Foreign lenders struggle for recourse in Indonesian restructures

Author: Brian Yap | Published: 7 Jun 2016

Counsel in Indonesia have pointed to the difficulty facing foreign lenders in seeking legal recourse against their onshore borrowers amid the global commodity price glut.

Indonesian oil and gas companies, which have found themselves knee-deep in restructurings in recent months, have been further hit by regulatory hurdles that make the act of taking security over assets a near impossibility.

Indonesia saw the successful closure of one of the region’s biggest restructuring deals involving shipping giant Berlian Laju Tanker, in which the restructuring was settled out of court, last December.

"Regulated industries in Indonesia present a whole series of challenges in relation to restructuring because it is often not possible to take security over the key operating assets," said Timothy Hia, partner at Latham & Watkins in Singapore, adding that "a lender or creditor seeking to obtain some form of recourse against onshore oil and gas or other similar assets...