Creditors challenge bankruptcy ruling

Creditors challenge bankruptcy ruling

Dadan Wijaksana, The Jakarta Post, Jakarta

In another test of the credibility of the country's legal
system, Exim SB Leasing and Bank Sumitomo Mitsui Indonesia filed
an appeal with the Surabaya High Court to challenge a lower
court's controversial decision which suspends a bankruptcy ruling
against gold producer PT Itamaraya Gold Industry (IGI).

While citing the ruling as bizarre, lawyer Ricardo
Simanjuntak, who represents Exim and Sumitomo -- whose majority
stakes are owned by the Japanese investors -- said his clients
intended to fight the ruling, not only to seek justice but also
to help clean up the country's messy legal system.

"What's been happening to this case is by and large confusing.
It's much worse than the Manulife case. Therefore we'll keep on
fighting," Ricardo told The Jakarta Post on Thursday.

He was referring to the July 11 ruling by the Surabaya
District Court ordering a suspension on the bankruptcy ruling
made by the Supreme Court.

He questioned the legal basis of a lower court overturning a
ruling made by a higher court.

Ricardo said that Itamaraya owed the creditors some US$870,000
in debt.

The legal dispute began late last year when Exim and Sumitomo
accused the Surabaya-based gold producer of failing to fulfill
its debt payment obligation and filed a bankruptcy petition
against the company with the Surabaya Commercial Court.

The conflicting parties then engaged in a fierce and
protracted legal battle all the way to the Supreme Court.

On April 29 however, the Supreme Court ruled in favor of Exim
and Sumitomo, declaring Itamaraya bankrupt.

Itamaraya then filed a lawsuit with the Surabaya District
Court against the two banks to overturn the decision, arguing
that the decision had no legal basis as the company did not owe
anything to Sumitomo.

Foreign creditors have been facing difficulties in sending
delinquent debtors into bankruptcy, which some say is due to the
country's weak and corrupt legal system. This has been seen as a
factor discouraging investors to return to the country.