Re PT Garuda Indonesia: Recognition of Foreign Proceeding & Enforcement of Restructuring Plan

The Singapore International Commercial Court heard an application by Irfan Setiaputra and Prasetio, foreign representatives of PT Garuda Indonesia (Garuda Indonesia), for recognition of foreign proceedings and enforcement of a restructuring plan. Greylag Goose Leasing 1410 Designated Activity Company and Greylag Goose Leasing 1446 Designated Activity Company (Greylag Entities) opposed the application. The court allowed the application, recognizing the PKPU Proceeding as a foreign main proceeding and granting the reliefs sought by Garuda Indonesia, subject to specific terms. The court dismissed the objections raised by the Greylag Entities.

1. Case Overview

1.1 Court

Singapore International Commercial Court

1.2 Outcome

Application allowed; PKPU Proceeding recognized as a foreign main proceeding; reliefs sought by Garuda Indonesia granted, subject to terms.

1.3 Case Type

Insolvency

1.4 Judgment Type

Judgment

1.5 Jurisdiction

Singapore

1.6 Description

Singapore court recognizes Indonesian restructuring of PT Garuda Indonesia, enforcing its composition plan despite objections from creditors.

1.7 Decision Date

17 January 2024

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels

3. Judges

Judge Name	Title	Delivered Judgment
Kannan Ramesh	Judge of the Appellate Division	No
Anselmo Reyes	International Judge	No
Christopher Scott Sontchi	International Judge	Yes

4. Counsels

Counsel Name	Organization

4. Facts

Garuda Indonesia is an Indonesian state-owned limited liability company and the national airline of the Republic of Indonesia.
The Applicants are officers of Garuda Indonesia and were appointed as the airline’s joint foreign representatives.
The Greylag Entities are two of Garuda Indonesia’s creditors and lessors of two Airbus aircraft.
Garuda Indonesia commenced a PKPU proceeding in Indonesia to restructure its debts.
The Greylag Entities participated in the PKPU Proceeding but voted against the Composition Plan.
The Composition Plan was homologated by the Jakarta Commercial Court on 27 June 2022.
The Greylag Entities challenged the Homologation Decision, but their appeals were dismissed.

5. Formal Citations

Re PT Garuda Indonesia (Persero) Tbk and another matter, Originating Application No 5 of 2022, [2024] SGHC(I) 1

6. Timeline

Date	Event
1952-08-11	Garuda Indonesia registered in Singapore as a foreign company.
1966-01-01	Garuda Indonesia began operating flights in and out of Singapore.
2016-10-28	Aircraft Headleases entered into between DAL, Garuda France, and Greylag 1410 and between SAL, Garuda France and Greylag 1446.
2016-10-28	Aircraft Subleases entered into between Garuda France and Garuda Indonesia.
2019-09-27	Aircraft Subleases amended to record the Greylag Entities as the new lessors.
2019-09-27	Subordination Agreements entered into.
2019-09-27	Security Agreements entered into between Garuda France and Greylag Entities.
2020-01-28	Greylag Entities issued notices of Events of Defaults to Garuda Indonesia and Garuda France.
2020-02-13	Greylag Entities issued notices of Events of Defaults to Garuda Indonesia and Garuda France.
2020-04-27	Greylag Entities issued notices of Events of Defaults to Garuda Indonesia and Garuda France.
2021-06-04	First winding-up application filed against Garuda Indonesia in the Supreme Court of New South Wales.
2021-08-11	First winding-up application against Garuda Indonesia was discontinued.
2021-10-22	PT Mitra Buana Korporindo filed the PKPU Petition in the Jakarta Commercial Court.
2021-11-12	Garuda Indonesia circulated a restructuring term sheet to its creditors.
2021-11-17	Garuda Indonesia circulated a revised version of the Draft Composition Plan to the creditors.
2021-12-09	Jakarta Commercial Court granted the Temporary PKPU Order.
2022-01-04	Greylag Entities issued notices of Events of Defaults to Garuda Indonesia and Garuda France.
2022-01-05	Greylag Entities registered their claims with Garuda Indonesia’s administrator.
2022-06-17	Creditors’ meeting held; creditors voted in favor of the Draft Composition Plan.
2022-06-27	Garuda Entities filed an application in the Paris Civil Court seeking an attachment order of Garuda France’s bank accounts.
2022-06-27	Composition Plan homologated by the Jakarta Commercial Court.
2022-08-15	Greylag Entities filed a winding-up application against Garuda Indonesia in the Supreme Court of New South Wales.
2022-08-17	Liquidation proceeding commenced against Garuda France in the Paris Commercial Court.
2022-09-23	Applicants filed an application in the US Bankruptcy Court for the Southern District of New York seeking recognition of the PKPU Proceeding.
2022-09-26	Appeal dismissed by the Indonesian Supreme Court.
2022-11-25	Liquidation proceeding against Garuda France was dismissed.
2022-11-29	Applicants brought a separate application seeking to enforce the Composition Plan in the US.
2023-02-07	Greylag Entities filed an application to the Jakarta Commercial Court to nullify the Homologation Decision.
2023-02-09	Garuda France's application to set aside the attachment order was allowed.
2023-05-24	Applicants withdrew the application to enforce the Composition Plan in the US.
2023-08-16	Civil Review Application was dismissed by the Indonesian Supreme Court.
2023-08-28	Solicitors for the Greylag Entities served a request for production of documents on the solicitors for the Applicants.
2023-08-31	Nullification Application was dismissed.
2023-09-07	Solicitors for the Applicants rejected the request for production of documents.
2023-09-08	Greylag Entities filed an appeal against the dismissal of the Nullification Application.
2023-09-12	Greylag Entities filed SIC/SUM 34/2023 for an order that the Applicants produce certain categories of documents.
2023-09-25	SUM 34 was dismissed.
2023-09-25	Hearing of OA 5 began.
2023-09-26	Hearing of OA 5.
2024-01-18	Judgment reserved.

