Academic journal article Southeast Asian Affairs

Progress in Corporate Debt Restructuring

Academic journal article Southeast Asian Affairs

Progress in Corporate Debt Restructuring

Article excerpt

Some progress has been made in corporate debt restructuring in Indonesia, Malaysia, and Thailand in 2001. However, like bank restructuring, corporate restructuring became more difficult in the worsening economic environment.

In Indonesia, the Jakarta Initiative Task Force (JITF) was established by the government in 1998 to act as mediator and facilitator in corporate debt restructuring cases. By October 2001, JITF had resolved about 58 per cent of corporate debt cases under its portfolio. As at 31 December 2001, Malaysia's Corporate Debt Restructuring Committee (CDRC) successfully resolved about 60 per cent of corporate debt under its portfolio. CDRC has resolved thirty-seven cases amounting to RM34.5 billion. Out of eighty-six applications with total debts of RM66.8 billion, twenty-three cases were withdrawn (or rejected) and eleven were transferred to Danaharta. This leaves twelve outstanding cases with debts amounting to RM18 billion which has yet to be resolved.8

Thailand's Corporate Debt Advisory Committee (CDRAC) had resolved 45 per cent of corporate debt under its control by January 2001. Since then, the completion rate of corporate debt workouts has slowed down considerably. As of October 2001, about 48 per cent of corporate debt had been restructured, a mere 3 percentage points increase from January 2001. According to the World Bank,9 this decline in completion rate is due to the following reasons:

Viable cases have been restructured but the remaining cases are more complex and will take much longer to reach an agreement. …

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