👟 Walk the Talk: Sritex
Acrostics Asia has been ahead of the curve on Sritex’s descent into bankruptcy every step of the way.
Acrostics Asia has accurately predicted key developments preceding Sri Rejeki Isman (Sritex)’s shutdown weeks or even months before they unfolded.
Sritex’s controlling shareholders, the Lukminto family, waged a futile campaign to keep the Indonesian textile company as a going concern.
Acrostics Asia also flagged that the corruption investigation by the Attorney-General’s Office (AGO) would shrink the liquidation pool for creditors.
Key Timeline
Acrostics Asia warned that Sritex’s local in-court restructuring (PKPU) agreement risked unravelling as a trade creditor filed a petition to push it into bankruptcy.
Even if Sritex tried to restructure its debt again, Indonesian shipping company Arpeni Pratama Ocean Line’s bankruptcy in 2019 had raised the bar for a PKPU amendment.
An Indonesian court declared Sritex bankrupt on the basis that the textile company had defaulted on its PKPU agreement.
Acrostics Asia wrote that Sritex’s bankruptcy is a stark reminder that a PKPU deal is like one last chance for a borrower to honour its obligations.
Acrostics Asia conducted a scenario analysis on whether Sritex could be saved from bankruptcy.
Neither of the potential options – overturning the bankruptcy ruling, providing new money to Sritex, or consolidating the textile industry – was feasible.
Acrostics Asia’s review of Sritex’s financials showed that it swung to a net operating cash outflow of USD 5.1 million in the first half of 2024 on a sharp drop in cash from customers and big payments to suppliers.
These numbers indicated that a one-off capital injection would not be enough to turn around Sritex’s operations as its challenges were structural in nature.
Acrostics Asia wrote that Sritex was nearing the end of the road as the company’s appeal against its bankruptcy was rejected by Indonesia’s Supreme Court.
Even though President Prabowo Subianto ordered his ministers to rescue Sritex’s workers, their hands were tied and bailing out the company was not an option.
Acrostics Asia wrote that the Lukminto family and the deputy manpower minister were propping up Sritex with the myth that the company could continue as a going concern.
While Indonesia’s Bankruptcy Law does give the administrators the option of continuing the business, in reality this can only be done in certain circumstances.
Acrostics Asia noted that Sritex trumpeted the size of its workforce as a reason why it should continue its operations, but the job numbers kept changing.
A labour union leader said many workers were already laid off or furloughed before the bankruptcy ruling, while Sritex’s financials showed that the company was reducing payments to employees.
The Indonesian government initially defended Sritex, whose controlling shareholders had a long-standing relationship with former President Joko Widodo.
Acrostics Asia flagged that the efforts of government officials had lost momentum after they realized how complicated rescuing Sritex would be.
Local media reported that Sritex would shut down on 1 March 2025 after terminating around 8,400 workers, confirming Acrostics Asia’s earlier analyses.
Acrostics Asia wrote that the last leg in Sritex’s journey was defined by a failure of accountability as the management blamed everything but themselves.
Acrostics Asia noted that the detention of Iwan Setiawan Lukminto – the eldest son of Sritex Group’s late founder – on alleged loan sidestreaming signalled the depletion of the family’s political capital.
Sritex’s development was being closely watched by other Indonesian clans who were making moves to protect themselves.
An investigation by the Attorney-General’s Office (AGO) into suspected corruption at Sritex had ensnared state-owned bankers.
Acrostics Asia flagged that the recovery for Sritex’s lenders could be even lower if their collateral was confiscated by the AGO to recoup state losses.
The AGO confiscated 72 cars that should have been part of Sritex’s bankruptcy estate, in a move that would likely shrink the liquidation pool for creditors.
Acrostics Asia wrote that AGO has shown the ability and willingness to step in when a soured loan allegedly caused state losses.
Full Acrostics Asia Coverage
📚 Acrostics Anatomy: Sritex’s Bankruptcy Spiral (30 August - 4 November 2024)
📚 Acrostics Anatomy: Sritex’s Desperate Cling (20 December 2024 - 7 February 2025)
📚 Acrostics Anatomy: Sritex’s Broken String (24 February - 13 May 2025)
📚 Acrostics Anatomy: Sritex’s Scavenger Hunt (24 May - 9 July 2025)