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- 🤯 Sritex Bankruptcy: How $500M Debt Crushed Indonesia’s Textile Giant
🤯 Sritex Bankruptcy: How $500M Debt Crushed Indonesia’s Textile Giant
From military supplier to court-ordered collapse — the leverage and governance mistakes behind Sritex’s downfall.
Admond Lee
February 15, 2026
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Hey Founders,
Welcome to The Runway Ventures — a weekly newsletter where I deep dive into failed startup stories to help you become the top 1% founder by learning from their mistakes with actionable insights.
Today’s story is about how one of Southeast Asia’s largest vertically integrated textile manufacturers collapsed under its own weight. Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → Stritex
⚠️ 2 Mistakes → Building a capital structure that required constant growth to survive
🧠 3 Lessons Learned → Don’t over-leverage
🔗 The Runway Insights → The AI pricing & monetisation playbook
💰 Southeast Asia Funding Radar → Sleek EV secures $8.5M (Series A) to become APAC’s trusted full stack EV Motorcycle Operating System
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☠️ 1 Failed Startup: Stritex
🚀 The Rise of Sritex
🇮🇩 Founded by H.M. Lukmint as a traditional trading company in 1966, Sritex grew into one of the largest integrated textile-and-garment producers in Southeast Asia.
🕺🏻 Founders’ Story
It started in 1966, when H. M. Lukminto opened a tiny textile trading stall called UD Sri Redjeki in Pasar Klewer, Solo.
👕 He wasn’t manufacturing anything yet — just buying and selling cloth — but he quickly realised trading margins were thin and quality control was outside his hands.
So in 1968, he built his own small fabric printing factory to control production.
🌏 By 1978, the business formalised into Sri Rejeki Isman Tbk, and that small market stall slowly evolved into one of Southeast Asia’s largest vertically integrated textile empires.
The Problem — 👕In the 80s–2000s, the global textile supply chains were fragmented, slow, and inconsistent. If you were a fashion brand or a military procurement officer, you had to:
Buy yarn from one supplier → delays
Send it to another factory to weave fabric → inconsistent quality
Ship it elsewhere for dyeing and finishing → higher logistics costs
Then send it again to a garment factory for assembly → Zero coordination when something went wrong
The Solution — 🏭 Sritex built what was essentially a “one-roof textile ecosystem” where they had:
Integrated spinning → weaving → finishing → garment under one system
Faster lead times and tighter quality control
Reliable large-scale production for global brands and military clients
🇮🇩 → 🏭 → 👔
In short, Sritex turned a fragmented, multi-vendor textile supply chain into a single, vertically integrated production powerhouse under one roof.
 | 🤯 Sritex’s “one-roof” model solved a major industry problem: Fragmented supply chains. Global brands no longer needed to coordinate multiple vendors — Sritex handled everything from yarn to finished apparel. 🤫 Then came the big pivot. |
🪖🪖🪖 In 1994, Sritex entered the high-spec military uniform market, eventually supplying NATO-linked countries and dozens of national armed forces. That move elevated it from a regional manufacturer to a global strategic supplier.
From a market stall… to a vertically integrated textile empire.
🏔️ At its peak, Sritex was:
Generating ~$1.3 billion in annual revenue in 2019
Employing 50,000+ workers
Exporting to 55 countries
Supplying military uniforms to 35 countries
Producing 180 million meters of fabric and 30 million garments annually
📈 In June 2013, it was listed on the Indonesia Stock Exchange (ticker: SRIL), had issued international bonds, and was considered one of Southeast Asia’s largest vertically integrated textile manufacturers.
That was the moment when Sritex didn’t just look successful.
It looked untouchable.
📉 The Fall of Sritex
And then… the empire started cracking.
💸 A $1.3B textile giant, supplying NATO, exporting to 55 countries, suddenly couldn’t pay its bills.
Debt ballooned. Courts got involved. Payments stopped. Creditors revolted.
😮 By the time corruption charges surfaced, this wasn’t just a business downturn anymore. It was a full-blown corporate collapse that wiped out 10,000+ jobs.
📌 Here’s what happened to Sritex:
We’ve waited for almost a year, but our severance pay and holiday bonus haven’t been paid, even though that’s our right.
🏭🏭🏭 The one-roof textile ecosystem
1966 — Sritex began as a traditional trading company “Sri Redjeki,” founded by H.M. Lukminto in Pasar Klewer, Surakarta/Solo.
