Indah Kiat Supreme Court Decision

The Supreme Court recently decided on some bond papers issued by Indah Kiat (some $500m worth). it's a complicated legalese around stuff i don't really understand (count on my co-host to explain when he's awake!), but the decision basically renders the bond agreement null in void.

In effect, it nullifies the bond and thus awarding Indah Kiat Pulp and Paper with $500m windfall (since the bond agreement was deemed in breach of Indonesian law, it -logically- frees indah kiat from its obligation to the bondholders). Among other problems (legal certainty issues, etc.) similar structure is used for many other bonds namely, PT Inti Indorayon Utama, PT Astra International, PT HM Sampoerna, PT Medco Energi, and PT Excelcomindo Pratama. While the decision itself was careful to note that it doesn't rule on the obligation itself (limited to the agreement), it's still an interesting case, nevertheless.

This is yet to make headlines (and unlikely so) - mainly because the primary creditors chose the quieter route and went with settlement deals instead.
It's also probably too complicated for most mainstream media to take notice at this stage as the implications are not yet clear.
And also the obvious fact that everybody involved would prefer to do this quietly -except those who lose. In the IKPP case, the losing parties are mostly vulture funds that bought the bonds at huge discount anyway (some 2c/$1) - ironically so since the bond was only dumped for the discounted value after APP danced around in its debt restructuring program earlier and resulting in this bonds to be in the hands of the 'distressed asset fund' investors.

Apparently this was even discussed with GWB on his visit last week. The Supreme Court is about to rule on another case (IKPP affiliates, Lontar) and already, ALL the major law firms in town are busy on their tails looking for the decision documents to explore the new exciting possibilities. This is probably the hottest decision coming from the court in many years. Except too many people would prefer that this is kept away from the public (they'd prefer to have the less scrutiny on the decisions so they can move forward with filing their own cases).

Several rating agencies overseas had already taking drastic steps in downgrading Indonesian bond ratings and flaunting the case as a major step backward in the legal system.

That's about as much as i could pretend to understand about this. Shoot me email, (or shoot my co-host) then we'll probably be back for more.