Abstract
Several state-owned enterprises in Indonesia have large debts. This paper elaborates on the legal aspects of state company debt with examples from two national airline companies, Garuda Indonesia and Merpati Nusantara Airlines, which face debt problems but have different fates. Garuda Indonesia received financial assistance from State Equity Participation sourced from the State Revenue and Expenditure Budget, whereas Merpati Airlines went bankrupt based on a court decision. In conclusion, the government, as the majority shareholder, is indirectly responsible for the company’s debt even though there has been a separation between state and company assets within the framework of corporate law. Therefore, state company debt will remain a burden on the government budget and risk bankruptcy.
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