Regarding Garuda Indonesia's Bankruptcy Options, Deputy Minister Of BUMN: It's Impossible For Owners To Bankrupt Their Own Company

Garuda Indonesia aircraft. (Photo: Wikimedia Commons)

JAKARTA - Deputy Minister of State-Owned Enterprises II, Kartika Wirjoatmodjo emphasized that the government does not want PT Garuda Indonesia Tbk to go bankrupt. He said the bankruptcy option would be taken if the creditors rejected the proposal submitted by Garuda in court related to debt restructuring.

As is known, Garuda Indonesia faces a pile of debts of up to Rp70 trillion and its value continues to grow every month. Currently, Garuda is completing a restructuring to reduce its operational costs amidst the weakening of the company's revenue due to the decline in passengers during the COVID-19 pandemic.

One of the restructuring steps is to renegotiate with 31 lessors.

"It is impossible for the owner to plan to bankrupt his own company. Bankruptcy will occur if creditors reject the proposal submitted by Garuda in court," he told VOI, Thursday, November 4.

Kartika stressed that the government did not want to bankrupt Garuda Indonesia. According to him, the government will seek settlement of the debt either outside the court process or through the court process.

"So the restructuring of Garuda is complex because there are so many domestic and foreign creditors. At this time we are trying our best to negotiate outside the court," he said.

However, Kartika said, if in the process it turns out that there are creditors who take the process of Postponing Debt Payment Obligations (PKPU). So, the government will negotiate in court.

"Well, this negotiation is to seek peace (the legal term). Bankruptcy occurs if the creditor rejects Garuda's proposal. It is the creditor who bankrupts the debt, if Garuda's debt is not paid," he said.

Kartika said that the government supports the efforts made by the management of Garuda Indonesia in rescuing the national airline.

Furthermore, he also said that currently the management of Garuda Indonesia is in talks with creditors to restructure the debt and expects to reach an agreement in the second quarter of 2022.

"We are negotiating with many parties with different needs, so their preferences vary," he said.