Bank Mandiri, the country's biggest bank, is set to proceed with a lawsuit against the Djajanti Group after failing to secure a deal in a negotiation with the company over its US$120.3 million overdue debt.
"We will process *the settlement* directly in the court and there will be no delay," Bank Mandiri's director for special asset management, Abdul Rahman, said in a press release issued Tuesday.
He added the decision was made following the collapse of talks between the bank and the group's founders, Burhan Uray and Soejono Varinata, mediated by the Central Jakarta District Court.
The negotiation, which began in September, ended on Oct. 12, with the group founders failing to submit settlement schemes required for the settlement of the debt.
"It's clear they do not have good intentions, even though they were given the opportunity for mediation," Rahman said.
He added both group founders had shown "little responsibility" as indicated by the condition of the group. Mandiri pointed out three of the group's subsidiaries - PT Artika Optima Inti, PT Djarma Aru and PT Biak Mina Jaya - had been declared bankrupt.
The Jakarta Post failed Wednesday to contact the group founders for comments.
The case began when five subsidiaries of the Djajanti Group failed to repay their debts, which were supposed to be settled in November 2004.
Mandiri had taken the case to the Central Jakarta District Court in August, but the judges ordered a mediated negotiation between the two parties.
The move to force the Djajanti Group to repay debts is part of Mandiri's efforts to recover major loans owed by bad debtors.
Mandiri is in the process of recovering debts from seven bad debtors with total loans valued at $270 million.
Among the bad debtors are plantation firm Benua Indah Group and coffee producer Tripanca Group. To date, Mandiri has recovered Rp 120 billion ($12.84 million) from auctioning off debtors' assets.
The recovery of bad loans is aimed at reducing the net performing loan (NPL) ratio of the bank.
Mandiri's NPL ratio stood at 1.09 percent in the first half of the year, slightly higher than the 1 percent it recorded in the same period last year.
Mandiri's first-half net profits rose 12.1 percent to Rp 2.927 trillion in 2009.
