Petition against Danamon rejected

Petition against Danamon rejected

JAKARTA (JP): The Central Jakarta Commercial Court turned down
on Wednesday a bankruptcy petition filed by Bank IFI against the
publicly listed Bank Danamon, saying the petition violated the
bankruptcy law.

"The petitioner has no locus standi to file for the bankruptcy
petition," said chief judge Subari in his verdict.

Article 1 paragraph 3 of the 1998 bankruptcy law stipulates
that a bank could be declared bankrupt through a petition filed
only by Bank Indonesia, he said.

Subari's verdict ended the legal controversy over Bank IFI's
move to bring to bankruptcy one of Indonesia's largest banks.

Last month, Bank IFI filed the petition against Bank Danamon
on charges the latter had neglected payment of debts, interest
and penalties amounting to some US$12 million.

Despite the legal obstacle Bank IFI went ahead, reasoning that
Bank Indonesia had neglected IFI's appeal to file the petition on
its behalf.

Bank Indonesia said earlier it had rejected the appeal, as a
bankruptcy petition against Bank Danamon ran against the public
interest.

Bank Danamon was one of the country's largest private banks,
but is now 99 percent owned by the government after the
recapitalization program. The remainder is owned by the investing
public.

The rift between the two banks arose when Bank Danamon refused
to pay the interest and penalties on its debts, worth $43.6
million, to IFI.

According to IFI, the debt payment, including interest and
penalties, has reached $12 million.

Bank Danamon took over the debts of Bank Nusa Nasional, after
the latter merged with Bank Danamon last year.

Bank Nusa pledged some $16.78 million in 1996 in a syndicated
loan with other local banks. The bank later offered $4.6 million
of its commitment to Bank IFI, under a sub-participation deal in
the syndicate.

However, as the loan became non-performing, Bank IFI withdrew
from the syndicate, and demanded the money be paid back.

Bank Danamon agreed to return the principal amount of the
debt, but refused to pay the full interest and penalties.

Danamon argued that as Bank IFI had retreated from the
syndicate, it was not entitled to receive the full rights, as
were other members of the syndicate.

Judge Subari, during the reading out of the verdict, suggested
the disputing parties settle their differences over the payment
in a civil court.

Bank IFI's legal representative Hotman Paris Hutapea said the
court rejected the bankruptcy appeal on technical grounds, but
recognized Bank Danamon's obligation to repay Bank IFI's full
entitlement.

"Substantively we have won the case ... it should be used as
further evidence," Hotman told reporters after the hearing.

However, he declined to say whether Bank IFI would seek a
civil court settlement to end its legal spat with Bank Danamon.

"I will bring this verdict to Bank Indonesia's board of
governors and tell them they should take action against Bank
Danamon's directors," he added.

Bank Danamon lawyer Amir Syamsuddin said the commercial court
could not issue a ruling over the disputed payment difference, as
it fell under the authority of a civil court.

"What the court read out during the verdict was the
considerations the petitioner stated in its petition. They were
in no way part of the court's verdict," Amir explained.(bkm)