Banks ask Supreme Court to revoke Modernland verdict

Banks ask Supreme Court to revoke Modernland verdict

JAKARTA (JP): Bank Danamon and Bank Internasional Indonesia
(BII), two of the country's largest private listed banks, have
appealed to the Supreme Court to overturn a bankruptcy verdict on
property firm PT Modernland Realty.

Hotman Paris Hutapea of Makarim and Taira S Law firm and Denny
Kailimang of Kailimang law firm said on Wednesday that the appeal
was filed on Monday.

The banks, major creditors of the property company, termed the
decision unfair and imprudent. Modernland was ordered to repay
down payments to plaintiffs Johan Subekti and Hussein Sani for
two unfinished apartments.

Hotman, who represents BII, said that the court's decision was
based on a letter from Modernland to the two men on July 14 but
the contents were misinterpreted by the commercial court's
presiding judge.

He said the letter contained offers for alternative settlement
because the property firm experienced difficulty in completing
the apartments by November as scheduled.

"The judge has misinterpreted the content of the letter as a
unilateral termination of the purchase agreement which would have
then obliged the company to return the money to the plaintiffs,"
he told The Jakarta Post.

"So the letter contains options only, and therefore it is not
a rejection."

Hotman said the appeal filed by the banks was the first
petition proposed by creditors to protect the debtor from
bankruptcy.

"It is a milestone in the country's bankruptcy proceedings,"
he said.

In a surprising move early this month, the Jakarta Commercial
Court approved the bankruptcy petition filed by Hussein and Johan
against Modernland for a modest claim worth Rp 94.13 million
(US$12.55 million).

The court, the country's first, opened in September and is
already embroiled in controversy over several of its early
decisions.

The Modernland verdict was met by a hail of criticism from
bankruptcy lawyers, who faulted the judge for being inconsistent
in implementing the bankruptcy proceedings.

Hotman also said the two plaintiffs could not be considered
creditors.

"But, on top of that, there is no debt that has matured," he
said.

Modernland, with total assets worth about Rp 1 trillion, has
appealed to the Supreme Court to overturn the bankruptcy verdict.

Hotman said that major creditors like BII and Danamon had not
filed a bankruptcy claim with the court even though they had
extended huge loans to the property firm.

He said that BII, the banking arm of the conglomerate Sinar
Mas Group, had total credit of Rp 140.1 billion and Bank Danamon
had channeled about Rp 150 billion to Modernland as of Oct. 9
this year. (aly)