After settling an agreement with creditors to halve its debt to around $5 billion, flag carrier Garuda Indonesia has requested that a New York court officially recognize the deal under Chapter 15 of the U.S. Bankruptcy Code, the airline’s CEO Irfan Setiaputra told Reuters on September 26, 2022.
The recent debt restructuring deal had been overseen by a court in Jakarta.
Chapter 15 provides effective mechanisms for solving business insolvency cases between the US and foreign courts that involve debtors, assets, claimants, and other parties showing interest in proceedings.
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”.
In June 2022, Garuda Indonesia announced that it had halved its outstanding creditor debt from $10.1 billion to $5.1 billion. At the time, the airline also managed to cut lease rates for wide-body aircraft by at least 65% and by 35% for narrow-body aircraft.
Plans to repackage more than $9 billion of the airline’s debt were given the go-ahead from creditors on June 20, 2022.
Garuda Indonesia filed for debt restructuring in December 2021. While it had been suffering from financial trouble prior to the COVID-19 pandemic, the global health crisis further accelerated these problems.