'Court to declare' Dharmala bankrupt

JAKARTA (JP): The Supreme Court is set to declare publicly listed PT Dharmala Agrifood bankrupt, overruling its decision in February, lawyers close to the case said.

They said on Thursday that although the ruling had yet to be made public, they knew informally of the decision.

Dharmala's lawyer Hotman Paris Hutapea also said he heard the verdict was pending but was awaiting formal notification.

"Yes, I have heard about it. This will be the first case I have lost in the last five years," Hotman told The Jakarta Post.

"But I lost in a political battle. Legally, I think, I won it."

Hotman alleged the pending verdict was the result of political maneuvering by foreign creditors dissatisfied with the Supreme Court's decision last February to reject a bankruptcy appeal by the International Finance Corporation and other creditors against the agricultural food producer.

The IFC -- the private investment arm of the World Bank -- together with ING Indonesia Bank and publicly listed Bank Niaga filed an appeal petition with the Supreme Court after their initial bankruptcy claim against Dharmala was thrown out by the Jakarta Commercial Court early last December.

The commercial court ruled that loans of IFC and ING Indonesia Bank to Dharmala Agrifood, totaling US$51.7 million, were not "due and payable", a prerequisite for a bankruptcy claim.

It further ruled that the claim of Bank Niaga over its loans worth Rp 16.04 billion ($2.1 million) to Dharmala Agrifood was "null and void" because the credit agreement was granted to cover foreign exchange losses and such an arrangement breached Bank Indonesia's regulations on derivative transactions.

The Supreme Court's ruling in February drew criticism from creditors and foreign insolvency experts.

They said the appeal ruling did not bode well for impatient offshore creditors struggling to recover debts from Indonesia's troubled firms.

The creditors then opted for the final legal resort by seeking review of the February ruling. A different set of Supreme Court judges sat on the review panel.

A local lawyer who insisted on anonymity said the Supreme Court's pending decision to declare Dharmala Agrifood bankrupt indicated there was misapplication of the bankruptcy law in the country's commercial court.

But Hotman claimed that the judges caved in to pressure of the government, itself answering to the International Monetary Fund, to send out pleasing signals on the bankruptcy law's effectiveness. (02/rid)