7. Legal Issues

Recognition of Foreign Proceeding
- Outcome: The court recognized the PKPU Proceeding as a foreign main proceeding under Article 17 of the Third Schedule.
- Category: Procedural
Public Policy Exception
- Outcome: The court held that recognition of the PKPU Proceeding would not breach Singapore public policy.
- Category: Substantive
Enforcement of Foreign Order
- Outcome: The court granted relief for the Composition Plan to be recognized and enforced in Singapore under the chapeau to Article 21(1) of the Third Schedule as a foreign order subject to the terms which we have set out above.
- Category: Procedural

8. Remedies Sought

Recognition of PKPU Proceeding as a foreign main proceeding
Recognition of Applicants as foreign representatives
Stay of all claims, enforcement, execution, and dealings against Garuda Indonesia
Recognition and enforcement of the Composition Plan
Entrusting the Applicants with the administration and realisation of Garuda Indonesia’s property and assets in Singapore

9. Cause of Actions

Recognition of Foreign Proceeding
Enforcement of Foreign Order

10. Practice Areas

Commercial Litigation
Insolvency
Cross-Border Insolvency

11. Industries

Aviation
Airline Industry

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Greylag Goose Leasing 1410 Designated Activity Co v PT Garuda Indonesia Ltd	Supreme Court of New South Wales	Yes	[2022] NSWSC 1623	Australia	Cited for the dismissal of a winding-up application against Garuda Indonesia based on state immunity under the Australian Foreign States Immunities Act 1985 (Cth).
United Securities Sdn Bhd (in receivership and liquidation) and another v United Overseas Bank Ltd	Court of Appeal	Yes	[2021] 2 SLR 950	Singapore	Cited for the cumulative requirements that must be satisfied for a proceeding to qualify as a “foreign proceeding” under Article 2(h) of the Third Schedule.
Global Distressed Alpha Fund 1 Ltd Partnership v PT Bakrie Investindo	Court of Appeal of England and Wales	Yes	[2011] 1 WLR 2038	England and Wales	Cited for the exception to the Gibbs Rule, namely that the Gibbs Rule does not apply where a creditor submits to the jurisdiction of a foreign court.
Re Pacific Andes Resources Development Ltd and other matters	High Court	Yes	[2018] 5 SLR 125	Singapore	Cited for examining the soundness of the Gibbs rule in the context of modern cross-border insolvency.
In re HIH Casualty and General Insurance Ltd	House of Lords	Yes	[2008] 1 WLR 852	England and Wales	Cited for the principle of modified universalism, requiring national courts to cooperate with the court of the jurisdiction of the principal liquidation of the debtor.
Ascentra Holdings, Inc (in official liquidation) and others v SPGK Pte Ltd	Court of Appeal	Yes	[2023] 2 SLR 421	Singapore	Cited for the principle that a light threshold should be imposed for recognition, which can then be tempered by granting recognition or relief subject to the imposition of appropriate conditions.
Re Rams Challenge Shipping Pte Ltd and other matters	General Division of the High Court	Yes	[2023] 3 SLR 787	Singapore	Cited concerning the scope of the recognition of foreign proceedings and court orders.
Re Zetta Jet Pte Ltd and others	General Division of the High Court	Yes	[2018] 4 SLR 801	Singapore	Cited for the effect of Article 6 of the Third Schedule and the omission of the word “manifestly”.
Re OGX Petróleo e Gás SA, Nordic Trustee ASA and another v OGX Petróleo e Gás SA (Em Recuperação Judicial) and another	N/A	Yes	[2017] 2 All ER 217	N/A	Cited for the interpretative trend amongst various foreign jurisdictions has recognised that Article 6 of the Model Law is to be applied restrictively.
AJU v AJT	Court of Appeal	Yes	[2011] 4 SLR 739	Singapore	Cited for the principle that where enforcement of a foreign arbitral award is resisted on public policy grounds, the public policy objection in question must involve either “exceptional circumstances … which would justify the court in refusing to enforce the award” or a violation of “the most basic notions of morality and justice”.
