Solo. Sri Rejeki Isman (Sritex), one of Indonesia’s largest textile companies, has furloughed 3,000 employees following the Supreme Court’s rejection of its bankruptcy appeal. The financially troubled company owes approximately Rp 14.42 trillion ($891.7 million) to 27 banks and Rp 220 billion to three financing firms.

The decision comes after the Semarang District Court declared Sritex bankrupt in October 2024. The ruling left Sritex struggling to secure raw materials, further constraining its operations.

“Our operational flexibility is increasingly limited as some raw materials, particularly chemicals, must be imported. We are now exploring domestic alternatives,” said CEO Iwan Kurniawan Lukminto on Saturday.

The company’s furlough policy, initiated in November, aims to temporarily manage its workforce of 20,000 employees spread across Semarang, Boyolali, and Sukoharjo. Lukminto clarified that the measure is not a mass layoff but a response to material shortages. However, he warned that if supply chain issues persist, more furloughs or even layoffs may follow.

Sritex plans to pursue a judicial review as a final legal recourse, though Lukminto expressed disappointment with the court's decision. “We are surprised by the Supreme Court's ruling. We believed our legal arguments were strong, but the court sided with the initial bankruptcy ruling,” he said.

The company’s debt woes have raised concerns, but Lukminto highlighted that Sritex has maintained strong relationships with most creditors. Only Indo Bharat Rayon, one of 20 creditors, initiated the legal proceedings leading to bankruptcy.

Founded 58 years ago, Sritex is a major player in Indonesia’s textile industry, supplying military uniforms to NATO countries and employing a large workforce across Central Java. Its bankruptcy has raised concerns over potential job losses and the broader impact on the textile sector, which is vital to Indonesia’s economy.