Daily Insolvency News Headlines

Fri., October 24, 2014

Fri., October 24, 2014

CSA Czech Airlines said that its key shareholder Korean Air Lines Ltd. has agreed to inject fresh capital into the country’s flagship carrier as it seeks to overcome its current financial struggles, The Wall Street Journal Emerging Europe blog reported. “The offered sum is within expectations of CSA laid out in the company’s restructuring plan,” CSA Czech Airlines’ spokesman Daniel Sabik told the Wall Street Journal Thursday, referring to the required maximum financing needs that in September were estimated at about $20 million. Thanks to the company’s improved performance in recent months “it’s possible the actual figure may be even lower,” said Jakub Puchalsky, the spokesman of Czech Aeroholding AS, a state-owned company which is currently in the process of reducing its stake in CSA Czech Airlines to 19.74% from 53.74%. Korean Air Lines, which holds a 44% stake in CSA Czech Airlines, was earlier reluctant to invest in the airline amid the ownership changes in the carrier. For that the Korean carrier has recently sealed an agreement with Prague-based and privately held Travel Service airline to co-operate on the management of CSA Czech Airlines. Travel Service, which has recently agreed to acquire 34% of CSA Czech Airlines from Czech Aeroholding, is expecting to obtain regulatory approvals of its transaction in coming weeks. The deal will leave the Czech government with the minority stake in the airline held through Czech Aeoroholding, which also owns the operator of the international Vaclav Havel Airport Prague in the Czech capital. Read more. (Subscription required.)

Fri., October 24, 2014

Pressure is growing on Russia's central bank to adopt more radical measures to defend the tumbling rouble, such as interest rate rises, but there is no easy fix, Reuters reported in an analysis. The bank's board meets on Oct. 31 to discuss monetary policy and there is growing speculation it may soon raise rates to support the rouble, which is being hit by plunging oil prices and Western sanctions imposed over the Ukraine crisis. The bank says it is also weighing other measures, including long-term dollar loans to banks, as it tries to restore calm to markets. The rouble has lost more than 16 percent of its value against the dollar over the last three months, and the central bank has spent over $15 billion (9 billion pounds) of its foreign reserves to defend it. While there is little sign that the fall is causing public panic, the central bank's goal of reducing inflation to 4.5 percent next year -- from around 8 percent at present -- means it cannot ignore the rouble's slump, which is pushing up import prices. And if the currency's decline gains momentum as some predict, it could yet cause wider financial instability such as runs on bank deposits. Read more.

Fri., October 24, 2014

European banks are likely to need about €10 billion ($12.6 billion) to address shortages of capital identified in a regulatory review, an amount modest enough to cheer markets, investors and analysts say, The Wall Street Journal reported. On Thursday, European regulators planned to privately disclose to around 150 lenders the results of a “stress test” designed to measure the strength of their balance sheets and their ability to survive a deteriorating economic environment. The scorecards will be made public on Sunday in a choreographed series of announcements in London, Frankfurt and other financial capitals across the continent. The European Central Bank and the European Banking Authority, the institutions running the exams, have touted the tests as the toughest ever conducted. But investors are betting that fewer than two dozen mostly smaller banks will flunk. They say such an outcome could boost stock prices of European banks and, in the longer term, spark a flurry of mergers among small lenders. Read more. (Subscription required.)

Fri., October 24, 2014

Tesco’s profits for the first six months of 2014 have been nearly wiped out by the toxic combination of the recent accounting scandal and slumping sales at its declining UK store empire, The Guardian reported. In another dark day for the supermarket giant, the accounting fiasco claimed the scalp of chairman Sir Richard Broadbent and the company said it was withholding million-pound payoffs to its former chief executive Philip Clarke and finance director Laurie McIlwee until an investigation into its mis-stated accounts by the City watchdog was complete. Pre-tax profits crashed 92% to just £112m as Britain’s biggest retailer revealed the month-long investigation by the accountancy firm Deloitte had found a bigger hole in its books than previously thought. More damagingly, Tesco claimed that the rogue accounting practices – which relate to how the supermarket banks payments from suppliers – dated back at least two years. Confidence in what was once one of the most respected companies in the FTSE 100 was further rocked by an admission that it could no longer estimate how much profit it would make this financial year, as there were too many uncertainties surrounding its future direction. Its shares slid more than 6% to 171p, wiping another £1bn off the value of the business. Tesco is now worth just half of its value in January. Read more.

Fri., October 24, 2014

The Cabinet yesterday green-lighted the establishment of a project team tasked with implementing new insolvency procedures, CyprusMail reported. According to a statement, the team will comprise of at least three officers from the Department of Companies and Official Receiver, as well as the finance ministry, which is the project manager. Where necessary, the team will work and liaise with the public administration and personnel department, the ministry of labour and social insurance, the ministry of the interior and the ministry of justice, the finance ministry’s Department of Information Technology Services, and the Treasury. Under the terms of its bailout agreement, Cyprus must by year’s end enact new insolvency legislation to facilitate debt restructuring. Government technocrats and lawmakers are currently hammering out an omnibus bankruptcies bill. A committee has been set up comprising a representative from each of the parties, save AKEL, who declined to participate. The insolvency legislation – consisting of six items – is designed to complement foreclosures-related legislation, the aim being to weed out uncooperative borrowers and give solvent debtors incentives to settle their arrears with banks. Read more.

Fri., October 24, 2014

Wellington-based aviation company Vincent Aviation, which has about 30 workers, has gone into receivership, Stuff.co.nz reported. In a public notice released today, Stephen Tubbs from BDO was appointed receiver of the company, which was established in 1990 and is based at Wellington Airport. The move comes after an application to liquidate the company was lodged last week lodged in the High Court by ANCL Investments. Owner Peter Vincent said last week that the action taken by ANCL Investments was a "serious situation" for his company. He blamed the collapse in May of Vincent Aviation Australia, based in Darwin but owned by Vincent Aviation in New Zealand. The balance sheet from the Australian arm of the company showed its debts outweighed its assets by A$8.8 million (NZ$9.86m). Vincent said the application to liquidate its New Zealand operations related to lease and maintenance provision payments for a BAe 146 aircraft, known as a Whisperjet. Read more.

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