Arpeni Insolvency to Be Decided in Indonesia, U.S. Court Rules
January 19, 2012, 4:43 AM ESTBy Tanya Angerer and David McLaughlin
Jan. 12 (Bloomberg) -- PT Arpeni Pratama Ocean Line won a court order recognizing Indonesia as home to the shipping company’s main insolvency proceeding.
The decision in U.S. Bankruptcy Court in Manhattan gives the bankruptcy judge the right to enforce the rulings of the Central Jakarta Commercial Court in the U.S. The Indonesian court will oversee the distribution of assets, meaning U.S. creditors will need to file claims in Indonesia.
The ruling may set an example for future Indonesian debt restructuring decisions, whereby a foreign court will accept a debtor’s home jurisdiction. The decision may mean that all creditors on Arpeni’s $141 million 8.5 percent 2013 bonds will have to accept its offer to exchange the securities for cash or floating-rate notes.
“International investors will now have to get their head around the fact that bankruptcy law, as a creature of public policy, has always been intended to trump creditors’ contractual rights in the debt instruments,” Joe Bauerschmidt, a partner at Jones Day working on the case, said by telephone on Jan. 12. “Philosophically, this is the right step to make in an international restructuring.”
This step of prohibiting creditors from bringing actions to the U.S. is “a little while in coming”, said Bauerschmidt.
Arpeni missed its 2013 U.S. bond coupon payment in November 2009 and was suspended from trading on the Indonesian stock exchange in March 2011.
NM Rothschild & Sons Ltd. is sole adviser on Arpeni’s debt restructuring.
--With assistance from William Rochelle and Steve Ludsin in New York. Editor: John Pickering
To contact the reporter on this story: Tanya Angerer in Singapore at tangerer@bloomberg.net
To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net John Pickering at jpickering@bloomberg.net
