Leather supplier CV Cisarua has revoked its bankruptcy litigation against local manufacturer of Adidas shoes PT Prima Inreksa Industries (PII) after reaching an amicable

settlement on the latter’s  outstanding debt.

In its press statement Tuesday, the lawyer for Cisarua, Suyud Margono, said PII had paid its US$163,046 debt to Cisarua after reaching  a peaceful settlement as a result of  mediation.

“Based on the peaceful settlement, Cisarua has agreed to revoke its bankruptcy suit logged with the Jakarta commercial court,” said the statement.

Cisarua filed the lawsuit after PII had failed to pay the debts. Cisarua could then hope to recover the debts in court or to create a favorable climate for an out-of-court settlement.

The firm believed PII was not in the financial difficulties that it claimed to be, since it was still

operating and employing about 5,000 workers.

According to data from the Industry Ministry, last year PII also had debts amounting to $8 million to suppliers while owing around $37.25 million in outstanding debts to Bank Negara Indonesia (BNI).

Cisarua, according to its lawyer Yakobus Eko Adrianto, initially filed the suit together with BNI because under the existing regulations, bankruptcy litigation requires at least two companies to act jointly as plaintiffs.

PII president director Paulus Harli had earlier said that he had no idea about the litigation and he refused to comment further on it.

PII has been facing a string of bankruptcy cases after its main buyer, the world’s second-largest sportswear manufacturer, Adidas Group, placed its final orders with them last year.

Adidas, which ordered 201 million pairs of shoes from the Indonesian shoe industry last year, had been ordering 500,000 pairs of shoes per month from PII since 1997, but this reliable contract came to an end.

Adidas and PII signed last August a final partnership agreement in which the final date for the termination of the business relationship was Dec. 31, 2008.

PII was one of six Indonesian companies manufacturing sport shoes for Adidas.

Before facing the negative impact of the global economic downturn affecting export orders and revenue, PII — located in Banten, Tangerang — had produced a high volume  of shoes annually for Adidas.

Adidas has been manufacturing sports shoes in Indonesia for about 20 years.

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