JAKARTA (REUTERS) - Indonesia's communications ministry has appealed to the country's Supreme Court against PT Bakrie Telecom Tbk's debt restructuring, a minister told Reuters on Friday.
Bakrie Telecom, part of the heavily indebted Bakrie Group, held a creditors' vote last year on its restructuring proposal, which was then validated by a Jakarta court.
The company said that 94.5 per cent of its creditors had approved its proposal, but some of its bondholders said they were excluded from the process and were receiving a tiny fraction of their money as a result of the vote.
If the Supreme Court overturns the Jakarta court decision,"the restructuring plan is deemed to have failed and the company is placed into bankruptcy and liquidates," said Hal Hirsch, a lawyer representing investors who had sued Bakrie Telecom over its $380 million bond in New York.
Liquidation would lead to "a significantly greater return"for the bondholders compared to what they would get if the Jakarta court decision were upheld, Hirsch said.
Bakrie Telecom owes licence and frequency rights fees to the government, which did not get to vote on the restructuring proposal, Rudiantara, Minister of Communication and Information Technology, told Reuters.
"During their restructuring process, we were not informed, we were not involved," Rudiantara said by telephone. "We request that their debt to the government is not part of the restructuring."
Joel Hogarth, a partner at Ashurst LLP, who advises Bakrie Telecom, said there was no legal basis under Indonesian law for the ministry to be treated as a preferred creditor and his client was likely to contest it.
Bakrie Telecom owes 1.2 trillion rupiah (S$121 million) to the Indonesian government, Hogarth said. "If the ministry of communications is successful, it would reopen the debt restructuring. But as far as I can tell, I don't see any legal ground for the petition at the moment," he said.