Bankruptcy plea for Polysindo rejected
Bankruptcy plea for Polysindo rejected
Bloomberg, Jakarta
PT Polysindo Eka Perkasa, an Indonesian petrochemical and textile company that owes about US$700 million to foreign creditors, fought off a bankruptcy petition brought by one creditor in Jakarta's commercial court.
Judge Pramudana told the court that Bangkok Bank Pcl.'s Jakarta branch, which filed the bankruptcy petition, failed to prove there were at least two creditors owed money by Polysindo, a unit of Texmaco Group, as required by Indonesian law.
The decision shows how difficult it is for creditors to use the court system in Indonesia in order to recover their money. Still, Indonesia is still attracting money from investors. The Jakarta Composite Index hit a three-year high today.
"Investors right now are looking at the positive news rather than the negative news," said Rizal Prasetijo, head of research at J.P. Morgan Securities Indonesia.
"They're looking at liquidity, there's so much money coming in"' to the region, including Indonesia, he said.
Bangkok Bank's Jakarta branch filed the bankruptcy petition on Aug. 12, claiming it hadn't been paid a $474,000 debt by Polysindo.
The debt, a trade loan facility used by Polysindo to help it import raw material, matured in June 1997.
"We have asked Polysindo a number of times to repay debts. They continued to not show good faith," the bankruptcy petition filed by Bangkok Bank's lawyer Benny Ponto and his team said.
Judge Pramudana, who only uses one name, said there was enough evidence that Polysindo owed money to Bangkok Bank.
"The problem is that Bangkok Bank failed to prove that there are at least two creditors."
The court ruling came as the Indonesian bank restructuring Agency (IBRA) is trying to sell the debt and equity of the Texmaco Group. Polysindo is one of the biggest companies in the Texmaco group, Indonesia's largest textile producer.
Had Polysindo been declared bankrupt and liquidated, IBRA would have found it even more difficult to attract potential buyers for Texmaco.
Texmaco was founded by Marimutu Sinivasan, a businessman of Indian descent who prospered during the Suharto era.
Two months ago, Malaysia's Utara Capital Ltd., a group led by Mirzan Mahathir, the eldest son of Malaysian Prime Minister Mahathir Mohamad, and China National Bluestar Corp., a state- owned enterprise, expressed interest in what is Indonesia's largest single debt sale.
It failed to submit bids by July 11.
Polysindo reported net sales of Rp 3.8 trillion, or $452 million, for 2002 and net income of Rp 477 billion, or $57 million, according to Bloomberg data. In the first six months of this year it reported net income of Rp 118 billion on sales of Rp 1.78 trillion.