Bakrie Finance bankrupt: Supreme Court

JAKARTA (JP): The Supreme Court has declared PT Bakrie Finance Corporation bankrupt, overruling the verdict issued by the Jakarta Commercial Court in March, a foreign creditor said.

Tae Seon Paik, an executive from Hong Kong-based creditor AB Capital Markets Ltd., said on Thursday that the above decision by the Supreme Court would give a strong boost to the country's slow debt restructuring process.

"I respect the Supreme Court's decision," he said.

Plaintiff's lawyer Joni Aries Bangun of Hanafiah Ponggawa Adnan Bangun Kelana law firm said the Supreme Court in its verdict accepted his plain and simple arguments that the defendant had a matured debt and owed money to at least two creditors.

According to the 1998 Bankruptcy Law, a party to be declared bankrupt must have at least one matured debt and owe to two creditors or more.

"A bankruptcy suit is simple and straightforward, it should not be seen as too complicated by the parties involved," Joni said.

Four Hong Kong-based creditors filed a bankruptcy suit for the second time in mid February against Bakrie Finance at the Jakarta Commercial Court for the company's failure to pay US$13.5 million in debts.

The four foreign creditors are AB Capital Markets Ltd., Cho Hung Leasing & Finance Ltd., Hanmi Leasing & Finance Ltd. and KEB Leasing and Finance Ltd.

The bankruptcy suit was rejected by the Jakarta Commercial Court due to technical reasons. The previous bankruptcy suit against Bakrie Finance filed by the same creditors was also rejected by the court on technical grounds last year.

The foreign creditors filed an Appeal to the Supreme Court in March, rejecting the Jakarta Commercial Court's verdict.

According to the March controversial verdict, the four creditors' bankruptcy suit has yet to be approved by two-thirds of Bakrie Finance's total creditors under the syndicated bank loan.

The four foreign creditors' $13.5 million loan, which matured on May 3, 1999, was part of a $21 million total loan matured under a syndicated loan agreement involving seven foreign financial institutions and one local bank, Bank Negara Indonesia.

Seon Paik said the Supreme Court's verdict on Bakrie Finance was a victory to all foreign creditors in Indonesia.

"This decision will be respected by foreign creditors in Indonesia who might have been frustratingly fighting to recoup their bad debts," he added.

He admitted Bakrie Finance could request a "Civil Review" from the Supreme Court to overrule the current Appeal decision, but the chances of it being successful were very limited.

There has to be either a serious misapplication of the law or a discovery of new evidence in the case for a Civil Review to be accepted by the Supreme Court, according to the existing law. (udi)