Bakrie Finance survives secondary bankruptcy threat

JAKARTA (JP): Finance company PT Bakrie Finance Corporation (BFC) has, for the second time, survived a bankruptcy threat at the Jakarta Commercial Court, a lawyer said.

Joni Aries Bangun, a lawyer representing four foreign creditors, said on Monday that the court was biased in its verdict as it only accepted BFC's legal arguments.

"The court completely ignored all our arguments," Joni said.

The court rejected last week the US$13.5 million bankruptcy claim filed by the four foreign creditors on the grounds that the plaintiff did not represent the majority of creditors.

"The bankruptcy claim should be rejected because the suit is not supported by at least two-thirds of the creditors," said the court verdict.

The four Hong Kong-based creditors, AB Capital Markets Ltd., Cho Hung Leasing & Finance Ltd., Hanmi Leasing & Finance Ltd. and KEB Leasing and Finance Ltd., and another four financial institutions agreed in April 1996 to provide $21 million in a syndicated loan to BFC. But BFC failed to repay the loan, which matured on May 3, 1999.

The bankruptcy suit was the second filed by the four companies. Their first attempt, which was filed in August last year, was also rejected due to a technical matter.

Joni denied his clients needed the majority approval from the other syndicated creditors to file the bankruptcy suit.

"Our clients -- in the context of protecting their own rights -- are acting independently from the other creditors," Joni said.

"Each amount outstanding at any time from the borrower to each lender or the agent shall be a separable and independent debt and every lender and the agent shall have the right to protect and enforce its rights arising out of this agreement," Joni said quoting the agreement between the syndication and BFC.

Joni said his clients might file an appeal. "The decision whether to file an appeal will be made tomorrow (Tuesday)."

Analysts have said Indonesia has a relatively good bankruptcy law, but the implementation of law by the country's judges was still poor. (udi)