Declared Bankrupt, Sritex Has Faced a Capital Deficiency Since 2021

The Semarang Commercial Court declared PT Sri Rejeki Isman Tbk (Sritex) bankrupt on Thursday, October 24, 2024. The court granted PT Indo Bharat Rayon's petition to annul the peace agreement within the postponement of debt payment obligations (PKPU).

The petition to annul the peace agreement was registered in August 2024 under number: 2/Pdt.Sus-Homologasi/2024/PN Niaga Smg jo. Number 21/Pdt.Sis-PKPU/2021/Pn Niaga Smg.

The bankruptcy decision of Sritex is quite shocking. This is because the issuer with the stock code SRIL is one of the largest textile companies in Indonesia.

Previously, since 2017, Sritex's sales had increased, reaching their highest level in 2020 at US$1.28 billion. During the 2017-2020 period, Sritex also consistently recorded profits.

However, in 2021, its sales began to decline. Since then, they have continued to experience losses until 2023, in line with unfavorable global conditions due to the impact of the Covid-19 pandemic and the outbreak of the Russia-Ukraine war.

The decline in sales affected Sritex's ability to pay its obligations, leading to a default on its 2018 medium-term notes (MTN) worth US$18.73 million at the end of 2023.

Accumulated losses during 2021-2023 also resulted in Sritex experiencing negative equity or capital deficiency, where the company's liabilities exceeded its assets.

In 2023, Sritex's total liabilities reached US$1.6 billion, while its total assets were only US$648.99 million. Thus, in 2023, Sritex's equity was minus US$954.83 million, as shown in the graph.