By
Bloomberg
Published
December 19, 2024
Indonesia's Supreme Court has upheld the bankruptcy ruling of struggling textile company PT Sri Rejeki Isman, according to people familiar with the decision, risking layoffs for tens of thousands of its employees.
The court on Wednesday rejected the appeal by Sritex – as the company is more commonly known – to overturn a lower court ruling in October that declared the company bankrupt, said the people, who asked not to be identified because the decision is still pending. It was not public.
The ruling will create uncertainty for the company's approximately 50,000 employees. Indonesian President Prabowo Subianto had previously ordered his ministers to propose rescue options for the company, once the country's largest clothing maker.
The textile industry is one of the largest employers in Indonesia and any widespread job losses would be an early setback for Prabowo's new government, which aims to accelerate economic growth to 8% from the current pace of 5%.
A court on the island of Java, where Sritex is headquartered, granted the bankruptcy petition against Sritex in October after the company and its subsidiaries failed to meet a payment obligation set out in a debt restructuring agreement starting in 2022. .
The clothing giant, which has sewn clothes for global brands such as H&M, Uniqlo and Zara, fell into difficulty during the pandemic after orders fell. It reached an agreement with creditors in early 2022 to restructure IDR 20 trillion ($1.2 billion) in debt, but has since struggled to recover from the impact of the pandemic.
Sritex's chairman and CEO declined to comment when interviewed by Bloomberg on Thursday. Calls to the company's chief financial officer went unanswered.
