Daily Insolvency News Headlines

Tue., March 31, 2015

Tue., March 31, 2015

With the prospect of a default looming in Greece, Prime Minister Alexis Tsipras is preparing to meet next week with President Vladimir V. Putin of Russia as a European deal to give more aid to Athens falters, the International New York Times reported. The timing has raised questions of whether the visit is an ordinary component of the new Greek government’s multipronged foreign policy, or a pivot toward Russia for financial aid in the event that Greece’s talks with European officials collapse. Negotiations between the struggling Greek government and its creditors stumbled anew on Monday after European leaders said that a reform plan submitted over the weekend to unlock a fresh lifeline of 7.2 billion euros, or about $7.8 billion, fell short. Greece has warned that it may run out of money soon after Mr. Tsipras meets with Mr. Putin on April 8. Mr. Tsipras, who came to power in January, originally planned to travel to Moscow in May. But he accelerated the meeting with Mr. Putin a couple of weeks ago as Greece came to loggerheads with Germany and other European countries over the terms for releasing the money. Without it, Greece could go bankrupt or possibly exit the 19-nation eurozone, an event that, if it happened, could increase instability in the region. Read more. (Subscription required.)

Tue., March 31, 2015

Australia is considering changes to the way it taxes pension funds and targeting the tax practices of multinationals, as Prime Minister Tony Abbott’s conservatives struggle to shore up the country’s finances amid deep hostility to proposed austerity measures, The Wall Street Journal reported. On Monday, Mr. Abbott called for discussion on how an aging population was progressively shrinking income-tax receipts and urged the opposition Labor party to cooperate with reforms needed to steer Australia through the end of a mining boom that once powered the economy. “What we want is lower, simpler, fairer taxes, so let’s see where the conversation takes us,” Mr. Abbott told reporters in the state of Tasmania following the release of the so-called tax-options paper by his treasurer, Joe Hockey. “This is an important conversation starter.” Like other developed nations, Australia is grappling with how to fund health, education and other welfare spending that is growing continually in a nation where expectations of government services are nearer European levels than those in the U.S. Read more. (Subscription required.)

Tue., March 31, 2015

China on Monday courted home buyers with a bigger tax break as it cut down-payment requirements for the second time in six months, stepping up a fight against sliding house prices that is imperiling the Chinese economy, the International New York Times reported. The People’s Bank of China, the central bank, said on its website that commercial banks could now lower their minimum down-payment requirement for buyers of second homes, and with outstanding mortgages, to 40 percent from 60 percent. The Ministry of Finance, in a separate statement, said that individuals selling houses were exempt from business taxes if they had owned the house for more than two years. Analysts said sellers were previously exempted from taxes only if they owned the houses for at least five years. The policy sweeteners, which were more generous than what the market had expected, confirmed rumors swirling in China on Monday that the authorities were increasing support for the flagging real estate sector. Real estate share indexes rallied sharply in Shanghai on rumors of the change. The Shanghai composite’s property index closed up more than 7 percent, its best day since 2009, while the broader index closed 2.6 percent higher. That China is now trying to lift its property market is an about-face in policy. As recently as early 2014, the authorities were waging a four-year campaign to tame an exuberant market, which pushed home prices to records. Read more. (Subscription required.)

Tue., March 31, 2015

The legal feud between Argentina and a group of “holdout” creditors is inflicting collateral damage on a growing number of victims caught in the crossfire. One of the few winners from the fight might turn out to be Cristina Fernández, the country’s president, the Financial Times reported. As Argentina continues to defy US court orders to pay the holdouts after its 2001 debt default, its citizens are suffering the broader fallout of a struggling economy. Bondholders remain unpaid since the government defaulted again last year. Financial intermediaries blocked by a New York judge from processing payments on restructured Argentine bonds have fallen foul of the dispute. Yet Ms Fernández is set to claim a political victory when her term expires after presidential elections in October by keeping her pledge not to pay what she calls “vulture funds” — led by US billionaire Paul Singer’s Elliott Management — “a single cent more” than the amount accepted by 93 per cent of creditors in debt restructurings in 2005 and 2010. Read more. (Subscription required.)

Tue., March 31, 2015

MPs on Monday wrapped up discussion of the fifth bill comprising the insolvency framework – a set of laws governing personal and corporate bankruptcy – hoping to put the whole package to a vote this Thursday. The fifth bill deals with the protection of primary homes, business premises and guarantors’ obligations to the principal debtor. The House aims to table the insolvency framework to the plenary for a vote by April 2, the last plenum before the Easter break. April 2 is also the date on which the foreclosures law – which the opposition has repeatedly blocked – comes into force. However, the House finance and interior committees will hold another session on Tuesday – and perhaps on Thursday – to review modifications made by the government to the four other insolvency bills. Enactment of the insolvency package should allay opposition parties’ concerns over the foreclosures legislation, finally allowing the latter’s enforcement. Implementation of effective repossessions legislation is a key obligation stemming from Cyprus’ bailout deal with international creditors. Read more.

Tue., March 31, 2015

Britain’s seven biggest lenders will be assessed on whether they could withstand a severe external shock including a Chinese property crash, a deep eurozone recession and the worst deflation since the 1930s, the Financial Times reported. The Bank of England on Monday presented the scenario for its second annual stress tests, which it said expanded on last year’s exercise to include more of a focus on global risks. Investors appeared relieved that the tests were not as tough as they had feared and shares in the biggest UK banks rose more than the overall London market on Monday morning. The BoE said it was modelling a milder stress scenario for the UK economy than last time. Its assumed peak-to-trough decline in the global economy was only a third of the fall that happened in the 2008 financial crisis. The number of banks being tested is slightly lower as the Co-operative Bank, the only failure in last year’s test, has been excluded because it is in the process of shrinking under a drastic restructuring plan. Read more. (Subscription required.) (Subscription required.)

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