Tirtamas granted six months to settle debts

Tirtamas granted six months to settle debts

JAKARTA (JP): The Jakarta Commercial Court rejected on Monday
the demand from the Indonesian Bank Restructuring Agency (IBRA)
to declare PT Tirtamas Comexindo bankrupt, granting instead the
trading company six months to settle its debts.

The verdict was seen as a blow to IBRA's bid to liquidate
Tirtamas Comexindo through the bankruptcy suit as shock therapy
for other "uncooperative" debtors.

IBRA, representing now liquidated Bank Tamara, filed a
bankruptcy suit against Tirtamas in late December, following the
company's failure to repay Rp 38 billion (US$5.2 million) in
overdue loans to the closed bank that have been taken over by
IBRA.

The court's ruling will extend the debt payment suspension
period for six months as the temporary 45-day suspension of
payment asked for by Comexindo in January expired on Monday.

Chief judge Mahdi S. Nasution cited Tirtamas' good faith in
negotiating a debt settlement, and the yet unclear status of its
debts to its creditors as the court's main considerations behind
its decision.

IBRA currently manages bad debts taken from closed,
nationalized and recapitalized banks. Comexindo, the trading arm
of the Tirtamas group that is controlled by Hashim
Djojohadikusumo, owes an estimated Rp 1.5 trillion in debts to
IBRA and to several other creditors.

The verdict was reached while IBRA and other creditors were
scheduled to vote on Monday (yesterday) on whether to accept
Tirtamas Comexindo's debt restructuring proposal or to go ahead
with bankruptcy proceedings.

However, the court canceled the voting as the creditors were
unable to verify Comexindo's total outstanding debts of some Rp
1.5 trillion, owed to various local and foreign banks.

Tirtamas' legal advisor Hotman Paris Hutapea said IBRA lost
the case, partly because it failed to attend meetings with
Comexindo and its creditors, aimed at verifying Comexindo's
debts.

"This is a lesson for IBRA not to underestimate legal
procedures and skip creditors meetings, since it was IBRA itself
that brought this case to court," he told reporters following the
ruling.

Based on the 1998 Law on Bankruptcy, Comexindo exercised in
late January its right to request a 45-day period of debt payment
suspension in order to negotiate its debts with creditors.

Comexindo proposed to use all of the proceeds from its
collected receivables, amounting to $121 million, to repay its
debts. In addition it pledged to repay its debts with $100
million in annual revenue expected within the next three years.

Hotman said that since IBRA skipped two recent meetings with
Comexindo it was not in a position to claim that Comexindo had
not shown good faith in its debt negotiations.

"If Comexindo had no intention of repaying its debts, why in
the first place did we ask for a suspension of debt payments?"
Hotman questioned.

If Comexindo did not want to settle its debts it would have
simply sought bankruptcy by itself, he added.

Companies requesting a period of debt payment suspension are
allowed a maximum of 270 days or nine months to negotiate debt
settlement with creditors.

However, if the debt payment suspension period ends, the
debtors will automatically be declared bankrupt, with no right to
appeal to the Supreme Court.

IBRA's litigation head, Widodo Mudjiono, expressed his regret
over the ruling, arguing that it was clear Comexindo had lacked
good faith from the outset.

"A gesture of good faith should be demonstrated by making an
initial payment ahead of the debt restructuring negotiations, but
Comexindo refused to do so," Widodo said.

According to him, IBRA insisted that Comexindo pay up 10
percent of its outstanding debts to IBRA but the company ignored
the request.

He said IBRA would no longer file a litigation case against
Comexindo, preferring to wait it out until Comexindo took
concrete measures within the 6-month period it was granted to
settle its debts.

He said IBRA was still hopeful that Comexindo would eventually
pay its debts.

Comexindo's case was the second blow suffered by IBRA after
the same court rejected in January its bankruptcy suit against PT
West Kalindo Pulp Papermill, which was owned by businessmen Thee
Ning Khong and Hasan Basuki. IBRA represented Bank Rakyat
Indonesia in the suit. (bkm)