🔍 What is Liquidation Priority?
Liquidation priority refers to the order in which stakeholders get paid if a company is liquidated (e.g., due to bankruptcy, sale, or dissolution). It determines who receives payment first from any remaining company assets.
🏦 Liquidation Priority in Indonesia (Typical Order):
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Secured Creditors (e.g., banks with collateral)
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Unsecured Creditors (e.g., suppliers, bondholders without collateral)
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Preferred Shareholders (Saham Preferen)
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Common Shareholders (Saham Biasa)
🧾 Explanation in Indonesian Context:
| Type of Holder | Priority Rank | Notes |
|---|---|---|
| Secured Creditors | 1st | Get paid from secured assets (e.g., collateralized loans). |
| Unsecured Creditors | 2nd | Include trade creditors, employees (under labor laws), and bondholders. |
| Preferred Shareholders | 3rd | Have contractual rights to receive liquidation proceeds before common shareholders. |
| Common Shareholders | 4th | Get paid last—only if anything is left. Often receive nothing in bankruptcy. |
🔧 Example: Gojek (Pre-Merger as Private Company)
Let’s say Gojek were to liquidate:
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Early investors like Sequoia and SoftBank (who held preferred shares) would have liquidation preference clauses, e.g., “2x liquidation preference.”
→ If they invested $10 million, they’d be entitled to $20 million before common shareholders (like founders or employees with stock options) get anything. -
Founders or employees holding common stock would receive payment only after all debt, liabilities, and preferred claims are settled.
📘 Legal Reference:
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Indonesia’s Company Law (UU No. 40/2007) and OJK regulations allow issuance of various share classes, and company Articles of Association usually spell out liquidation rights.
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In IPO prospectuses, companies disclose whether any class of shares has liquidation preferences.
Summary:
| Share Type | Liquidation Priority | In Practice (Indonesia) |
|---|---|---|
| Secured Creditors | 1st | Highest—e.g., bank loans with collateral |
| Unsecured Creditors | 2nd | Moderate—vendors, employees, bondholders |
| Preferred Shareholders | 3rd | Rare in public companies, common in startups |
| Common Shareholders | 4th (Last) | Most common share class on IDX |
Let me know if you’d like a flowchart or to see an example from a specific company prospectus (like GoTo or BUKA).