Bloomberry Resorts and Hotels Inc and another v Global Gaming Philippines LLC and another	Court of Appeal	Yes	[2021] 2 SLR 1279	Singapore	Cited for the principle that the public policy objection pitched at a high threshold is thus necessarily of a narrow scope.
Stocznia Gdynia SA v Bud-Bank Leasing SP	N/A	Yes	[2010] BCC 255	N/A	Cited for the principle that the courts must be sensitive to procedural and substantive differences between domestic insolvency laws and foreign insolvency laws.
Re Dalnyaya Step LLC (in liquidation); Cherkasov and others v Nogotkov (Official Receiver of Dalnyaya Step LLC (in liquidation))	High Court of England and Wales	Yes	[2017] EWHC 3153 (Ch)	England and Wales	Cited for the principle that potential fraudulent activities may constitute grounds for invoking the public policy objection under Article 6 of the Cross-Border Insolvency Regulations 2006 (SI 2006 No 1030) (UK).
Re Taisoo Suk (as foreign representative of Hanjin Shipping Co Ltd)	N/A	Yes	[2016] 5 SLR 787	Singapore	Cited for the principle that a foreign rehabilitation proceeding should not be recognised if those proceedings would lead to a result that would be unfair to the creditors as a whole, or which would not facilitate the orderly rehabilitation of the company.
Pathfinder Strategic Credit LP and another v Empire Capital Resources Pte Ltd and another appeal	Court of Appeal	Yes	[2019] 2 SLR 77	Singapore	Cited for the need for proper classification of creditors in a restructuring proceeding conducted under Singapore law.
Wah Yuen Electrical Engineering Pte Ltd v Singapore Cables Manufacturers Pte Ltd	N/A	Yes	[2003] 3 SLR(R) 629	Singapore	Cited for the need for proper classification of creditors in a restructuring proceeding conducted under Singapore law.
Re Tantleff, Alan	N/A	Yes	[2023] 3 SLR 250	Singapore	Cited for the principle that relief under the Third Schedule may extend to the recognition and enforcement of foreign insolvency orders.
Rubin v Eurofinance SA	UK Supreme Court	Yes	[2012] 3 WLR 1019	United Kingdom	Cited for the principle that the Model Law is not designed to provide for the reciprocal enforcement of judgments and that Article 21 was concerned with procedural matters only.

13. Applicable Rules

Rule Name
Singapore International Commercial Court Rules 2021
O 12 r 4 of the Singapore International Commercial Court Rules 2021

14. Applicable Statutes

Statute Name	Jurisdiction
Insolvency, Restructuring and Dissolution Act 2018	Singapore
Third Schedule of the Insolvency, Restructuring and Dissolution Act 2018	Singapore
Article 2(f) of the Third Schedule	Singapore
Article 2(i) of the Third Schedule	Singapore
Article 6 of the Third Schedule	Singapore
Article 8 of the Third Schedule	Singapore
Article 17 of the Third Schedule	Singapore
Article 20 of the Third Schedule	Singapore
Article 21(1) of the Third Schedule	Singapore
Law No 37 of 2004 on Bankruptcy and Suspension of Debt Repayment Obligations	Indonesia

15. Key Terms and Keywords

15.1 Key Terms

PKPU Proceeding
Composition Plan
Foreign Main Proceeding
Homologation Decision
Aircraft Leases
Greylag Entities
Foreign Representative
Modified Universalism
Public Policy Exception

15.2 Keywords

Garuda Indonesia
PKPU
Insolvency
Restructuring
Cross-Border
Singapore
Recognition
Enforcement
Composition Plan

17. Areas of Law

Area Name	Relevance Score
Insolvency Law	95
Restructuring and Dissolution	90
Cross-Border Insolvency	85
Bankruptcy	75
International Commercial Law	60
International Law	50
Foreign Law	40
Arbitration	30
Civil Litigation	25
Commercial Law	20
Business Law	15
Contract Law	10

16. Subjects

Cross-Border Insolvency
Recognition of Foreign Proceedings
Enforcement of Foreign Judgments
Restructuring