Court undecided over IFC bankruptcy plea
JAKARTA (JP): The Supreme Court has yet to decide over the International Finance Corporation's (IFC) bankruptcy appeal against financing company PT Panca Overseas Finance (POF), after IFC lost a bankruptcy case at the Jakarta Commercial Court.
IFC legal representative Luhut Pangaribuan on Thursday denied a few media reports saying the Supreme Court had rejected IFC's bankruptcy appeal against POF.
"That is not correct, we went to the Supreme Court to verify the news but a ruling on this matter has not been issued," Luhut told The Jakarta Post.
The IFC, the World Bank's commercial financing arm, filed a bankruptcy petition against POF last year for unresolved debts amounting to US$13 million.
It said it took POF to court after two years of negotiations had failed to produce a debt restructuring deal.
Luhut, however, did confirm that the Supreme Court rejected IFC's appeal, but on a different issue in the case against POF.
He said the Supreme Court had only rejected IFC's first appeal against a decision by the supervisory judge at the Jakarta Commercial Court to verify POF's debts and creditors.
The IFC issued its first appeal shortly after the supervisory judge approved the verification of POF's creditors and the amount of their loans.
The appeal was issued on suspicion that POF had falsified several creditors in an attempt to manipulate the court ruling.
Yet the main case, which is the bankruptcy appeal, remains undecided, Luhut said.
Although he questioned the reasons behind the Supreme Court rejecting the appeal according to him the IFC's arguments were strong.
"We have a police report stating they found strong indications of criminal action in POF's case," he complained.
To expose false creditors, IFC hired the service of an internationally-renowned private investigating firm.
Luhut said the firm's reports revealed some irregularities in the presence of suspected fictitious creditors.
He added that the Supreme Court rejected IFC's first appeal, because appealing a supervisory judge's ruling was not regulated under bankruptcy law.
"But our appeal was not against the law, and there was an earlier case where the same appeal was made," Luhut said, although he fell short of naming the case.
Asked how the chances were of winning the main appeal after the first one had been rejected, he said he remained confident.
"We haven't lost the case yet, there is still a possibility that the Supreme Court will accept our appeal," he said.
Luhut said that the bankruptcy law required the Supreme Court to respond to IFC's appeal within 30 days of receiving it.
The IFC appealed early last month, after losing its bankruptcy petition against POF in January.
It suspects that POF escaped the bankruptcy case by fabricating 14 out of its 31 creditors to vote in favor of POF.
Under bankruptcy law, creditors vote to decide whether to accept or reject a debtor's debt restructuring proposal.
If the majority of creditors representing at least two thirds of a company's outstanding debt, approve the proposal, the debtor will survive the bankruptcy petition.
But since the enactment of the 1998 bankruptcy law, only a few firms have been declared bankrupt by the Jakarta Commercial Court.
Foreign investors eye with suspicion the recurring failures of the Indonesian Bank Restructuring Agency (IBRA) in bringing uncooperative debtors bankrupt.
The case of IFC against POF is widely seen as a showcase of how Indonesia's bankruptcy court lacks legal certainty. (bkm)