The U.K.'s Serious Fraud Office is investigating sales of structured products such as credit-default swaps and collateralized debt obligations, amid concern some bankers may have knowingly sold complex assets based on flawed valuations before the global financial crisis struck two years ago, The Wall Street Journal reported. Credit-default swaps are insurance-like contracts designed to protect investors against losses on bonds or loans, though in recent years they have been used more often to speculate on the health of companies or countries. CDOs are packages of different slices of debt that are given a single credit rating, enabling them to be traded. The U.K. probe is the latest sign that policymakers and regulators on both sides of the Atlantic are scrutinizing structured products, which many believe were at the heart of the financial crisis, after years of taking a mostly hands-off regulatory approach. Read more. (Subscription required.)
Daily Insolvency News Headlines
Mon., August 3, 2009
The future of Ssangyong Motor grew gloomier as management said it is considering filing for bankruptcy and liquidating the company after failing to hammer out an agreement with its labor union, which has been on strike at the automaker’s plant in Pyeongtaek for more than two months, the JoongAng Daily reported. It was a final warning from management after negotiations over layoffs and related issues broke down. The automaker still has a shot at survival if production resumes in August, management said. It would take about two or three weeks to get the plant back in operation. The company said it will make a final decision on what to do next by Sept. 15, when its creditors are scheduled to meet. If the creditors determine that it is better to liquidate the automaker, the court’s debt rescheduling program will end. Read more.
In a related story, The Chosun Ilbo reported that Ssangyong subcontractors also warned they will file for bankruptcy. Choi Byung-hoon, the secretary general of the Ssangyong Motor Subcontractors Association, which consists of about 600 firms, said Sunday they will watch the union response. "If there is no change, we'll file for bankruptcy as early as Wednesday." Read more.
The premier of the German state of Rhineland-Palatinate said on Friday he expected that next week there would be a "clear decision on the new start for Opel", the General Motors unit which has a plant in his state, Reuters reported. State premier Kurt Beck office added that, like the premiers of the other German states home to Opel plants, he had backed a bid for the carmaker from Canadian auto parts maker Magna. Magna is competing with RHJ International for control of Opel, in which GM is relinquishing control in return for state support for the local carmaker which it needed after filing for bankruptcy protection in June. The German states and federal government have expressed a preference for Magna's bid, while sources close to the negotiations have said GM likes RHJ. Read more.
Fri., July 31, 2009
After about half a year of intensive talks, Russian aluminum producer United Company Rusal has agreed to the principal terms of a long-term restructuring of its $7.4 billion debt to international banks, including the pledge of stakes in its operating companies as collateral, people familiar with the matter said. In what Rusal Chief Executive Oleg Deripaska described as a "landmark restructuring," the company earlier Thursday announced it had reached an agreement on the debt with the coordinating committee of lenders, The Wall Street Journal reported. The debt will be repaid within seven years under the terms of the deal, which is still subject to credit-committee approval at the lending banks, as well as the completion of relevant legal documentation. The restructuring of Rusal's debt to international banks is an acid test for Russian companies' ability to manage more than $400 billion in foreign debt. To ease lender concerns over the company's ability to repay the debt, Rusal has pledged stakes in its assets as collateral, including 25% stakes in its flagship Siberian aluminum smelters, Bratsk and Krasnoyarsk, people familiar with the situation said. Read more. (Subscription required.)
Canada's Ambrilia Biopharma Inc, a cash-strapped biotech company, said it would seek protection from its creditors in a Quebec court as its cash on hand would not allow it to meet its current obligations, Reuters reported. The company, which fired both its chief executive and chief financial officer on July 29, said it had not yet determined a restructuring plan. Montreal-based Ambrilia said the Quebec Superior Court would hear its application under the Companies' Creditors Arrangement Act (Canada) on July 31. Read more.
The operator of the Sydney Entertainment Centre (SEC) has gone into receivership after sustained losses caused by the economic downturn, The Age reported. Arena Management Pty Ltd said a secured creditor who is owed $1.7 million has called in Andrew Wily and David Hurst of Armstrong Wily Chartered Accountants as receivers and managers of the company. The unnamed creditor holds a charge over Arena Management's assets as security for the loan. Arena Management chairman Kevin Jacobsen said the company lost money due to the economic downturn and due to its failure to sell or assign the SEC lease. He also blamed the venue's owner for a lack of flexibility in adjusting lease terms to reflect the downturn. "Ultimately this is a loss for the Sydney public," Mr Jacobsen said in a statement. Read more.