In business world, the uncertainty of economic condition may put firms in the risk of experiencing financial distress or bankruptcy. Therefore bankruptcy is a phenomenon that isoften greatly feared the company, either by the owner or the management. Means the companyunable to run its operations properly and could not produce normally. Thus the company isconsidered to have failed in business or unable to pay its debts. However, filling for bankruptcyis also considered the most appropriate solution to resolve the issue of corporate debt that couldnot be resolved (Fuady, 2008).For the growth of the company, there is a need of increasing demand for additional capital. Thusthe company borrow capital to creditors in this case the financial institutions, both banks and thefinancial institutions of non-bank financial institutions. Working capital loans by these creditorsabide the consequences in accordance with the payback period is determined by both parties i.e.debtor and creditor (Saliman, 2005). Nevertheless, prediction error towards the continuity of capital in the future can cause severe loss for the company.
PT Kertas Nusantara
The business atmosphere in Indonesia is highly competitive. It is often occurs ups and downs interms of gains and losses. Consequently, few companies lose money and eventually go out of business. PT Kertas Nusantara (formerly PT Kiani Kertas) experienced the bankruptcy condition
company owning a large pulp mill in Berau East Kalimantan by Prabowo Subianto,Indonesian politician conglomerate of great movement of Indonesian Party (Gerindra). As oneof the biggest pulp and paper companies in Indonesia and the biggest in South East Asia, it haslots of controversy since its established in 1997 especially high debts. In 2004, Prabowo boughtthe company from IBRA (Indonesian Bank Restructuring Agency) or BPPN, and being funded by the bank loan of USD 230 million. Then it processed into a well-established company calledPT Kertas Nusantara (PT KN). Along the way, the company had difficulty working capital.Thus a number of domestic and foreign investors intend to invest in this company.Unfortunately all ended without a deal.The case started in 2005. Allied Ever Investment Ltd, a Hong Kong based company, has filed bankruptcy lawsuit against PT Kertas Nusantara for defaulted payments of US$20 million. It began since its receivables that arise from the agreement signed debts on December 20, 2004.The issue has been on and off until 2011. Indeed it is a negative publication for Prabowo whonominate as presidential candidate in 2014. The company admitted that they could not complete