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Garuda files debt restructuring recognition under Chapter 15 in US
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An aviation security officer rides a bicycle as he patrols at the Garuda Maintenance Facility (GMF) AeroAsia, at Soekarno-Hatta International airport near Jakarta, Indonesia, Jan. 21, 2022. (Reuters/Willy Kurniawan)
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ational flag carrier Garuda Indonesia has filed a request under Chapter 15 of the United States bankruptcy code in New York to recognize its debt-restructuring deal, which it agreed in a Jakarta court last June.
The airline made the request on Friday. According to Investopedia, the code allows for cooperation between US and foreign courts when foreign bankruptcy proceedings touch upon US financial interests.
The deal contains majority creditors’ approval for a proposal to restructure Garuda’s US$10.1 billion liabilities, which after the process would be halved to just $5.1 billion.
“It is important that we ask for recognition from many jurisdictions. For now, we’ve filed in the United States under its Chapter 15,” Garuda CEO Irfan Setiaputra told reporters on Monday after a meeting with House of Representative’ Commission XI, which oversees finance and the state budget.
Read also: Garuda still faces repayment risks, possible lawsuits: Experts
The request was necessary, as Garuda made the deal under a debt-suspension case (PKPU) in the local jurisdiction, the scope of which is limited to those willing to follow Indonesian law.
However, several Garuda creditors, including Boeing, decided not to back the its debt-restructuring proposal, therefore, according to some experts they may still pose a risk to the airline, as lawsuits are still possible overseas.
