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)