Daily Insolvency News Headlines

Australia (1)
Canada (1)
China (1)
Greece (1)
Ireland (1)
Zimbabwe (1)

Mon., March 30, 2015

Mon., March 30, 2015

Greek proposals for a revised bailout program don’t have enough detail to satisfy the government’s international creditors, eurozone officials said, making it more likely that Athens will need to go several more weeks without a new infusion of desperately-needed cash, The Wall Street Journal reported. Officials from Greece’s leftist government were in Brussels over the weekend to present the proposals to officials from the European Commission, the European Central Bank and the International Monetary Fund—the trio of institutions representing the government’s creditors. Getting their thumbs-up is crucial for Athens to regain access to bailout funds and restore normal lending from the ECB. The Greek government is facing a dire shortage of cash: It must pay salaries and pensions at the end of the month and repay debts to the IMF on April 9. While talks over the weekend were friendly, officials said, mistrust at a political level continues to stew between the outspoken government in Athens and the rest of the eurozone. Following a meeting last week between Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel, Greece said it would submit a list of bailout proposals to its creditors on Monday. Officials hoped that discussions over the weekend would ensure the list is roughly in line with the creditors’ demands. But they said crucial details were again missing from the Greek proposals after talks that started Friday night, lasted all day Saturday and continued on Sunday. Read more. (Subscription required.)

Mon., March 30, 2015

Zhou Xiaochuan, China’s central bank governor, warned on Sunday that the country needed to be vigilant about signs of deflation and said policy makers were closely watching the slowing of global economic growth and declines in commodity prices, the International New York Times reported. Mr. Zhou’s comments are likely to add to concerns that China is in danger of slipping into deflation and to underline increasing nervousness among policy makers as the economy continues to lose momentum despite a series of stimulus measures. “Inflation in China is also declining. We need to have vigilance if this can go further to reach some sort of deflation or not,” Mr. Zhou said at a forum in Boao, on the southern Chinese island of Hainan. Mr. Zhou added that the pace at which inflation was slowing was a “little too quick.” Beijing is determined to keep the Chinese economy, the world’s second-largest, after that of the United States, from taking the same path of recession and deflation that has blighted its neighbor Japan for the past 20 years. The central bank’s newspaper warned last month that China was dangerously close to slipping into deflation. Read more. (Subscription required.)

Mon., March 30, 2015

Australia plans to join an Asian infrastructure bank led by China, the government announced on Sunday, reversing an earlier decision taken at the urging of the United States not to become a member. The move made Australia the latest of a list of major American allies to sign up, the International New York Times reported. The office of Prime Minister Tony Abbott said in a statement that Australia still had concerns about the management of the bank but recognized the pressing needs for infrastructure in Asia. The decision will allow Australia to “participate as a prospective founding member in negotiations to set up the bank,” the statement said. Australia said it wanted to ensure that the board of directors had authority over crucial investment decisions and that “no one country,” a reference to China, controls the bank. Among Washington’s main objections to the China-led bank have been concerns that it would seek to undermine the authority of the World Bank and the International Monetary Fund, established after World War II with the United States in the leadership role. The administration has also suggested that, given China’s record on the environment and lack of transparency, the new bank would not meet the standards of existing institutions. The Chinese have countered that bureaucracy at the World Bank and the Asian Development Bank, which is based in Manila and led by Japan, has slowed their capacity to meet demand. Read more.

Mon., March 30, 2015

Comments by a Supreme Court judge on a matter of law could have implications for many hundreds of distressed mortgages loaned by the former Bank of Scotland (Ireland), the Irish Times reported. At the end of 2010 a cross-border merger took place between Bank of Scotland Ireland (BOSI) and Bank of Scotland. As a result, BOSI ceased to exist. Since then, some of the mortgage business of the former BOSI has been sold on to other international finance companies, while the rest of the loans remain on the books of Bank of Scotland. In the course of her ruling in the recent case of Kavanagh versus McLoughlin, Ms Justice Mary Laffoy raised an issue surrounding the fact that Bank of Scotland (Ireland) remained the registered owner of charges over mortgaged properties even though it ceased to exist in 2010. The legal situation is the only way in which the charge on the property can be transferred to a new owner is through an application by the registered owner. But as Bank of Scotland (Ireland) ceased to exist as of December 31th, 2010, it raises the possibility there is no legal way that a transfer could be effected. Read more.

Mon., March 30, 2015

Air Zimbabwe Ltd., the state-owned carrier that declared itself insolvent this month, is considering long-haul routes and seeking partners in an effort to repair its finances, Bloomberg News reported. The airline will decide by the year end whether to start flights to China and Brazil, acting chief executive officer Edmund Makona said in an interview on March 25. Another potential destination is New York, he said. The company’s only current international destination is Johannesburg. “Air Zimbabwe makes a loss by not flying,” Makona said at the company’s headquarters in Harare, the Zimbabwean capital. “There are fixed costs which the airline will be incurring by not flying -- it’s about $2.4 million a month.” The expenditure relates to salaries and maintenance, he said. At its peak in the 1980s, Air Zimbabwe flew to cities including Sydney, London and Athens before running into financial difficulties as the country entered a near-decade long recession that ended in 2009. Pagiel Chimudzi, the airline’s general manager for finance, told lawmakers March 16. that the airline is insolvent and needs investment of about $260 million from the government to stay in business. Read more.

Mon., March 30, 2015

Best Buy Canada, a unit of Best Buy Co., said it will close 66 of its Future Shop electronics stores, or roughly half, while firing 1,500 full- and part-time workers and taking a restructuring charge of as much as $280 million, Bloomberg News reported. Best Buy said in a statement released Saturday that the cost of the consolidation will reduce earnings in its 2016 fiscal year by as much as 20 cents a share. The company, which has pushed to cut costs in its U.S. operations, said it doesn’t expect the move to affect earnings in later years. Best Buy plans to rebrand the remaining 65 Future Shops under its own name while investing up to $160 million to improve operations. The company’s decision to close some Future Shops while rebranding the others reflects the difficult business climate in Canada, where a plunge in the price of oil, one of its key exports, has curbed consumer demand. Best Buy also has struggled to develop the right growth strategy in a geographically dispersed market with a slowing economy, as well as to compete with online merchants. Read more. (Subscription required.)

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