Changes to legislation reducing the State’s bankruptcy term from 12 years to three were announced today by Minister for Justice Alan Shatter, the Irish Times reported. Announcing the package of measures, the Minister said they “complete the reform of our personal insolvency and bankruptcy legislation”. Mr Shatter said the measures “will address the circumstances of insolvent debtors”. “Critically, there will now be automatic discharge from bankruptcy after three years from the date of adjudication – a significant reduction from the current 12 years,” he said. “Bankruptcies currently existing for three years or more at today’s date will be automatically discharged after a further six months have elapsed.” There are currently a total of 189 people who have been adjudicated bankrupt by the court. Of these, 73 have been in bankruptcy three years and over and will now be eligible for automatic discharge six months from today’s date. This delay is in order to allow time for an objection to discharge to be entered by the Official Assignee in Bankruptcy Christopher Lehane, who administers bankruptcy, or a creditor where they may consider it warranted. Mr Lehane said the enactment of the legislation means there is now “a viable bankruptcy solution for debtors in financial difficulty”. Read more.
Daily Insolvency News Headlines
Wed., December 4, 2013
Russian billionaire Oleg Deripaska's Central European Aluminum Company (CEAC) is suing Montenegro for 100 million euros ($140 million) over the failure of its aluminum plant there, Reuters reported. A statement issued in Cyprus, where the Russian company has its headquarters, CEAC said the case will heard in Vienna. The statement said Montenegro violated a 2010 settlement agreement, leading to the plant going bankrupt. In a separate statement, Montenegro's government denied any wrongdoing. Deripaska's company in 2005 bought a 58.7 percent stake in Kombinat Aluminijuma Podgorica (KAP), which in its heyday in the late 1970s had employed 5,000 people. In a debt for equity deal, the Balkan country's government took back half of that stake in 2009 and the arrangement was sealed in 2010. Deripaska is also co-owner and chief executive of Rusal , the world's biggest aluminium producer, which is feeling the effects of a weak aluminium price and the cost of maintaining net debt of around $10 billion. Read more.
Ukrainian bond yields soared and the price of insuring against a default on government debt surged yesterday as tens of thousands of demonstrators continued to protest in the country’s biggest political crisis in nearly a decade, the Financial Times reported. Extended political uncertainty, with disruption to government work and the threat of strikes, could damage Ukraine’s already fragile economy and public finances, analysts warned, increasing the risks of a currency crisis. The price of insuring against a default on Ukrainian debtin the next five years rose almost 100 basis points to 1,067bp. The yield on the junk-rated sovereign dollar bonds due in June 2014 jumped 274 basis points to a record 19.34 per cent. Russian president Vladimir Putin late on Monday waded into the crisis, condemning the 12-day-old protests in Kiev over Ukrainian president Viktor Yanukovich’s decision to back away from an integration deal with the EU as “pogroms”. “What is happening in Kiev is not revolution, as the Ukrainian opposition claims, but pogroms,” he said. Mr Putin was speaking in Armenia where he announced the economic benefits Russia is extending to it after it abandoned an EU deal in September in favour of joining a Russia-led customs union of other ex-Soviet republics. Read more. (Subscription required.)
Pietro Fattorini, owner of a marble company in the eastern Italian region of Marche, recently filed for bankruptcy protection. But it isn't for lack of demand. The 23-year-old company he founded has plenty of orders from overseas clients, The Wall Street Journal reported. Mr. Fattorini's problem is much closer to home. His longtime bank, Banca Marche, lost more than €750 million ($1.01 billion) in 2012 and the first half of this year. As a result, the bank cut his credit lines last year, choking off the funds he needs to survive. "It's like starting to drive on the motorway without knowing if you'll find gas stations on the way," he said. The woes of smaller banks like Banca Marche are washing over the millions of small Italian businesses that depend on them for financing. Moreover, the deep ties the banks have to Italy's small towns mean that the consequent losses in banking jobs, share prices and even charitable donations weigh heavily on some local communities. Small and midtier banks like Banca Marche account for about half of overall lending in the country. In turn, Italian companies rely on banks for about 70% of their funding, more than double the rate in the U.K. or U.S., according to Bank of Italy data. Read more. (Subscription required.)
JPMorgan Chase & Co. and two other banks rejected a European Union deal to end an antitrust probe into the rigging of Euribor lending rates, risking higher fines and challenging the future of the EU’s settlement process, Bloomberg reported. The EU is seeking to announce two sets of settlements as soon as today with banks accused of colluding to rig the London interbank offered rate and Euribor, according to a person familiar with the EU’s probe who asked not to be identified because the process is private. While global fines for rate-rigging have already topped $3.7 billion, the cost to banks may climb as they face lawsuits worldwide. An EU accord includes a finding of liability that can be used in civil cases. Read more.
The legal action by the liquidators of stockbroking firm Bloxham over alleged underinsuring of the firm has resumed at the High Court after efforts to mediate failed, the Irish Times reported. The sides had last week taken up a suggestion by president of the High Court, Mr Justice Nicholas Kearns, to consider mediation but they told the judge yesterday that it had not worked and the case was proceeding. The liquidators have sued the firm’s former insurance broker, Robertson Low, for more than €15 million damages arising from Bloxham allegedly being “chronically underinsured”. Although the firm paid some €16 million in settlement of claims by clients related to certain Saturn Dresdner investment bonds, the total sum recovered from its insurers was one-tenth of that, the court heard. The liquidators claim Bloxham believed in 2007 it had insurance cover on the basis of up to €3 million a claim, but it turned out the total cover for all claims was €1.27 million. This was in a context where the firm’s business was expanding and it had more than €1 billion under discretionary management by 2008 for fees of €35 million, the court was told. Robertson Low has denied the claims, insisting Bloxham understood the cover it had and that the firm’s concern at all times concerning insurance was the price. Bloxham was placed in liquidation in 2012 on foot of a petition by the firm’s partners. The court was told one reason for that was because the firm was subject to claims by former clients arising from the sale of investments known as the Saturn Dresdner bonds. Read more.