Singapore's International Commercial Court (SICC) has recognized the Indonesian bankruptcy of PT Sri Rejeki Isman Tbk (Sritex), a major Indonesian textile manufacturer. This landmark ruling is significant as it marks the first time an Indonesian corporate bankruptcy has been recognized in Singapore, potentially streamlining cross-border debt recovery for other companies. The decision allows Sritex's court-appointed curators to investigate two Singaporean subsidiaries, Golden Legacy Pte Ltd and Golden Mountain Textile and Trading Pte Ltd, and trace the utilization of $725 million raised through senior notes listed on the Singapore Exchange (SGX) between 2016 and 2020. The curators had previously stated they were unaware of how these proceeds were used, whether they flowed to the Indonesian entities, or if they were held in Singapore.
The SICC granted further relief, including a stay preventing secured creditors from enforcing their security without court approval or the curators' consent. This is an unusual move, as secured creditors typically operate outside of insolvency proceedings. The court justified this by citing concerns over potential fraud and embezzlement, with several former Sritex personnel having been investigated in Indonesia. This measure aims to protect and potentially enhance the pool of assets available for distribution to creditors, especially given the difficulty in tracing the note proceeds.
Additionally, the SICC granted the curators broad administrative powers to investigate Sritex's affairs in Singapore. This general power eliminates the need for curators to seek individual orders against specific banks or advisors, making the investigative process more efficient. The relief was granted on the condition that any distribution or repatriation of assets out of Singapore would require court leave, ensuring judicial oversight. This ruling aligns with the UNCITRAL Model Law on Cross-Border Insolvency, as adopted in Singapore, and could encourage more effective collaboration between Indonesian and Singaporean courts in future cross-border insolvency cases.
