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Indonesian Court Issues Bankruptcy Proceedings Against Telkomsel
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Indonesia's largest mobile network by subscribers, Telkomsel has been formally declared bankrupt by the Jakarta State Court, thanks to a legal dispute with a prepay voucher reseller.
The bankruptcy was automatically applied thanks to an Indonesian law that stipulates that if a company has missed payments for two creditors, then it can be deemed to be bankrupt, regardless of the financial health of the company.
The company has issued a statement confirming that its finances are perfectly healthy and it is seeking to resolve the legal dispute.
The matter concerned a decision by the company to suspend the reseller account of Prima Jaya and an unrelated decision to suspend a mobile content agreement with PT Extent Media.
Both companies sued to recover their losses, and with two outstanding debts, the Jakarta court issued the bankruptcy order.
Technically, the government should now seize the company assets and dispose of them to settle the debts - which reportedly amount to a mere US$560,000. The regulator confirmed that it is working to ensure the network continues providing services while the legal dispute is resolved.
There is also local speculation as to why the Judge in the case didn't seek an alternative to bankruptcy and whether this case may finally lead to an overhaul of the outdated legislation which enables small creditors to hold the threat of bankruptcy over companies while a payment is in dispute.
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