Flag carrier Garuda Indonesia has asked a New York court to formally recognize the agreement under Chapter 15 of the U.S. Bankruptcy Code after reaching a settlement with creditors to reduce its debt by half to roughly $5 billion, the airline’s CEO Irfan Setiaputra said to Reuters on September 26, 2022.
A Jakarta court was in charge of overseeing the most recent debt restructuring agreement.
Chapter 15 offers efficient methods for resolving commercial insolvency cases involving debtors, assets, claimants, and other parties with an interest in the proceedings between US and international courts.
According to the Administrative Office of the US Courts, the goal of Chapter 15 is to “promote cooperation and communication between US courts and parties of interest with foreign courts and parties of interest in cross-border cases” by “explicitly charging the court and estate representatives to cooperate with foreign courts and foreign representatives”.
Garuda Indonesia declared in June 2022 that it has cut its outstanding creditor debt in half, from $10.1 billion to $5.1 billion. The airline was able to reduce lease rates for wide-body aircraft by at least 65% and for narrow-body aircraft by 35% at the time.
On June 20, 2022, creditors approved the airline’s plans to repackage more than $9 billion of its debt.
In December 2021, Garuda Indonesia submitted a request for debt relief. It already had financial issues before the COVID-19 epidemic, but the global health crisis made these issues worse.