US Ex-Im has won a summary judgement against Asia Pulp & Paper (APP) to recover over US$104mn, in what has become Asia's biggest corporate default to date.
APP, a Singapore-based manufacturer of paper products announced in March 2001 it would cease repayment of its worldwide debts totalling approximately US$13.9bn.
Since then, US Ex-Im has been involved in extensive talks with APP and its Indonesian operating companies which have also defaulted on payments, with the aim of reaching an accepted restructuring agreement that avoided the need for litigation.
However, ultimately US Ex-Im rejected a proposed restructuring agreement and decided to take the case to court, with the US attorney's office litigating the case.
Commenting on the judgement, Howard Schweitzer, US Ex-Im Bank general counsel asserts: "The federal court’s decision is a victory for US taxpayers. It also reaffirms creditors "rights and demonstrates that no company, regardless of its size, is above the law."
The three principal Indonesian companies named as defendants in the suit are PT Indah Kiat Pulp & Paper, PT Pabrik Kertas Tjiwi Kimia, and PT Pindo Deli Pulp & Paper Mills. The lawsuit alleged that the three defendants defaulted on 13 loan agreements with US Ex-Im, and that APP had unconditionally guaranteed repayment of three of these loans.
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