Herbert Smith Freehills and Hiswara Bunjamin & Tandjung advise 13 lessors on US$13.8 billion debt restructuring of Garuda Indonesia

Herbert Smith Freehills and associate Indonesian firm Hiswara Bunjamin & Tandjung have represented multiple lessors in Garuda Indonesia’s restructuring, Indonesia’s largest restructuring in recent years.

Amongst the 13 parties advised by the teams was Garuda's single largest lessor, which leased 32 of the 200 aircraft leased to Indonesia’s national airline.

On 17 June 2022, the restructuring plan won approval from the vast majority of the airline's creditors, staving off the risk of bankruptcy at the flag carrier. The process, which had been ongoing since December 2021, involved 511 creditors and total debt of US$13.8 billion.

From the outset, the team had to navigate a myriad of complex legal and structural challenges. The high-profile matter covered many areas, from cross-border negotiations to aircraft leasing structures in offshore jurisdictions.  

“We are delighted to have represented major lessors in one of the most complex and significant restructurings in the Indonesian market,” said Debby Sulaiman, Hiswara Bunjamin & Tandjung's disputes and restructuring partner.

"We worked seamlessly with Herbert Smith Freehills' aviation finance partners Siva Subramaniam and Samuel Kolehmainen in Singapore, reflecting our combined aviation sector expertise across the region.”

The restructuring was led by Debby, Siva and Samuel, assisted by teams drawn from both firms, including senior associate Roni Heilig Marpaung and associates Bunga Febriola Putri and M. Rizky Hadi Eka Putra in Jakarta, and associate Shi Yin Gan in Singapore.

Herbert Smith Freehills’ market-leading aviation restructuring practice has been particularly busy as a result of the global pandemic. It recently advised Bain Capital on the high-profile acquisition and restructuring of the Virgin Australia Group, as well as various creditors in the insolvency proceedings involving PAL, AMX, Avianca and Thai Airways. In Indonesia, Hiswara Bunjamin & Tandjung has advised aviation clients including Air Asia, Lion Air, Wings Air, Mandala Air, Batavia Air, Pelita Air and Transnusa Airlines on both restructuring and financing matters.

In Jakarta, Herbert Smith Freehills' international counsel practise on secondment to associate firm Hiswara Bunjamin & Tandjung, one of Indonesia’s leading commercial and corporate law firms.