The local supplier of Adidas shoes PT Prima Inreksa Industries (PII) is facing bankruptcy litigation for failing to pay debts worth more than US$37 million.
The plaintiffs are PII leather supplier CV Cisarua and state owned Bank Negara Indonesia (BNI). PII has not yet paid its debts to either.
“The litigation is our last resort, we have tried the mediation process, but it always ended up with [PII] saying they don’t have the money to pay the bills,” Yakobus Eko Adrianto, a lawyer representing CV Cisarua, told The Jakarta Post on Tuesday.
Yakobus said that legal steps are being taken because Cisarua observes that PII is still operating and employing about 5,000 workers; contradicting their claim of lack of money. “[Thus} they don’t have reasons to avoid their obligations,” Yakobus said.
PII has failed to pay debts amounting to Rp 2 billion (US$168,000) to Cisarua, on top of a larger $37.25 million outstanding debt to BNI.
Last year PII also had debts amounting to $8 million to suppliers, according to data from the Industry Ministry.
The litigation was filed with the Central Jakarta District Court on Commerce and scheduled to begin on Tuesday, but due to the absence of a representative from PII, it was adjourned until next week
“Should they fail to appear in next week’s trial, we will still proceed with the case. [The court] will proceed [in absentia],” Yakobus said.
Contacted separately, PII president director Paulus Harli said he had no idea about the litigation and refused to comment further.
Yakobus said his client filed the case together with BNI because under the existing regulations, bankruptcy litigation requires at least two companies to act as plaintiffs.
The bankruptcy litigation is the latest problem faced by PII after its previous main buyer, the world’s second-largest sportswear manufacturer, Adidas Group, placed its final orders with them last year.
Adidas, which ordered 201 million pairs of shoes from the Indonesian shoe industry last year, had been ordering 500,000 pairs of shoes per month from PII since 1997.
Adidas and PII signed last August a final partnership agreement, in which the final date for the termination of the business relationship was Dec. 31, 2008.”
PII was one of six Indonesian companies manufacturing sport shoes for Adidas.
Before facing the negative impacts of the global economic crisis, affecting export orders and revenues, PII -- located in Banten, Tangerang -- produced up to 900,000 pairs of shoes annually for Adidas.
Adidas has been manufacturing sports shoes in Indonesia for about 20 years.
Find Article by Date