Enormous debt forces Garuda Indonesia to file for bankruptcy

Robert Besser
30 Sep 2022, 04:33 GMT+10

Last week, Garuda Indonesia asked a New York bankruptcy court to recognise its recent debt restructuring agreement in a Jakarta court, under Chapter 15 of the U.S. Bankruptcy Code
If there is the presence of a U.S. financial interest in proceedings, Chapter 15 smooths the cooperation between U.S. and foreign courts
Under the agreement overseen by a bankruptcy court in Jakarta in June, Garuda and its creditors agreed to halve its debt to some $5 billion

JAKARTA, Indonesia: Irfan Setiaputra, CEO of Indonesian flag carrier Garuda Indonesia, has confirmed to Reuters that last week the airline asked a New York bankruptcy court to recognise its recent debt restructuring agreement in a Jakarta court, under Chapter 15 of the U.S. Bankruptcy Code.

If there is the presence of a U.S. financial interest in proceedings, Chapter 15 smooths the cooperation between U.S. and foreign courts.

Under the agreement overseen by a bankruptcy court in Jakarta in June, Garuda and its creditors agreed to halve its debt to some $5 billion.

However, this restructuring agreement is being challenged by an Ireland-based aircraft lessor, Greylag Goose Leasing, in the country's Supreme Court.

Greylag Goose has objected to the calculation of their claims, at some $152.07 million under the restructuring agreement.

During a parliamentary hearing this week, finance ministry senior official Rionald Silaban said Boeing, one of Garuda's lessors, has yet to agree to participate in the restructuring plan, but "will eventually participate."

Boeing, whose claims are estimated at $822 million, has not immediately responded to requests for comment.

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