Davomas wants debt payment halted

JAKARTA (JP): Publicly listed cocoa producer PT Davomas Abadi is to ask Central Jakarta Commercial Court to suspend the payment of its US$3 million debt to American Express Bank.

Lawyers representing the company, Hotman Paris Hutapea of Makarim and Taira and Denny Kailimang of Kailimang, said on Tuesday that their clients would file for a suspension of payment within the next two days.

"We will submit the proposal for the suspension of the payment to the commercial court either on Wednesday or Thursday," Hotman said after the second hearing on the bankruptcy case pitting American Express Bank against Davomas Abadi.

He acknowledged that his client owed a total US$3 million in promissory notes to the American Express Bank (Amex).

Amex, a unit of the American Express Co., filed a bankruptcy claim against the cocoa producer at Jakarta's commercial court on Sept. 3 after the latter failed to redeem the US$3 million promissory notes which matured on Jan. 7 this year.

In the court proceedings, lawyers for the plaintiffs, J. Cemby Hutapea of Kemalsjah of Cemby & Avriline demanded the court declare PT Davomas bankrupt and sell its assets if it failed to pay its debts.

The new bankruptcy law allows troubled Indonesian companies to file a suspension of payments. Under the procedure, the court can issue a temporary payment suspension order during which time the debtors and creditors will work out a reorganization plan.

The debtor is then given up to 270 days to renegotiate the debts. Failure to do so will result in the initiation of bankruptcy proceedings.

If it does not issue a payment suspension order, the court must hand down its decision within 30 days of the suit being filed and any appeal must also be heard within 30 days.

Indonesia enacted ambitious new bankruptcy legislation on Aug. 21, replacing an antiquated law which had been in place since 1906 and had proved to be insufficient in settling bankruptcy cases.

Presiding judge Kristi did not make any decision on Tuesday but adjourned the hearing until next Monday to allow the commercial court to verify the documents for suspension of payment. (aly)