Indonesia gives nod to foreign lenders' rights in 'unprecedented' ruling

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An Indonesia court handed an "unprecedented" victory to foreign lenders, paving the way to more protection for foreign investment. PRC law firms, faced with a prolonged domestic economic downturn, are trying to find answers in Malaysia and other emerging markets. Tell us what you think [email protected] and [email protected]

Foreign creditors triumph in Indonesia court

A recent ruling by an Indonesian court that fully admitted claims worth $560 million by private lenders to PT Visi Media Asia, allowing them to participate as creditors in the debt restructuring mechanism of the media company, has been hailed as “unprecedented” by the country’s lawyers.

Going against the general trend of favouring domestic lenders in debt restructuring, Judge Kadarisman Al Riskandar of the Central Jakarta Commercial Court overturned a decision by court administrators who had earlier rejected the claims.

The ruling marks a pivotal moment in the landscape of corporate restructuring within Indonesia, highlighting both the strengths of the Penundaan Kewajiban Pembayaran Utang (PKPU) – the country’s chief debt restructuring mechanism – and the reforms needed to enhance its effectiveness and attractiveness to foreign creditors.

The commercial court's ruling indicates a shift towards recognizing the rights of foreign creditors within the Indonesian insolvency framework, potentially encouraging more international investment in the region, say legal experts from the region.

“Although the Indonesian legal system does not follow precedent (stare decisis), the decision by the Jakarta Commercial Court in this case still sets a positive precedent for claims filed by international creditors during PKPU proceedings in Indonesia." - Rahayu Ningsih Hoed & Rudy Andreas S. , Makarim & Taira S.

The latest judgment has brought the strengths and challenges of Indonesia's restructuring system under the spotlight, especially as the largest ASEAN economy sees an inflow of foreign investor interest across sectors recently.

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You've got a friend in me

Chinese law firms are increasingly setting their sights on Malaysia. In June alone, two major PRC firms, Yingke Law Firm and Grandall Law Firm, established offices in the "Golden Peninsula."

These firms are following in the footsteps of their clients. In 2023, the Malaysian government approved 64 investments from China, valued at $2.6 billion and creating more than 10,000 new jobs, according to yanfei yao , the executive director at Yingke Law Firm 's Malaysia office.

Malaysia's significant Chinese immigrant community, robust manufacturing history, and burgeoning tech sector have made it a prime destination for Chinese companies expanding abroad.

With an eye on the country's growing semiconductor industry, these firms aim to mitigate China's chip supply crisis exacerbated by U.S. sanctions. Malaysia's rich manufacturing base and strategic geographical position also make it an ideal location for Chinese companies to relocate their factories, explains Li Chun, founding partner at 国浩律师事务所 .

For Chinese law firms, Malaysia is pivotal in their broader expansion plans. Fang Weicheng, director at Grandall's Malaysia office, notes that a presence in Kuala Lumpur enables Chinese firms to consolidate resources across ASEAN countries.

Additionally, Malaysia's Islamic cultural backdrop provides a conducive environment for Chinese firms to gain experience and strengthen ties with the larger Muslim world, including the Middle East, a region anticipated to be a key investment destination for Chinese companies over the next five years.

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Also read

• Operation expansion: After the pandemic, PRC law firms have expanded internationally, and ASEAN, Latin America, and Central Asia are their top destinations. Beyond assisting PRC companies with greenfield investments, these new offices are extending their services to cover compliance and dispute resolution. DeHeng Law Offices , Tahota Law Firm and Wang Jing & GH Law Firm shared their experiences in their expansion exercise. (Hu Yangxiaoxiao)

• 'Compliance scenario': One key task for lawyers in China helping clients manage their overseas operations is to ensure compliance in various areas including ESG, data security, labour laws, sanctions, and anti-bribery matters. Marquee PRC firms 君合律师事务所 , Zhong Lun and Commerce & Finance Law Offices explain the notion of "compliance scenario". They also stress the importance of obtaining global certifications, such as ISO standards, as a way to demonstrate a company's compliance achievements. (Hu Yangxiaoxiao)

Find out more from the latest issue of ALB China edition

Want to know more? Write to [email protected]

• Skadden, Arps, Slate, Meagher & Flom LLP and Affiliates has advised Japan's Otsuka Pharmaceutical on its $1.1 billion agreement to acquire Boston-based Jnana Therapeutics, which was represented by Latham & Watkins . (ALB)

• Cyril Amarchand Mangaldas and Latham & Watkins are advising Indian e-scooter maker Ola Electric on its proposed $734 million initial public offering in India, the largest of the year so far. Shardul Amarchand Mangaldas & Co and 年利达 are advising the book-running lead managers for the deal. (ALB)

• Messrs Lee Choon Wan & Co is advising Malaysia's top mini-market chain retailer 99 Speed Mart Retail on its planned $509 million IPO, the country's biggest in seven years. Christopher & Lee Ong, a member firm of Rajah & Tann Asia is counselling the underwriters. (ALB)

Singapore

• Ex-K&L Gates managing partner Sreenivasan Narayanan has left the firm with two senior associates to launch commercial disputes and corporate advisory firm Sreenivasan Chambers LLC .
• Withersworldwide has added a two-lawyer real estate team from Shook Lin & Bok, led by partner Chau Hwei Lee .
• Han Kun Law Offices has added corporate partner Chuo Ming Leong along with his team from Withers KhattarWong.

China

• 年利达 has bolstered its Greater China team with the hire of a trio of lawyers from Clifford Chance, led by partner Christine Xu .

India

• Cyril Amarchand Mangaldas has been on a partner hiring spree, bringing in a 50-plus capital markets team led by Manan Lahoty from IndusLaw, M&A partner Alok Sonker from K Law, former IndusLaw employment partner Sowmya Kumar, and corporate pro Jay Parikh from Luthra and Luthra Law Offices.

Thailand

• Japanese law firm Anderson Mori & Tomotsune has bolstered its Bangkok office by hiring corporate specialist Natira Siripun as a partner from local firm SRPP.

Indonesia

• TNB & Partners , which operates in association with Norton Rose Fulbright , has hired disputes and arbitration specialist Erie Tobing as a partner from Soemadipradja & Taher.

The wait is finally over! We have revealed the finalists of this year's ALB Hong Kong Law Awards. Our heartfelt congratulations to all the private practice lawyers, in-house counsel, and top-class legal teams who've made onto the list.

It's our privilege to celebrate the pinnacle of Hong Kong's legal profession. Join us on Sep 13 (Friday) at the JW Marriott hotel for the gala dinner to witness the brilliance, triumphs, and the remarkable resilience of the industry. Secure your table today.

Mark your calendar for our premier event for in-house legal professionals Hong Kong In-House Legal Summit on Sep 12 (Thursday). And join us in Singapore on Sep 26 - 27 for our second Pan-Asia Regulatory & Anti-Corruption Compliance Summit this year. Get you ticket today.

The South India Top 15 In-House Counsels ranking celebrates these unsung heroes who serve as strategic advisors and legal architects, guiding their companies through the complexities of South India's evolving legal landscape. Send us your nominations before Aug 9 (Friday).

And don't miss out taking the shot to be recognized as South India's top law firms and rising lawyers. Deadline for submissions is also Aug 9 (Friday).

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