By: Anastasia Marie Greer
St. John’s University School of Law
In In re PT Bakrie Telecom TBK, the bankruptcy court for the Southern District of
York recognized an Indonesian insolvency proceeding under Chapter 15 of Title 11 of the United
States Code (the “Bankruptcy Code”), but denied a request to enforce the Indonesian
plan approved in the Indonesian proceeding.1 PT Bakrie Telecom Tbk (the “Debtor”)
Indonesian cellular telecommunications company that defaulted on scheduled interest payments
under certain notes (the “Notes”) issued by Bakrie Telecom Pte. Ltd. (the “Issuer”), a wholly-
subsidiary of BTEL.2 The Notes were issued under an Indenture governed by New York law—
with The Bank of New York Mellon as trustee (the “Indenture Trustee”).3 Before both
BTEL negotiated a debt restructuring plan (the “Plan”) with certain noteholders. However, an ad
group of noteholders (the “Objecting Noteholders”) refused to participate in the negotiations and
sued BTEL in New York state court demanding immediate payment.4
In the Indonesian proceedings,5 the Indenture Trustee, on behalf of the Objecting
Noteholders, filed proofs of claim6 and objected to the proposed plan, arguing, among other
things, that they had “insufficient information . . . to make an ‘informed vote’” and their requests
for documents were ignored.7 Ultimately, the Indonesian court approved the Plan over the
Indenture Trustee’s objection.8 Thereafter, BTEL appointed Mr. Abi (the “Foreign
to file a petition under Chapter 15 of the Bankruptcy Code for an order recognizing the
Indonesian proceeding as a foreign main proceeding and enforcing the Plan in the United States.9
The Objecting Noteholders opposed that request.10
Finding that all the requirements for recognition under Chapter 15 were satisfied, the
bankruptcy court for the Southern District of New York granted the Foreign Representative’s
request and recognized the Indonesian proceeding as a foreign main proceeding. The court,
however, was not satisfied that the plan should be enforced in the United States because it was
troubled with certain issues.11 In particular, the plan contained a third-party non-debtor release of
claims under the Notes, but “there [was] no clear and formal record” indicating “whether or how
the foreign court considered the rights of creditors,” if any, as to the release.12 Indeed, according
to the bankruptcy court, there was nothing in the Indonesian judgment nor anything presented by
the Foreign Representative to justify the third-party release.13 These issues fell short of the
“clear and formal” record required for the court to extend comity to the plan.14
Recognition is generally formulaic. If certain requirements are met, a court must
recognize a foreign proceeding. Here, those requirements were satisfied and the New York
bankruptcy court granted recognition to the Indonesian proceeding. However, enforcement of a
foreign plan is discretionary, and a U.S. court may refuse to enforce a plan in the U.S. if it is
satisfied that creditors were given due process or were sufficiently protected in connection with
the approval or implementation of the foreign plan. Here, the court expressed certain concerns,
but did not fully close the door to enforcement in the U.S. Instead, it invited the Foreign
Representatives “to return to the [international forum] to further develop the record on this
1 In re PT Bakrie Telecom TBK, 628 B.R. 859, 874 (S.D.N.Y 2021) (finding that, “[w]hile the Objecting Noteholders contend that they were unfairly treated during the PKPU Proceeding, these arguments go more to whether their rights as creditors were appropriately protected,” and are “not really about the collective nature of the proceeding”).
2 Id. at 864–65.
3 See id. at 867.
4 Id. at 866.
5 See Id. at 868.
6 Id. (“The PKPU Plan eliminated millions of dollars in past due interest and provided that 30% of the debt on the Notes was to be paid in cash over an extended period of time and 70% was to be converted to Mandatory Convertible Bonds with a term of ten years at Indonesian rupiah (“Rp” or “IDR”) 200 per share.”).
7 Id. (“Such consent, the Indenture Trustee argued . . . was necessary for the Issuer to submit its claim and vote at the creditors' meeting on the proposed PKPU plan.”).
8 Id. at 869.
10 Id. at 869.
11 Id. at 892.
12 Id. at 884 (“[T]he record contains no information about how this third-party release was presented . . . or whether any creditors were heard—or even had the ability to be heard—as to a third-party release.”).
13 Id. at 885 (“The lack of such explanation is particularly noteworthy given the testimony of the Objecting Noteholders' expert witness that a third-party release is not standard for Indonesian PKPU proceedings but instead must be justified under Indonesian law.”).
14 Id. “[B]ased on the current record, the Court cannot conclude that the Foreign Representative has met its burden for granting the additional relief.”).
15 Id. (“Of course, the parties are free to return to the Indonesian Court to further develop the record on this issue, consistent with the substantive and procedural requirements of Indonesian law.”).