Flag carrier Garuda Indonesia has asked a New York court to formally recognise the agreement it reached with creditors to cut its debt in half to around $5 billion, according to statements made by CEO Irfan Setiaputra to Reuters on 26 September. The agreement was reached under Chapter 15 of the U.S. Bankruptcy Code.
A court in Jakarta oversaw the latest debt restructuring agreement.
Business bankruptcy cases, including debtors, assets, claimants, and other parties expressing interest in proceedings, can be effectively resolved between US and international courts with the use of Chapter 15’s processes.
Chapter 15 is intended to “explicitly charge the court and estate representatives to work with international courts and foreign representatives” in cross-border cases, as stated by the Administrative Office of the US Courts.
Garuda Indonesia reported a reduction of its outstanding creditor debt from $10.1 billion to $5.1 billion in June 2022. In addition, the airline was able to reduce lease rates for wide-body aircraft by at least 65% and for narrow-body aircraft by at least 35% at the time.
Creditors approved plans to restructure more than $9 billion in airline debt on June 20th, 2022.
In December of 2021, Garuda Indonesia sought reorganisation of its debt. They were having financial difficulties even before the COVID-19 pandemic hit, but that situation was exacerbated by the global health crisis.
Creditors have given Garuda Indonesia the OK to implement its restructuring plan.