Danamon faces bankruptcy suit

JAKARTA (JP): Publicly listed Bank Danamon Indonesia is facing bankruptcy charges at the Central Jakarta Commercial Court for failing to pay Bank IFI some US$12 million in outstanding debts, according to Bank IFI's legal representative.

Bank IFI's lawyer Hotman Paris Hutapea said on Saturday the bank filed a bankruptcy petition against Bank Danamon, after the latter neglected his client's litigation threats several times.

He said that Bank Danamon failed to pay his client debts of $12 million, which fell due on Dec 18, 1998.

"A bank is an institution based on trust. By not meeting its obligation, Bank Danamon has further eroded the public's already fragile trust in the national banking sector," Hotman said in a statement on Saturday.

He did not say when he planned to file the bankruptcy petition at the Central Jakarta Commercial Court.

The bankruptcy petition against Bank Danamon, he explained, already met existing regulations on bankruptcy charges for banks.

Although the bankruptcy law requires Danamon to have at least two creditors before Bank IFI can file a bankruptcy petition against it, Hotman argued that the petition was valid.

According to him, all customers of Bank Danamon are at the same time also the bank's creditors, thus eliminating the need to seek other creditors.

He further said that Bank Danamon was capable of paying the $12 million it owed his client, as can be seen in the bank's balance sheet.

The Indonesian Bank Restructuring Agency, he continued, had also validated Bank IFI's loans to Bank Danamon, declaring them as eligible, due and payable.(bkm)