Luxembourg-based creditor Molucca wants local paper company PCP to start repaying its loans. (Photo from Freepik.com)
Molucca Holdings Accuses Pelita Cengkareng Paper of Going to Court to Avoid Repaying Loans
BY :MUHAMAD AL AZHARI
JUNE 21, 2019
Jakarta. Molucca Holdings S.a.r.l. or Molucca, a Luxembourg-based creditor to Pelita Cengkareng Paper, or PCP, has stated its intention to prove at the Central Jakarta District Court that its right-to-claim on PCP is valid and enforceable under Indonesian law.
"We have strong evidence to be presented to the judges to support our case that PCP has an obligation to repay its debt to Molucca. PCP has made us a defendant in a series of frivolous and baseless claims. The fact is, PCP continues to default on their payment obligation to us. PCP has resisted reasonable efforts to restructure their debts or repay their loans. We suspect PCP has now gone to court to stall repaying their legal obligations," Molucca representative Kalesta Fong said in a press release on Friday.
PCP has filed a legal suit against Molucca, Permata Bank and a number of their staff in an attempt to get the court to declare that the loan assignment from Permata Bank and Molucca was invalid.
"Assignment of receivables by an act of cession is a common practice between domestic and international lenders," Fong said.
"This is a very simple case. PCP's attempt to make the loan assignment appear more complex than it really is ignores the basic banking regulations and laws of Indonesia," she said.
Permata Bank issued the original secured loan to PCP in 2013 to build a new paper plant in Subang, West Java.
Problems with the plant led PCP to default on the loan, valued at that time at around Rp 413 billion ($29.2 million).
The outstanding principal and interests on the loan to date are in excess of Rp 512 billion. Molucca has been experiencing difficulties in collecting interest and principal payments from PCP.
In 2017, Molucca acquired PCP's non-performing loan portfolio which was sold, assigned and transferred from Permata Bank. The sale, assignment and transfer of rights over a non-performing loan portfolio to a third party as the new creditor is a common practice in Indonesia and around the world.
Molucca tried to work with PCP to improve the company's performance and restructure its capital to improve the paper company's long-term viability. Without much progress or significant cooperation from PCP over a period of 12 months, Molucca was forced to apply for a debt postponement petition in April last year to restructure the debts and improve PCP's operational cash flow – this was expected to lead to a more consistent repayment of the principal loan and interests by PCP.
But in response, PCP's directors filed the "frivolous" claim in the civil court with, as the creditor claimed, the intention of avoiding the repayment to Molucca.
"This is a crucial case for the Indonesian court system. They should give a fair and transparent hearing to Molucca so the banking and investment community can be confident that Indonesian courts do recognize the basic rights of secured lenders," Fong said.