Agreement between debtors and creditors still far off<\/p>\n
By Reiner S.<\/p>\n
JAKARTA (JP): Some thorny issues are still seen as obstacles
\nto further negotiations between local debtors and foreign
\ncreditors attempting to arrive at out-of-court debt settlements,
\naccording to participants in a debt conference on Monday.<\/p>\n
Chairman of the Indonesian Chamber of Commerce and Industry
\nAburizal Bakrie said that innovative solutions, including the use
\nof the best future market value of debtors' assets rather than
\ntheir liquidation value as the basis of debt restructuring
\nagreements, was essential to encourage local debtors to sit down
\nat the negotiation table.<\/p>\n
If foreign creditors stubbornly demand current value for the
\nassets, "forget it, we'll never reach an agreement," he said.<\/p>\n
He warned that debt settlement through the Commercial Court
\nwould leave foreign creditors facing a greater loss because the
\nvalue of loan collateral is now only one fifteenth of its pre-
\ncrisis value.<\/p>\n
"Cornered debtors are also ready to enter bankruptcy
\nproceedings," he told the Jakarta Initiative conference on
\ncorporate debt restructuring.<\/p>\n
Aburizal said some debtors were already giving up and
\nresorting to the court.<\/p>\n
The two-day conference has been convened to encourage debtors
\nand creditors to resume efforts to restructure at least some of
\nthe country's US$67 billion foreign debt through out-of-court
\ndebt settlements.<\/p>\n
Around $32 billion of the debt falls due this year.<\/p>\n
A solution to the foreign debt problem is key to bringing
\nstability back to the rupiah-U.S. dollar exchange rate. Out-of-
\ncourt debt settlements are also critical to prevent job losses in
\nindebted companies.<\/p>\n
Aburizal said that foreign creditors should share in the pains
\nof debtors and suggested that a significant amount of debt
\nforgiveness would be required because many local companies are
\nnow insolvent.<\/p>\n
"I'm not so certain about this restructuring thing," said a
\ntop executive of a publicly listed export company who declined to
\nbe named.<\/p>\n
He pointed out that foreign creditors were reluctant to give
\nlocal debtors substantial relief on their dues.<\/p>\n
"We have talked with creditors before and we failed. I'm not
\nso sure how it will work this time," he said.<\/p>\n
"I think both debtors and creditors are currently playing a
\nwaiting game," he added.<\/p>\n
Foreign lenders are insisting that local debtors provide a
\nfull disclosure of information as a precondition to debt
\nrestructuring and forgiveness.<\/p>\n
Chairman of the National Private Banks Association Gunarni
\nSoeworo admitted that disclosure of information was poor,
\nparticularly among small and medium-sized companies.<\/p>\n
"The track record in disclosure is poor here, even among many
\nlisted companies," added a corporate restructuring consultant.<\/p>\n
"We have no problem with the idea of full disclosure, but the
\nproblem is that they're also demanding to see plans on how we're
\ngoing to survive the crisis. Amid the current volatility it's
\ndifficult to come up with reliable business plans," the executive
\nof the listed exporting firm said.<\/p>\n
The consultant said that the bottom line for the success of
\nout-of-court debt settlement negotiations was foreign creditor
\nconfidence in the country.<\/p>\n
The vice chairman of the diversified Lippo Group called on
\nforeign creditors to maintain "hope" in the country despite the
\ncurrent recession and uncertainty.<\/p>\n
John Knight of Chase Manhattan Bank admitted that many foreign
\ncreditors had taken a short-term view in relation to the debt
\nrestructuring process.<\/p>\n
"Lenders have to take the long-term view. Lenders who help to
\nreorganize debtors will have a greater value," he said.<\/p>\n
Chase Manhattan Bank is one of the country's largest corporate
\ncreditors.<\/p>\n
"A private sector problem is a business problem not a legal
\nproblem, so it should not be solved by litigation or bankruptcy
\nproceedings," Knight added.<\/p>\n
He also urged borrowers not to delay coming to the negotiating
\ntable, saying that early debt restructuring agreements would
\nprovide indebted companies with the best opportunity to obtain
\nnew financing from the international capital market.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/agreement-between-debtors-and-creditors-still-far-off-1447893297",
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