1968 — First factory expansion: produced bleached and dyed fabrics at its first factory in Baturono 81A, Solo.
16 Oct 1978 — “Sri Redjeki” officially became PT Sri Rejeki Isman.
1982 — Began operating its first weaving factory (moving deeper into integrated manufacturing).
1992 — 🏭 Became an integrated textile-garment company with 4 production lines (spinning, weaving, printing/dyeing, garment).
1994 — 🪖 Entrusted to produce German military uniforms; then expanded to other NATO countries.
1997 — Iwan Setiawan Lukminto entered management.
2001 — Grown 8x larger than 1992 levels after surviving the 1998 crisis.
17 Jun 2013 — 📈 Public listing on the Indonesia Stock Exchange (SRIL), with IPO details including offering shares and funds raised in the ~Rp1.29–1.34T range depending on source.
Oct 2013 — Acquisition of PT Sinar Pantja Djaja widely reported/planned around Rp723bn to expand spinning capacity.
7 Jun 2016 — 💰 Golden Legacy issued $350m 8.25% senior notes due 2021 (guaranteed by Sritex and PT Sinar Pantja Djaja).
27 Mar 2017 — 💰 Golden Legacy issued $150m 6.875% senior notes due 2024 (guaranteed by Sritex and PT Sinar Pantja Djaja).
Sep 2018 — Reuters profiled Sritex as an exporter of military uniforms to 35 countries, including NATO members, highlighting export-driven strength during currency volatility.
2018 (audited) — 💰💰💰 Reported net sales ~$1.0339b (from the 2019 bond offering memorandum historical financials).
9–16 Oct 2019 — 💰 Sritex issued $225m 7.25% senior notes due 2025; proceeds partly used to redeem outstanding 2021 notes.
📉 Debt → refinancing → COVID → bankrupt
2020 — 😷 COVID era pivot included mass mask/PPE production (company reporting in public annual report copies).
19 Apr 2021 — 🚨 PKPU petition filed against Sritex Group by CV Prima Karya.
6 May 2021 — Semarang Commercial Court granted PKPU petition.
May 2021 — ⚠️ Singapore moratorium order issued involving Sritex’s Singapore subsidiary and its linkage to the Indonesian PKPU process (cross-border restructuring layer).
18 May 2021 — 📉 Trading suspension of SRIL shares began (IDX suspension summary carried by IDN Financials).
May 2021 — 😮 Fitch downgraded Sritex to restricted default following an uncured payment default (public rating note).
2022 — A restructuring deal was reached (later referenced as the agreement annulled in 2024).
Jun 2023 — 💸 Octus reported allegations that Sritex ceased required monthly payments under the restructuring from June 2023 (minimum payment amount cited).
2 Sep 2024 — Petition filed by PT Indo Bharat Rayon to annul the 2022 PKPU agreement (per Octus reporting).
Oct 2024 — 💀 Court annulled the 2022 restructuring agreement; Reuters reported the case put Sritex on the brink of bankruptcy and highlighted debt burden and job risk.
18 Dec 2024 — Supreme Court decision No. 1345 K/Pdt.Sus-Pailit/2024 (PT Indo Bharat Rayon vs Sritex and subsidiaries) recorded on the Supreme Court directory.
1 Mar 2025 — 🙏🏻 Sritex ceased operations; 10,665 layoffs reported across group companies.
Mar 2025 — Worker protested and demanded for clarity on severance and THR recorded by labour-rights monitoring coverage.
🤯 Loan-related corruption case…
May 2025 — 🚔 Former president director Iwan Setiawan Lukminto arrested.
AGO and bank executives named suspects in loan-related corruption case.
Aug 2025 — 👮🏻 Jakarta Globe reported detention of Iwan Kurniawan Lukminto as a suspect as the probe expanded.
Dec 2025 — 🚨 Jakarta Globe reported authorities seized Ayaka Suites Hotel as part of money laundering investigation tied to the case.
Sritex didn’t collapse overnight.
📈 It grew aggressively, borrowed heavily to scale, and looked unstoppable at its peak.
📉 But when COVID hit and global demand vanished, the same scale that once made it powerful became its biggest burden.
🙏🏻 Debt piled up, restructuring failed, confidence eroded — and eventually, the courts stepped in.
Want to learn more about Sritex’s downfall?
⚠️ 2 Mistakes
Mistake 1: Building a capital structure that required constant growth to survive
🚨 Sritex scaled aggressively using large USD-denominated bonds ($350M in 2016, $150M in 2017) to expand capacity.
