The Jakarta Post reports that the US Bankruptcy Court for the Southern District of New York has granted Indonesian telco Bakrie Telecom (BTel’s) request for recognition of its Indonesian debt restructuring plan (or PKPU) as a ‘foreign main proceeding’, overruling a challenge from six holders of the company’s USD380 million notes. The report says that Judge Sean Lane issued a bench ruling on 19 April 2019, determining that ‘the company’s notes indenture, governed by New York law, constituted US property and met eligibility requirements for Chapter 15 and that the company’s foreign representative had been appointed appropriately in the course of its restructuring’. It is understood that the parties involved would now like to negotiate a schedule for the case and report back to the judge.
BTel, which from April 2015 began leasing back network capacity on fellow operator Smartfren’s 800MHz network for IDR30 billion per month in a three-year MVNO-style deal to serve its own customers, is currently inactive. Its demise came despite an eleventh-hour move in March 2017 that saw China’s Huawei reportedly take a more than 16% interest in the company through a debt-for-equity conversion paving the way, it hoped, for the former to recover from its financial woes. At the time, the ailing operator owed the government millions of dollars in licence and frequency rights fees. Previously, in September 2014, BTel noteholders secured a USD161.6 million judgement in the New York state court, after claiming that the telco had ‘misstated its financial position while offering bonds in 2010’. In October that year, a separate filing was made by a different creditor in the Jakarta court to push BTel into a PKPU. BTel subsequently restructured USD780 million-worth of debt in that case, including the notes, but the decision of that restructuring was questioned by its noteholders and, unhappy with the outcome, the noteholders pushed Judge Lane not to recognise the Indonesian restructuring as a foreign main proceeding, arguing that the case constituted a ‘complete disenfranchisement’ of the noteholders. For his part, Judge Lane said the court ‘was not in the position to resolve disputes that occurred in the company’s Indonesian restructuring as it related to a motion for Chapter 15 recognition’.