IBRA critisizes Jakarta Commercial Court

IBRA critisizes Jakarta Commercial Court

By Wachyudi Soeriaatmadja

JAKARTA (JP): Seemingly confused, the Indonesian Bank
Restructuring Agency (IBRA) has voiced concerns against 'funny'
verdicts made by the Jakarta Commercial Court in bankruptcy cases
filed by the agency against recalcitrant debtors.

"The point is not that the creditor always has to win the
case, but legal certainty is at stake here," IBRA legal head
Agustus Sani Nugroho said on Wednesday.

He said in many verdicts at the Jakarta Commercial Court the
lawyers were often forced to go along with the judge's
misinterpretation of the 1998 Bankruptcy Law, something which
goes beyond human logic.

In one of the cases, the judge required that the creditor have
the debtor it was filing against approve the amount of matured
debts being claimed, he said.

And when the debtor did not agree with the amount, the court
then rejected the suit, he added.

"Of course, what debtor in his right mind would ever approve
the amount of the debt being claimed against him?" he asked.

"The Commercial Court's verdict goes against the fundaments of
the Bankruptcy Law, plain and simple."

Agustus also cited another IBRA case at the Commercial Court
where an important chapter of the 1998 Bankruptcy Law was clearly
breached by the court.

Chapter 217, article 5 of the Bankruptcy Law stipulates that
in a certain situation creditors, among themselves, are entitled
to carry out a voting procedure in deciding the fate of the
debtor.

But this procedure was often skipped over by the court.

"The judge abandoned the voting procedure and chose to
unilaterally make decisions on behalf of the creditors, but ended
up doing so at their expense," he said.

He said that taking legal action was actually the last option
for IBRA when dealing with recalcitrant debtors.

As of April, IBRA's legal division has 166 cases of
uncooperative debtors being transferred to the division as part
of the agency's efforts in maximizing assets recovery.

Of the total 166 cases, 33 cases have been brought to court,
43 are under final evaluation for choice of strategy and the
remaining cases are still undergoing the checking of
documentation process, according to Agustus.

With the 33 cases brought to the court, four of them finally
ended with out-of-court settlements, nine went to the Commercial
Court and the remaining 20 underwent other courses of legal
action.

IBRA has so far filed bankruptcy suits against five
uncooperative debtors with the Commercial Court.

They are PT Tirtamas Comexindo, PT Westkalindo Pulp Papermill,
PT A Latief Corporation, PT Ometraco Corporation and PT Sumi
Asih.

Another four cases were on the way to the Commercial Court,
Agustus said, declining to identify the names of these debtors.

He said that IBRA was still waiting for the installment of
independent ad hoc judges at the Commercial Court by the
government. Only then will they file the next four cases.

Coordinating Minister for Economy, Finance and Industry Kwik
Kian Gie, said on Wednesday the government had issued a
presidential decree to appoint nine independent ad hoc judges to
serve at the Commercial Court.

Meanwhile, state owned PT Dok & Perkapalan Kodja Bahari filed
for bankruptcy for the fourth time due to its alleged failure to
repay its debts.

The lawyer representing the foreign creditor, Rahmat Bastian,
also questions the court's verdict against his client, but he
said that his client would never give up pursuing the matured
loans from PT Dok & Perkapalan.

"We will not stop filing the bankruptcy suit against PT Dok &
Perkapalan until they have repaid their debts," he said.

The Hongkong Chinese Bank, Ltd. on Tuesday filed the
bankruptcy suit against the state-owned company for the US$3.5
million promissory notes which matured on Jan. 16, 1998.

PT Dok & Perkapalan survived the previous three bankruptcy
suits on a mere technicality.

"In the eye of the Jakarta Commercial Court, a technicality
problem seemed to always exist in the bankruptcy suits against
state-owned companies," Rahmat said.

Other state owned-companies that had filed for bankruptcy in
the past were PT Hutama Karya (two times) and PT Asuransi Jasa
Indonesia.

Both always survived.

Analysts said state-owned companies and big corporations
seemed to avoid bankruptcy suits easily.

Larger corporations might use their ample financial resources
to influence bankruptcy verdicts.

An informed source said the cost of fighting bankruptcy at the
Jakarta Commercial Court ranged between $20,000 and $40,000.

He also said court bribery was very difficult to prove, but
the close relationships between bankruptcy judges and some
lawyers could indicate something like this was possible.

"There is a prominent lawyer who has his own school of law
which has recruited judges from the Jakarta Commercial Court," he
said.

"The lawyer, who had never lost a case at the Jakarta
Commercial Court, serves as the principal of that school of law,
while the bankruptcy judges work as the instructors," he added.