At the time, revenue was rising, military contracts were strong, and global apparel demand looked stable. The strategy was coherent → dominate through scale, lock in export contracts, and let volume service debt.
The underlying belief was that demand volatility would remain cyclical — not systemic.
💣 When COVID collapsed global retail simultaneously, the company’s leverage left little margin for error. Once payments slipped, the situation escalated into PKPU proceedings and eventually bankruptcy.
And here’s how everything collapsed all at once:
High fixed costs + falling revenue → rapid margin compression
USD debt amplified refinancing and liquidity pressure
Legal restructuring reduced managerial flexibility
Creditor confidence deteriorated
Mistake 2: Letting governance crack during financial pressure
When Sritex ran into serious liquidity problems, it entered court-supervised restructuring.
Later, authorities alleged manipulation of financial reports to secure IDR 1.35 trillion in loans. The former CEO was arrested in 2025. These are confirmed legal developments, but the allegations remain subject to court outcomes.
At that point, the company was under extreme pressure — thousands of jobs at stake, creditors demanding payment, operations shrinking. The likely belief was simple:
Secure cash first, stabilise the company later.
But if governance controls weaken during distress (if proven), the crisis changes shape. It stops being just a business problem and becomes a legal and institutional one.
🧠 3 Lessons Learned
Lesson 1: Scale without flexibility is fragile
🏭 Sritex built a beautiful machine.
Spinning → weaving → finishing → garment.
All under one roof.
At 90%+ utilisation?
Incredible margins.
Military-grade precision.
Global credibility.
But…
Fixed cost + volume dependency = fragility
When COVID hit, utilisation dropped. Factories don’t shrink gracefully. Machines don’t go half-rent.
🌮 Key Takeaways:
Vertical integration increases control. But control increases fixed cost exposure.
If your break-even point is too high, volatility becomes existential.
🛠️ Operator Playbook:
🧮 Calculate your “Survival Utilisation Rate”
What % capacity do you need to stay cash-flow positive?
What happens at -20% revenue? -40%?
Do this in a spreadsheet today.
📦 Modularise your cost structure
Lease some production lines instead of owning all.
Use contract manufacturing buffers.
Keep 20–30% flexible capacity via partners in Vietnam, Cambodia, and Indonesia.
For example, companies like Eclat (Taiwan) run vertical integration but diversify geographies and buyer mix.
Lesson 2: Don’t over-leverage
Debt compressed time.
🤑 When Sritex issued $350M in bonds in 2016, then $150M in 2017 — it was smart. But the assumption was this → Global textile demand will remain structurally stable.
When COVID happened, the assumption was broken.
Global demand froze.
Retail shut down.
Debt didn’t pause.
And everything collapsed.
🌮 Key Takeaways:
Leverage doesn’t create risk. It amplifies timing risk.
If your revenue is cyclical but your debt is fixed — the clock always wins.
🛠️ Operator Playbook:
🧠 Run a “Revenue Shock Simulation” every quarter
Ask:
What if revenue drops 30% for 12 months?
Can we service debt without new financing?
💵 Match capital structure to volatility
Textile business = cyclical + commodity pricing pressure.
Better structure:
Longer maturities
Blended financing (equity + debt)
Revolving credit lines, not lump-sum bonds
Lesson 3: Trust is the real balance sheet
When liquidity tightened, Sritex entered restructuring. Then corruption allegations surfaced. Arrests followed.
Whether courts prove everything or not, the damage was immediate.
🙅🏻♂️ Because once creditors suspect misreporting, something irreversible happens → trust disappeared, revenue fell.
And in capital-intensive industries, trust is oxygen.
🌮 Key Takeaways:
Financial stress tests your numbers. Crisis tests your integrity.
If reporting credibility weakens, restructuring becomes impossible.
🛠️ Operator Playbook:
✅ Formalise board-level independence
At least one independent director with finance experience.
Quarterly external audit review (not just annual).
Separate audit committee from operations leadership.
🧐 Lock down related-party controls
Install policy:
All related-party transactions documented and priced at arm’s length.
Independent review required.
Monthly disclosure to board.
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That’s all for today
Thanks for reading. I hope you enjoyed today's issue. More than that, I hope you’ve learned some actionable tips to build and grow your business.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
Disclaimer: The Runway Ventures content is for informational purposes only. Unless otherwise stated, any opinions expressed above belong solely to the author.
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