IBRA to get tough on defiant debtors
IBRA to get tough on defiant debtors
JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA)
says it will not hesitate to take litigation measures against
uncooperative bank debtors in order to recover massive
non-performing loans at local banks.
IBRA public relations officer Franklin Richard said the agency
was empowered to take legal measures against bad debtors. The
measures could include taking them to court to liquidate their
assets through bankruptcy proceedings.
"This is not an empty threat. We'll use Government Regulation
No. 17/1999, and, if necessary, we'll file for bankruptcy through
the commercial court," he told the daily Kompas on Monday.
Franklin said the litigation measure would be prioritized to
force the bad debtors to negotiate for debt restructuring
measures with the agency.
He said filing for bankruptcy would be a last option.
IBRA has assumed over Rp 150 trillion (about US$18.75 million)
in bad debts from the country's seven state banks, taken over
banks, recapitalized banks and closed down banks.
Many observers have expressed doubts over whether the agency
can recover the non-performing loans, particularly as the bulk of
the loans are owed by well-connected businessmen.
The government has been criticized for its reluctance to force
the bad debtors to accept debt restructuring agreements or asset
foreclosures.
Early this month, IBRA publicly announced the list of its 200
largest bad debtors in a bid to quell doubts about the
government's seriousness in recovering the non-performing loans.
In the announcement, IBRA called on the debtors to resume or
start debt restructuring talks with the agency.
The list includes indebted companies linked to the family of
former president Soeharto and its associates.
Franklin said that since disclosure of the debtors list, some
50 percent of the debtors had begun negotiations with IBRA, with
particular emphasis on loan recovery proposals.
Minister of Finance Bambang Subianto earlier said the
government would enforce stricter measures against the country's
bad debtors. He said he expected an IBRA announcement regarding
the first batch of debtors to reach a loan recovery agreement
this month.
"There are measures that we won't use right now because we're
still hoping for the good will of the debtors to talk (for a loan
workout strategy)," he said after IBRA disclosed its list of the
largest bad debtors.
Bambang said the recovery of the non-performing loans was
essential to help ensure the success of the costly government
bank recapitalization.
He said restructuring of the other categories of loans,
particularly substandard and doubtful loans, were important to
reduce bank recapitalization costs.
Analysts have expressed concerns these type of loans could
easily be transformed into non-performing category ones unless
they are restructured.
Several banks have announced their list of debtors in an
effort to force them to discuss debt restructuring strategies.
(rei)