidation banks, including disputes relating to deposit insurance. The scope of disputes involving banks in liquidation includes, among others:

• liquidation of assets and collection of receivables;

• transfers of assets and liabilities of banks in liquidation to other parties;

• cancellation of all legal actions of bank in liquidation that cause the decrease of assets or the increase of liabilities which are conducted within one year before its license revocation; and

• disputes relating to deposit insurance.  

For post-liquidation banks, the regulation also covers:

• claims against directors, commissioners, shareholders, or other parties whose actions contributed to the bank's collapse where liabilities remain outstanding after liquidation;

• disputes concerning residual assets and liabilities; and

• disputes concerning depository insurance.  

Formal Pathway for Challenging LPS Decisions

SC Regulation 1/2026 introduces a structured mechanism for customers wishing to challenge LPS decisions related to deposit insurance payments.

Under the regulation, LPS may declare a deposit ineligible for payment where, among other things, the deposit is not recorded in the bank's books, the depositor obtained an improper benefit, or the depositor contributed to the bank becoming unsound.  

A customer who objects to an LPS decision must first submit an objection, accompanied by supporting evidence, directly to LPS within 180 days from the announcement of the LPS decision. LPS must respond through a formal decision on the objection within 90 days. Only after receiving that decision may the customer bring the dispute before the Commercial Court, no later than 180 days from the date of notification of the LPS decision on the objection. The key timelines prescribed by SC Regulation 1/2026 are set out below:

The regulation also governs situations where LPS changes a deposit's status to “ineligible for payment” after the payment has already been made. In those circumstances, customers may challenge the revised decision through an objection process, while LPS is also empowered to seek recovery of payments through litigation before the Commercial Court if the customers do not voluntarily reimburse the payments.

Emphasis on Speed and Digital Proceedings

SC Regulation 1/2026 imposes strict procedural timelines. Commercial Court proceedings must generally be completed within 90 days from the date the panel of judges receives the case, subject to a one-time extension of up to 30 days. Cassation proceedings before the Supreme Court must likewise be resolved within 90 days. 

Claims must be filed electronically through the Court Information System (Sistem Informasi Pengadilan or "SIP"). The first hearing is conducted electronically, and documentary evidence is authenticated through a hybrid process combining electronic submission and verification against original documents. Witness and expert testimony may also be delivered remotely through audiovisual facilities. Judgments are deemed formally pronounced once uploaded to SIP.

Streamlined Rules for Deposit Insurance Litigation

To accelerate adjudication, the regulation introduces several procedural simplifications specifically applicable to deposit insurance disputes. When adjudicating deposit insurance disputes, judges must evaluate the claim against the statutory criteria governing eligible and ineligible deposits. The regulation also prescribes the minimum contents of a judgment, including declarations regarding the validity of the LPS decision, the status of the deposit, and orders directing either payment by LPS or reimbursement by the customer. 

The expedited procedure also applies to disputes regarding bank in liquidation and post-liquidation banks with a claim value not exceeding IDR 1 billion. Such disputes are heard by a single judge under a simplified process. 

During the examination of such expedited disputes, parties are prohibited from submitting claims for provisional measures, preliminary objections, counterclaims, interventions, replies, or rejoinders. In addition, courts are authorized to dismiss claims that fail to satisfy statutory filing deadlines or documentary requirements at any stage of the proceedings.  

Unlike ordinary cases, expedited proceedings are not subject to cassation. Instead, parties may file an objection with the Commercial Court within seven days after the decision is rendered. The objection is decided based solely on the case file and written submissions, with no further evidentiary examination. The resulting decision is final and binding, and no appeal, cassation, or judicial review is available. 

ABNR Commentary

SC Regulation 1/2026 represents a significant development in Indonesia's bank resolution framework. By centralizing disputes in the Commercial Court, establishing a dedicated process for reviewing LPS decisions, and introducing strict timelines supported by electronic court administration, the regulation seeks to provide greater certainty and efficiency in the resolution of disputes arising from bank failures. For depositors, the regulation provides a clear judicial pathway to challenge adverse LPS decisions. For LPS and liquidation teams, it offers procedural tools to pursue recovery actions, challenge prejudicial transactions, and efficiently administer liquidation processes.

At the same time, the regulation places a premium on early preparation. The relatively short objection periods, the use of electronic filing, and the compressed court timetable mean that parties will need to gather evidence, review LPS notifications and prepare authentication materials promptly. For LPS and liquidation teams, the regulation also introduces clearer procedural tools for asset recovery, including in situations where assets intersect with bankruptcy or criminal proceedings.

Although SC Regulation 1/2026 prescribes strict procedural timelines, courts may, depending on the circumstances, require additional time to complete their examination of a case.

By partners Yanny M. Suryaretina (ysuryaretina@abnrlaw.com), Rully Hidayat (rhidayat@abnrlaw.com), Adithya Lesmana (alesmana@abnrlaw.com), and associate Ruth Mendrofa (rmendrofa@abnrlaw.com).

This ABNR client alert is intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. It does not constitute legal advice and should not be relied upon as such. ABNR accepts no liability of any kind in respect of any statement, opinion, view, error or omission that may be contained in this update. You are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could affect your rights and obligations under Indonesian law.