Daily Insolvency News Headlines

Thu., July 24, 2014

Thu., July 24, 2014

Cyprus plans to seek a buyer for the local operation of Federal Bank of the Middle East, a Lebanese-controlled lender, which has been placed under administration by the island’s central bank following allegations of money-laundering, the Financial Times reported. FBME, which has a $2bn balance sheet, was accused by the US Treasury’s financial crimes enforcement network (FinCEN) of facilitating a “substantial volume” of money-laundering through its network for many years. In an eight-page report released last week detailing the allegations against FBME, the US regulator said FBME was used by its customers to facilitate “money-laundering, terrorist financing, transnational organised crime, fraud, sanctions evasion and other illicit activity internationally and through the US financial system”. It pointed to a 2008 transaction in which an FBME customer received a deposit of hundreds of thousands of dollars from a financier for Lebanese Hizbollah. It also said the bank was “a financial adviser for a major transnational crime figure who banked entirely at FBME in Cyprus.” At least one FBME customer is a front company for a Syrian entity, the Scientific Studies and Research Centre, which has been designated as a proliferator of weapons of mass destruction, according to FinCEN. Read more. (Subscription required.)

Thu., July 24, 2014

The fate of one of the biggest banks in the European Union’s poorest country, Bulgaria, remains hostage to a political crisis, which caused the prime minister’s government to resign on Wednesday, the International New York Times reported. The resignation of Prime Minister Plamen Oresharski and his cabinet, which had been expected for weeks, comes as Bulgaria’s worst banking crisis since the 1990s threatens to take an economic toll on local businesses and foreign investors. And with a caretaker government presiding until elections in the fall, there may be no quick resolution of a rescue plan for the bank. The bank, Corporate Commercial Bank, also known as K.T.B., has been closed since June 20, after a three-day run in which some $700 million — about a fifth of the bank’s deposits — was withdrawn. It had been set to reopen on Monday, a month after the central bank took control of its operations. But the bank remains closed as officials continue to wrangle over whether the state should bail it out or find private investors to save it. Read more. (Subscription required.)

Thu., July 24, 2014

A group of creditors of Mt Gox, the collapsed Bitcoin exchange, is threatening a shake-up of bankruptcy proceedings in Tokyo unless the administrator settles its claims in the virtual currency, the Financial Times reported. Once the world’s largest trading venue for trading and storing Bitcoin, Mt Gox went offline in February saying it had lost track of about 750,000 bitcoins belonging to customers and another 100,000 of its own. It later said it had found 200,000 bitcoins in an old digital file – a disclosure which prompted the court to launch formal bankruptcy proceedings, rather than try to rehabilitate. At the first gathering of creditors at a Tokyo District Court on Wednesday, Daniel Kelman, a New York-qualified lawyer now resident in Taiwan, notified trustee Nobuaki Kobayashi of his plans to form a rebel group. Under Japanese law, a committee representing more than half of creditors has the power to “participate” in proceedings, so long as it satisfies certain conditions and is recognised by the court as representing the interests of creditors as a whole. A sale of bitcoins for cash could depress market prices, said Mr Kelman, while incurring transaction charges. But more fundamentally, he said, cash was not what creditors wanted. Read more. (Subscription required.)

Thu., July 24, 2014

Settlement talks set for Wednesday between Argentina and bondholders who did not participate in the country's past debt restructuring have been rescheduled for Thursday, the court-appointed mediator said. Daniel Pollack, a New York lawyer appointed to oversee the settlement discussions, had scheduled a meeting for 10 a.m. EDT (1400 GMT) after a U.S. judge ordered the parties to meet "continuously" until a deal is reached. Pollack in a statement said he was advised by the Argentina delegation they could not get to New York for the Wednesday meeting. Pollack said the meeting has been re-scheduled for Thursday at 12:00 p.m. EDT. Read more.

Thu., July 24, 2014

The number of recorded personal insolvencies has reached its lowest level in nearly a decade, according to official figures, BBC News reported. The Scottish government said more people were using its debt payment programmes to manage their finances. Enterprise Minister Fergus Ewing described the figures as "encouraging". However, the figures also showed a rise in corporate insolvencies, with 250 Scottish firms failing in the second quarter of 2014. The official statistics published by the Accountant in Bankruptcy (AiB) showed a 25.8% decrease in the number of personal insolvencies from the same quarter the previous year. The recorded number of personal insolvencies, including both bankruptcies and protected trust deeds (PTDs), are now at their lowest recorded level since the first quarter of 2005-06. PTDs have fallen in popularity as Scots take advantage of government debt payment programmes (DPPs), which allow people to pay off their debt over a longer period rather than transfer their estate to a trustee to avoid bankruptcy, as is necessary under a PTD. Read more.

Thu., July 24, 2014

The Central Bank has secured High Court orders winding up a credit union in Cork with 3,500 members, the Irish Times reported. The President of the High Court, Mr Justice Nicholas Kearns, today appointed insolvency practitioners Jim Hamilton and David O’Connor of BDO Ireland as provisional liquidators of Berehaven Credit Union, Castletownbere. Mr Justice Kearns said he was satisfied to appoint the provisional liquidators. Paul Gallagher SC , for the Central Bank, had earlier told the judge an orderly orderly wind up of Berehaven Credit Union was “in the the public interest”. Counsel said the Central Bank was also of the opinion the credit union “may be unable to to meet its obligations to creditors”. Two reviews, conducted in 2010 and earlier this year, identified corporate governance failures which had not been rectified, the court was told. Counsel said the Central Bank had concerns that unless an orderly winding up process was put in place there was a risk of corporate failure and a “disorderly collapse” of the credit union. The State deposit guarantee scheme, which guarantees deposits up to €100,000 will apply to depositors with the credit union, he added. Read more.

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