Thursday, February 25, 2021 - 14:28





Singapore, armed with an attractive regime under its Insolvency, Restructuring and Dissolution Act, is emerging as the choice jurisdiction for some Indonesian companies looking to restructure their debts. This creates opportunities and challenges for both international and local lawyers in Singapore that focus their practice on debt restructuring.

The Asian Business Law Institute (ABLI) sat down with Ms Tahirah Ara, Managing Partner Singapore and Head of Asia of Mishcon de Reya LLP, who represented PT Bumi Resources Tbk in one of the largest and most complex debt restructurings ever completed in Southeast Asia, amongst her other extensive experience acting for Indonesian clients in debt restructurings.

ABLI: You enjoy a stellar reputation for your work focusing on Indonesia. Do you mind sharing with us how it all began?

Tahirah Ara (TA): I was fortunate to work on a few Indonesian transactions early in my career. However, Indonesia deals became my key focus after I moved to an international firm about 14 years ago. That firm focused mainly on cross-border Indonesian work.It was also at that international firm that I started working with Indonesian clients, and I am grateful that some of them are still clients of mine today! Over the years, I have had many opportunities to work on some of the largest deals done in Indonesia. For example, just last year I represented the Indonesian parties in a landmark project financing deal with Air Products Inc. to build a US$ 2 billion coal to methanol plant in Borneo.

ABLI: Spealing of the largest deals, we must mention the Bumi deal which won you many accolades. You were lead counsel in its successful multi-creditor US$4.5 billion debt restructuring, a complex matter that included both a PKPU court-supervised restructuring in Indonesia and a Chapter 15 recognition in the US. Looking back, what is your biggest take-away from it?TA: I quickly learnt that having legal skills alone is not enough for managing a transaction of this size and complexity. Also critical are the skills required for advance preparation, strategy and negotiation. The deal was a major undertaking, but we successfully exchanged eight syndicated bank loans and three international bonds amongst other debt into loans, notes, MCBs, equity and contingent value rights, which hundreds of creditors could individually choose from in a debt exchange.

This deal also has many "firsts". It is one of the rare Indonesian PKPUs that was successfully implemented. I also understand that the composition agreement which we helped put together is now the precedent used for all other PKPUs.

ABLI: You mentioned that Indonesia became the focus of your work about 14 years ago. Over this long period, have you noticed any change among the Indonesian clients you work with?

TA: The level of sophistication of Indonesian clients has markedly increased. Previously they tended to gravitate towards brand name firms, but now they are more likely to look at the track-record of an individual lawyer and his/her ability to complete deals and protect clients' interests.

I also feel that Indonesian clients prefer their lawyers to be “trusted advisors” to whom they can turn for legal advice generally rather than simply external counsel engaged for specific transactions. This fits well with the approach of Mishcon where I am the Managing Partner of Singapore and Head of its Asia practice since our focus is on high-net-worth individuals and their businesses.

ABLI: As pandemic-induced corporate restructurings intensify, do you anticipate more Indonesian companies turning to offshore jurisdictions, including Singapore, to restructure their debts? How do you and your team plan to capitalize on your collective expertise to meet such demand?  

TA: Each restructuring is unique depending on the profile of the company and those of its creditors, the locations of the company's assets, as well as the types and size of its debts. In addition, from the company's perspective, sometimes a private restructuring can be done and is indeed preferred, while at other times, the company may be better off turning to Singaporean or Indonesian courts.I am fortunate to work with a team that has vast experience acting for borrowers/issuers on restructurings. For example, we have advised on loans, high-yield bonds and unique products such as contingent value rights. Coupled with New York and English law capabilities, I am confident that we are best placed to advise borrowers on their restructurings.

Tahirah will be speaking at a webinar co-organised by ABLI and INSOL International at 4pm (SGT) on 29 March to discuss the use of Singapore (and other offshore jurisdictions) to restructure Indonesian companies. Alongside her co-speakers Michael Carl, Senior Foreign Legal Advisor of SSEK Legal Consultants and Meiyen Tan, Partner and Head of Restructuring & Insolvency of Oon & Bazul LLP, she will tackle some burning questions such as why Indonesian companies are looking to restructure in Singapore and in which situations does a Singapore restructuring work well (or not at all). Sign up now here.