IFC loses bankruptcy battle with POF
IFC loses bankruptcy battle with POF
JAKARTA (JP): The International Finance Corporation (IFC), the
commercial financing arm of the World Bank, lost its legal battle
with publicly listed PT Panca Overseas Finance (POF) when a
commercial court rejected its bankruptcy petition on Tuesday.
The Central Jakarta Commercial Court approved a vote by POF's
creditors to accept the company's debt restructuring proposal.
Syamsudin Manan Sinaga, the chief judge at the court, ruled in
favor of Panca, saying the court's priority was to seek a win-win
solution for creditors and debtors.
IFC legal representative Luhut Pangaribuan criticized the
court for ignoring IFC's suspicion that fictitious creditors took
part in last week's vote.
"We are going to appeal the ruling," Luhut told The Jakarta
Post following the hearing.
He said IFC would file an appeal with the Supreme Court within
eight days.
He said that according to Article 284 of the bankruptcy law,
creditors who reject a debtor's debt restructuring proposal but
lose the vote on the proposal are allowed to appeal the decision.
Luhut added that according to the bankruptcy law, the Supreme
Court must respond to IFC's appeal within 30 days of receiving
it.
The IFC filed a bankruptcy petition against POF last year for
unresolved debts amounting to US$13 million.
IFC said it took the financing company to court after two
years of negotiations had failed to produce a debt restructuring
agreement.
The company suspects POF fabricated 14 of its 31 creditors,
allotting them Rp 1.6 trillion (about $170 million) of its $230
million in total outstanding debts.
It said the move enabled POF to win the creditors' vote
accepting its debt restructuring proposal.
According to POF, under its debt restructuring proposal
creditors agree to accept $40 million in debt repayment over a
period of three years.
The company will pay installments of $10 million in the first
and second years, with the remaining $20 million to be paid in
the third year.
The company has said it will raise the funds by recouping
loans it has channeled to domestic and foreign parties.
Luhut questioned the chief judge's objectivity, citing the
inclusion of an opinion of the Indonesian Securities Investor
Society (MISSI) among the considerations he used in making his
decision.
MISSI held a media conference on Monday urging the court not
to approve the bankruptcy petition against POF, saying ruling
against the company would harm the interests of investors.
"The judge is not allowed to consider the opinions of parties
other than those directly involved in the case," Luhut said.
As with a jury in the U.S. legal system, he said, a judge must
be isolated from opinions expressed outside the court
proceedings.
POF spokesman Harry Ganda said the company was relieved to
have survived the bankruptcy petition.
He also urged IFC not to be suspicious of Syamsudin's verdict,
saying the judge had acted on the basis of fairness.
"You heard what MISSI said about the harm of declaring POF
bankrupt," he said.
On the charge of fictitious creditors, Harry said earlier IFC
was never able to prove its allegations with evidence that these
creditors did not exist.
Nevertheless, the alleged involvement of fictitious creditors
in the bankruptcy process has dealt another blow to the country's
legal system.
The Indonesian Bank Restructuring Agency (IBRA), which
deals with numerous bankruptcy cases, voiced its concerns with
the POF case.
The agency is in charge of recouping nonperforming loans from
several major local banks, and files bankruptcy petitions against
uncooperative debtors.
The head of IBRA's legal division, Robertus Bilitea, warned
that the agency's debtors might be tempted to use fictitious
creditors to avoid bankruptcy.
"Providing that POF has indeed fabricated its creditors, we
will surely be on the lookout for similar schemes," he said.
In the wake of the POF decision, he said, IBRA will take
further precautions when preparing its bankruptcy cases. (bkm)