Indonesia labour group urges state bailout for troubled textile giant Sritex
JAKARTA, Oct 28 (Reuters) -A major labour group in Indonesia has called on the government to bail out troubled textile giant Sritex, after President Prabowo Subianto ordered his ministers to save the firm from bankruptcy.
Prabowo, who took office last week, has ordered his cabinet to find solutions for Sritex quickly, after a court last week accepted a petition by one of its trade partners over unpaid debt, which has put the firm, which employs about 50,000 people, on the brink of bankruptcy.
Sritex had $1.6 billion of debt as of June.
Said Iqbal, chairman of the labour party, a prominent workers' movement and political party, said a state bailout is one solution to prevent massive layoffs that may come from Sritex's bankruptcy.
"The government needs to provide bailout funds to settle Sritex's debts," he said on Sunday, adding another solution was state intervention in the legal process to annul the bankruptcy decision.
Sritex, which has produced clothes for high street brands like H&M HMb.ST, Rip Curl and Forever 21, as well as military uniforms for the North Atlantic Treaty Organization (NATO), has suffered from weak global demand and cheaper imported fashion.
It struck a deal with its creditors in 2022 to restructure more than $1.4 billion of debt but the court last week ruled to annul that agreement following the petition by its trade partner PT Indo Bharat Rayon.
Industry Minister Agus Gumiwang Kartasasmita said the government was working to find the right measures to ensure Sritex's operations and to avoid layoffs, according to state news agency Antara.
Sritex's outstanding debt to Indo Bharat Rayon as of June was at 101.3 billion rupiah ($6.48 million) or 0.4% of its total liabilities, Sritex said in a stock exchange filing.
Indo Bharat Rayon did not immediately respond to request for comment.
Sritex has filed an appeal against bankruptcy and has asked for government's support, the company said in its Instagram account.
($1 = 15,635.0000 rupiah)
Reporting by Stefanno Sulaiman; Editing by Martin Petty
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