Daily Insolvency News Headlines

Fri., December 19, 2014

Fri., December 19, 2014

Foreign banks have fled Russia in dramatic fashion in 2014, cutting back their exposure to the country well ahead of the latest escalation of the rouble crisis, the Financial Times reported. Overall syndicated loan volumes this year collapsed to just 14 per cent of the 2013 total, as western lenders retrenched from a market that looked increasingly risky as the year progressed. Foreign banks are expected to continue retreating next year, putting further pressure on Russia’s already fragile economy. Russian national income is believed to have stagnated this year, but the central bank forecasts it could contract by as much as 4.7 per cent if oil prices remain at the current level of $60 a barrel. “There will probably be a credit crunch,” said Magdalena Stoklosa, an analyst at Morgan Stanley. “The appetite to lend has already decreased dramatically. For the banks it’s not just about credit quality, it’s also the earnings risk that comes from a fall-off in business.” Read more. (Subscription required.)

Fri., December 19, 2014

Creditors of Mriya Agro Holding Plc said they presented the Ukrainian agricultural group with their own plan to restructure about $1 billion debt, Bloomberg News reported. Bondholders and lenders want the company to hire a chief restructuring officer and have submitted a “detailed proposal” to help rescue the company and avoid insolvency, according to an e-mailed statement from Rothschild, their financial adviser. Tension between management and creditors has been growing since Mriya said in August it missed payments on some of its obligations. Mriya is struggling to service its debt as Ukraine’s conflict with pro-Russian rebels in eastern regions pushes the country’s economy into the deepest recession since 2009. The Ternopil-based company, which announced the departure of its Chief Financial Officer Oleksander Cherniavskiy this week, said it’s prepared to cede control to creditors if they agree to its restructuring plan by year end. “The company and the shareholders have effectively opted out of a consensual restructuring process, which increases the likelihood that the company may be forced to file for insolvency,” according to the statement e-mailed by Rothschild today. “Any such filing would be against the creditor committees’ wishes.” Creditors should reach an agreement on the restructuring by year-end, or the group would have to cut jobs and start bankruptcy proceedings for some units, Mriya said on Dec. 16. Read more. (Subscription required.)

Fri., December 19, 2014

Dutch sportscar maker Spyker, one-time owner of Sweden's Saab, declared bankruptcy on Thursday, after failing to secure a critical bridging loan it had hoped would help it refinance and restructure, Reuters reported. The company, formed in 2000 to resurrect an early 20th century Dutch auto marque, had filed for protection from creditors earlier this month, hoping to stave off collapse. Victor Muller, the company's founder and chief executive, said he would now work to resurrect the group and focus on electric vehicles -- the latest twist for a company that once fielded a Formula 1 racing team and briefly held Saab before selling it on to Chinese-owned NEVS AB in 2012. Read more.

Fri., December 19, 2014

Every urban real estate market is different in mainland China, driven by myriad municipal and provincial regulations and the varying strength of local economies. But the outcome is the same: The property market is under serious pressure, the International New York Times reported. Prices for newly constructed housing fell 1 percent to 9 percent in recent months in all 70 mainland cities tracked by the national government, according to data released Thursday. Prices kept falling in November compared with October in all but three cities, where they were unchanged. Weak real estate prices are a major challenge for Beijing as it tries to manage an economic slowdown. The Chinese economy, which a few years ago was increasing at an annual 10 percent to 12 percent pace, is now growing at about 7 percent — a rate that President Xi Jinping described last month as “a new normal of China’s economy.” The government has already cut interest rates and authorized state-controlled banks to pump out more loans to prevent the economy from sagging even further, as the housing market has stalled. Read more.

Fri., December 19, 2014

Killorglin Credit Union (KCU) in Kerry has been subsumed into Tralee Credit Union (TCU) following a High Court application on Thursday by the Central Bank, the Irish Times reported. The move follows a secret four-year engagement with regulators to repair its balance failed. It had needed a €3.1 million injection just to meet regulatory reserves. A report prepared by the special resolution unit (SRU) of the Central Bank for the governor, Patrick Honohan, blamed KCU’s woes on poor corporate governance, a decision to invest €5.4 million in a new premises that is now worth €450,000, and potential losses on a series of “bullet loans” with delayed repayments, including several to directors and staff at KCU. The SRU’s report, prepared prior to Thursday’s application, warned of the possibility of a run on KCU if members, whom it said were “unaware” of the credit union’s true position, found out what was going on. Read more.

Fri., December 19, 2014

Latvian Saeima passed amendments to the Insolvency Law in the final reading today, stipulating that the amendments will come into force on March 1, 2015, reports LETA. The government originally approved amendments to the Insolvency Law on September 25, according to which bank mortgages issued to borrowers who buy a home/apartment, and have no other domicile, will be considered non-recourse loans. Commercial banks were very critical of these amendments, saying that they will cause credits to become more expensive due to which commercial banks will no longer interested in the state housing support program for families with children. The president Andris Berzins promulgated the law, yet criticized the risks that these amendments could pose to Latvia's national economy. Coalition members indicated that it would be necessary to work on these amendments in order to make the said principle an optional choice, instead of a mandatory procedure. However, the coalition is planning to review this matter only in January. Read more.

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