Garuda Indonesia Appeals for US Chapter 15 Bankruptcy

DALLAS - After undergoing a debt restructuring deal in Jakarta, Indonesian flag carrier Garuda Indonesia (GA) has requested that the United States Bankruptcy Court in New York court acknowledges the move under Chapter 15 of the US Bankruptcy Code.

Chapter 15 provides an effective system for handling foreign insolvency cases that is of financial interest to the US. It allows cooperation between the US courts and foreign nations. According to Garuda CEO Ifran Setiaputra, the airline appealed at the end of last week. He reiterated that this process does not indicate bankruptcy of the company.

Simply put, the purpose of the request is to let the court recognize the results of the restructuring under the local legal process known as the Suspension of Debt Payment Obligations, which GA has now completed.

Turbulence

In June, Garuda and its creditors agreed to halve its debt to approximately US$5.1bn in a restructuring deal in Jakarta. However, the agreement has since been challenged by the Supreme Court of New South Wales in Sydney, Australia, by the aircraft lessor, Greylag Goose, managed by New York-based private equity firm Avenue Capital Group. The lessor objected to their calculated claims of US$152bn.

Boeing is another creditor yet to participate in the restructuring agreement. While addressing parliament, a senior finance ministry official, Rionald Silaban, stated that Boeing "will eventually participate." Currently, the claims from Boeing to GA are approximately US$822m.

Featured Image: Garuda Indonesia Boeing 777-300ER. Photo: Alberto Cucini/Airways