'Court to declare' Dharmala bankrupt

'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)