Bankers are calling for a new London panel to help smooth the restructuring of hundreds of billions of pounds of debt and prevent further ugly fights before courts between lenders, Reuters reported. The group, modelled on the Takeover Panel, would help prevent complex debt workouts being decided before courts, as the number of defaults soars. The restructuring panel would be most useful in cases where a minority of lenders are unreasonably holding out on the other lenders, said Andrew Speirs, managing director at London advisory firm Hawkpoint. Read more.
Daily Insolvency News Headlines
Wed., August 12, 2009
Heavily indebted New Zealand dairy farmers face a financial "perfect storm" and many could go under, finance experts warn. Dairy farms are especially vulnerable as farmers face falling commodity prices, increased costs and some farm asset values had dropped by 30 to 40 percent, The National Business Review reported. There were a lot of stressed farmers running significant cash deficits this year, PricewaterhouseCoopers partner Roger Wilson told The Press. Farm equity partnerships in Southland and Canterbury, where people had often borrowed against assets to invest, were particularly vulnerable, he said. Mr Wilson warned there could be an "avalanche" of dairy farm foreclosures in autumn if things did not improve. He warned proposed international banking recommendations, requiring banks to impose rigorous capital and risk management policies, would create a "perfect storm" for financially stressed farmers. Read more.
Latvia's economy shed nearly one-fifth of its value in the second quarter compared with the same period last year, official data showed Monday, signaling a deepening of the Baltic state's recession, The Wall Street Journal reported. Gross domestic product fell 19.6% from a year earlier in the April to June period, the national statistics agency announced, led by a 28% slump in retail and a 19% drop in industrial production. The restaurant and hotel sector plunged 35% year-to-year. The fall is the sharpest since Latvia began keeping records in 1996. Latvia's economy is undergoing a major correction after years of impressive growth after joining the European Union in 2004. The global economic recession has compounded its woes, as Latvia has seen demand for its exports weaken sharply. Read more. (Subscription required.)
Canadian bankruptcies rose 51.6 percent in June compared to a year earlier as more consumers were unable to pay debts, but business bankruptcies rose only modestly despite the recession, a government report showed. The number of consumer bankruptcies in June rose 54.3 percent to 10,823 from June 2008, while business bankruptcies rose 10.8 percent to 515, the Office of the Superintendent of Bankruptcy Canada said in a report. The bankruptcy report showed business bankruptcies were concentrated in manufacturing, retail, finance, real estate and accommodation and food services, while the number of bankruptcies in construction fell. Manufacturing, especially Canada's auto factories, has been hard hit in recent months by restructuring at Detroit's Big Three auto companies and the knock-on effect of production cuts across North America. Finance and real estate were sideswiped by the global financial meltdown, while retail and food services have seen a big drop in demand as consumers tightened purse strings. Read more.
Leaving a financial crisis is like leaving an awkward social gathering: a good exit is essential. In 1936-37, the Federal Reserve made a colossal mistake in its “exit strategy”, the Financial Times reported in a commentary. This time round it is crucial that central banks get their timing right. there is much concern about the inflation potential of the roughly $700 billion (€494 billion , £425 billion ) accumulation of excess reserves on the Fed’s balance sheet as well as excess reserves on many other central banks’ balance sheets. Central banks must not repeat the premature “exit” mistake of 1936-37. The big challenge is for central banks to avoid deflation and provide the monetary accommodation to restore economic growth without igniting high inflation down the line. Read more. (Subscription required.)
The Rann government has rejected calls for a parliamentary inquiry to investigate a collapsed aquaculture company and its dealings with government ministers and officials. The state opposition called for a select committee to be established after The Australian revealed numerous contacts between ministers and Andrew Ferguson, chief executive of Australian Bight Abalone, which went into voluntary administration last month. Mitch Williams, acting Liberal spokesman on fisheries, yesterday said the 1200 people who invested $43.8 million in the company deserved answers. "It seems that to clear the air, we need some sort of inquiry," Mr Williams said. "There are a lot of unanswered questions. Industry insiders have raised specific concerns about the way ABA's aquaculture licences were approved for commercial production. Read more.