Fee for commercial court administrator 'too high'

Fee for commercial court administrator 'too high'

JAKARTA (JP): Golf course and clubhouse developer PT Karabha
Digdaya said on Thursday that the commercial court's decision to
impose a five percent fee for the appointed administrator to take
charge of its assets would be a further blow to its weak
financial condition.

Edino Girsang from the Yan Apul law firm, who represented PT
Karabha in the hearing, said that the fee -- five percent of the
company's total assets -- was too high given the size of the
disputed debt.

"With total assets of Rp 1.3 trillion, this means that the
administrator will receive Rp 75 billion in commission fees from
Karabha. It means the fee will be four times higher than the Rp
15.3 billion owed by Karabha to the plaintiffs," he said.

Besides being too high, the fee for the administrator was not
stipulated in the bankruptcy law, he told reporters following the
court's third bankruptcy proceeding pitting Karabha against PT
Jaya Obayashi and PT Nusa Raya Cipta.

On Thursday, the Jakarta Commercial Court approved the request
by golf course and clubhouse developer PT Karabha Digdaya to
temporarily suspend payment of an Rp 15.3 billion (about US$1.4
million) construction fee to PT Jaya Obayashi and PT Nusa Raya
Cipta.

The presiding judge, Haryono, who chaired the court hearing,
said the court had accepted the request and appointed a
supervisory judge and an administrator to take charge of the
debtor's assets.

"We appoint Suryanto as the supervisory judge and Marjan Pane
as the administrator to manage Karabha's assets," he told the
hearing.

Suryanto is a judge appointed by the Jakarta Commercial Court
while Marjan Pane is a trained administrator from Tumbuan and
Pane law firm appointed by the plaintiffs.

According to the newly introduced bankruptcy law, the court
must appoint a supervisory judge and an administrator if it
accepts the request for a suspension of payments to protect the
assets of debtors.

Hotman Paris Hutapea of Makarim and Taira S. law firm, the
plaintiff's lawyer, said he was also surprised at the high
administration fee imposed by the court.

"It's a lot of money ... I'd better become an administrator
instead of a lawyer then," he joked.

However, Haryono did not respond to concerns voiced by the
lawyers.

The new bankruptcy law allows debt-ridden Indonesian firms to
file for a suspension of debt repayments. Under this procedure
the court issues a temporary suspension of payment order during
which time debtors and creditors must work out a reorganization
plan.

Debtors are given up to 270 days to negotiate a reorganization
of payments, and failure to do so could result in the initiation
of bankruptcy proceedings.

When a company is declared bankrupt, the court will appoint a
receiver or curator to administer the assets of the debtor.

There have been five bankruptcy claims brought to the Jakarta
Commercial Court so far. Most debtors have sought a suspension of
payment order.

Cocoa producer Davomas Abadi, which was unable to repay US$3
million in promissory notes to the American Express Bank when
they matured on Jan. 7 this year, has submitted a request for a
suspension of payment order.

The commercial court will have to decide whether or not to
accept the request today (Friday).

Ometraco Multi Artha, a subsidiary of the public-listed PT
Ometraco Corporation has submitted a request to suspend repayment
of a US$140 million syndication loan to a consortium led by the
American Express Bank.

Lawyers who have been following the bankruptcy hearings over
the past two weeks voiced concerns over the commission fee
charged by the Jakarta Commercial Court on Thursday.

"The commission fee is just too much ... our bankruptcy law is
still new and now we don't know the prospects for commercial
proceedings in the future," one lawyer who asked for anonymity
said. (aly)