Over the past decade, fintech lending has transformed access to financing by connecting lenders directly with borrowers through digital platforms. The model has become an attractive alternative to traditional banking, particularly for individuals and small businesses that struggle to obtain conventional loans. However, alongside its rapid growth, fintech lending has introduced new legal and financial challenges. Beyond the risk of individual borrower defaults, platforms themselves may experience financial distress if a large number of borrowers fail to repay their loans simultaneously, potentially leading to bankruptcy and widespread losses for creditors.
Previous studies have largely focused on legal protection against non-performing loans, dispute resolution, or consumer rights within fintech lending. Far less attention has been given to what happens when the fintech platform itself becomes insolvent. Affandi's research addresses this gap by examining how Indonesia's bankruptcy law interacts with fintech regulations and whether existing legal instruments adequately protect creditors during large-scale default events.
The study employed a normative legal research approach using qualitative analysis. Instead of collecting survey data, the researcher examined legislation, regulatory documents, and academic literature related to bankruptcy and fintech lending. Key legal references included Law No. 37 of 2004 concerning Bankruptcy and Suspension of Debt Payment Obligations (PKPU), Financial Services Authority (OJK) Regulation No. 10/POJK.05/2022 on Information Technology-Based Joint Funding Services (LPBBTI), and OJK Regulation No. 22 of 2023 on Consumer and Public Protection in the Financial Services Sector. These regulations were analyzed to determine whether they provide sufficient legal protection for creditors when fintech lending platforms become bankrupt.
The findings reveal that Indonesia's current legal framework relies primarily on general bankruptcy law rather than fintech-specific insolvency mechanisms.
Key Findings
- Creditor protection in fintech lending still depends largely on Law No. 37 of 2004 on Bankruptcy, with no specialized legal mechanism governing the bankruptcy of fintech platforms.
- OJK Regulation No. 10/POJK.05/2022 establishes requirements for platform governance, electronic contracts, risk management, and transparency but does not provide a collective recovery mechanism for creditors if a platform becomes insolvent.
- Existing regulations focus primarily on preventive protection, such as risk mitigation and disclosure obligations, rather than legal remedies after bankruptcy occurs.
- Current laws do not clearly regulate creditor claims, payment priority, asset segregation, or collective creditor representation during fintech platform bankruptcy proceedings.
- The researcher concludes that stronger integration between bankruptcy law and fintech regulations is necessary to ensure legal certainty for creditors affected by mass default events.
The study also emphasizes that legal relationships within fintech lending are considerably more complex than those found in traditional lending. Every transaction involves multiple parties, including the platform operator, lenders, and borrowers. When large numbers of borrowers default simultaneously, the platform itself may become financially unstable, transforming what initially appears to be a contractual dispute into a broader insolvency issue affecting numerous creditors. Under such circumstances, resolving disputes individually is no longer sufficient, making collective legal protection increasingly important.
Another important finding is that current regulatory safeguards mainly function as preventive measures. Fintech operators are required to conduct borrower assessments, verify customer identities, monitor loan performance, and implement internal risk management systems. While these measures reduce the likelihood of financial failure, they do not adequately address the legal consequences once bankruptcy has already occurred. Existing regulations offer limited guidance on how creditors' rights should be recognized, verified, and compensated during insolvency proceedings.
According to Affandi, legal protection for creditors should extend beyond electronic contracts, transparency obligations, and complaint mechanisms. It should also include comprehensive post-bankruptcy procedures that clearly define creditor claims, asset distribution, payment priorities, and collective legal representation. Without such provisions, lenders remain vulnerable to significant financial losses whenever fintech platforms experience systemic failure.
The findings carry significant implications for regulators, fintech operators, and the broader financial sector. For Indonesia's Financial Services Authority (OJK) and lawmakers, the research highlights the need to harmonize bankruptcy legislation with fintech-specific regulations. Future legal reforms should establish clear procedures for creditor representation, claim verification, segregation of platform assets from customer funds, and collective compensation mechanisms during insolvency.
For fintech lending companies, the study serves as a reminder that strong governance extends beyond regulatory compliance. Effective credit assessment, transparent reporting, proper management of escrow accounts, and well-developed contingency plans are essential for maintaining public trust and minimizing the risk that mass borrower defaults evolve into platform-wide financial crises.
The researcher also acknowledges several limitations. The study relies exclusively on normative legal analysis based on legislation and scholarly literature without incorporating empirical evidence from industry stakeholders. Future research is encouraged to include interviews with regulators, insolvency practitioners, fintech operators, lenders, borrowers, and legal experts. Comparative studies involving jurisdictions such as Singapore, the United Kingdom, and the European Union could also provide valuable insights into developing a more comprehensive creditor protection framework for Indonesia.
Author Profile
Affandi is a researcher specializing in business law and digital financial regulation. His academic interests include bankruptcy law, fintech regulation, creditor protection, financial technology governance, and digital financial services.
Research Source
Article Title: Creditor Protection in the Bankruptcy of Fintech Lending Platforms Arising from Mass Default Events
Author: Affandi
Journal: International Journal of Management and Business Intelligence (IJBMI), Vol. 4 No. 3, 2026, pp. 521–536.
DOI: As listed in the official publication of the International Journal of Management and Business Intelligence (IJBMI).
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