Indonesia's Telkomsel appeals bankruptcy ruling

Telkomsel (Jakarta, Indonesia) has lodged an appeal against its bankruptcy ruling earlier this month, according to the Jakarta Globe newspaper, in a case that highlights the shortcomings of the country’s legal framework and the risks to businesses operating within it.

The state-backed operator was declared bankrupt on September 14 after being found guilty of failing to pay a debt of 5.3 billion rupiahs ($555,000) to Prima Jaya Informatika, a former business partner.

Telkomsel had agreed to provide 120 million vouchers and 10 million SIM cards to Prima Jaya, which managed to sell only about half a million of them.

The operator approved the sale of more vouchers to Prima Jaya in May but claims not to have received any payment for them. When Prima Jaya placed another purchasing order in June, Telkomsel rejected it and moved to terminate its contract with the company.

Prima Jaya responded by filing the bankruptcy lawsuit against Telkomsel, arguing that the operator’s contract termination had cost it as much as 200 billion rupiahs.

Telkomsel lawyers say that judges ignored that fact that Prima Jaya had not settled previous payments with the operator.

The operator says they also refused to acknowledge evidence showing that Telkomsel has previously settled debts with Extent Media, a content provider.

Under Indonesian law, companies can be declared bankrupt if they have at least two creditors and the debts they owe one have matured.

The ruling looks particularly inappropriate given that Telkomsel reported net income of $770 million last financial year.

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