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Wed., June 17, 2009

Sweden Says Unclear Whether Saab Guarantees Needed
Wed., June 17, 2009

A senior Swedish government official said on Tuesday it remained unclear whether Sweden would need to make guarantees for European Investment Bank financing in support of a deal to sell General Motors unit Saab. GM Europe said earlier on Tuesday a preliminary agreement had been reached to sell Saab to sports car maker Koenigsegg. "We do not yet know if Koenigsegg group will need loan guarantees or not," Joran Hagglund, state secretary for Sweden's industry ministry, told Reuters. GM Europe did not disclose terms but said the sale involved expected financing that would be guaranteed by Sweden. Read more.

In a related story, industry analysts say that for the new owners of Saab Automobile to make money selling small numbers of cars across the globe, they have to return to the Swedish automaker's roots. Somehow, a consortium of investors led by custom sports car maker Koenigsegg Automotive AB must restore Saab to the quirky, cutting edge and reliable brand once favored by professionals who wanted to look smart rather than wealthy, the Associated Press reported. Read more.

B.C.-Based Petcetera Files for Bankruptcy
Wed., June 17, 2009

Petcetera, the leading pet supplies superstore in Canada, has gone out of business, CTV reported. The British Columbia-based company filed for bankruptcy on Tuesday after an unsuccessful restructuring bid. Petcetera was founded in 1997 in Richmond, B.C. In March, the company revealed that it would seek protection from creditors under the Bankruptcy and Insolvency Act. "In light of the recession's impact on the Canadian retail industry, we have to take drastic measures in the short term to ensure that Petcetera continues to be viable long after the downturn is over," Petcetera president and CEO Dan Urbani said in March. But despite several restructuring efforts, including a large inventory liquidation sale, the company was unable to stay afloat. Forty-five stores across B.C., Newfoundland, and Labrador will be closed and around 1,500 employees will be fired. Read more.

Oppenheim Mulls Options for Arcandor Stake
Wed., June 17, 2009

Private bank Sal. Oppenheim is considering a sale of its stake in bankrupt German retailer Arcandor, a source close to the bank said on Wednesday. The bank and its holding company will decide in about three months' time whether to keep its stake and inject more money or to exit the position, depending on the outcome of the assessment by the insolvency administrator, the source said. German newspapers on Wednesday also said the bank was considering a sale. The bank declined to comment. Oppenheim Holding and its bank Sal. Oppenheim together own 28.6 percent of Arcandor. The source said there had already been interest in the bank's stake but it would not engage in negotiations for now. Read more.

Deals With Unions Buy Time for Air Canada
Wed., June 17, 2009

Air Canada has bought itself some breathing room after hammering out tentative agreements on pension funding with its employees, but observers say it still may not be enough to keep the country's largest airline out of bankruptcy protection, the Toronto Star reported. The airline reached tentative deals with its five biggest unions this week that include a moratorium on pension payments for 21 months, with four of the five unions also agreeing to wage freezes over the same period. As well, the agreements call for Air Canada to raise $600 million in financing. That includes $200 million to $300 million in the form of a federal government loan from Export Development Canada and up to $200 million from parent, ACE Aviation Holdings Inc., according a source familiar with the situation. The loans are needed to keep the airline from being dragged into its second filling under the Companies' Creditors Arrangement Act in less than six years. Read more.

Tue., June 16, 2009

“No Truth” in RTÉ Bankruptcy Claim
Tue., June 16, 2009

RTÉ Director General Mr. Cathal Goan, at an Oireachtas meeting last week told the gathered committee there was no financial crisis at the national broadcaster and that the €68m shortfall was currently being dealt with, IFTN reported. TD’S and Senators called for a re-examination of the six-figure salaries that top RTÉ broadcasters are currently being paid, which were deemed “disproportionate and unjustifiable” by those present at the meeting. Labour TD Liz Mc Manus suggested that RTÉ should take a lead from the BBC where Director General Mark Thompson earlier this week told top presenters that they face a pay cut of between 25% and 40%. Whilst Mr. Goan did say that there was “no denying” that RTÉ was in the midst of a financial crisis he said that there was “absolutely no truth” in suggestions that the station could go bankrupt this year. Last year the station reported a €26m revenue deficit but broke even by cutting bonuses and making cost saving measures. At present RTÉ employees are involved in a ballot on pay cuts that would see staff who earn over €25,000 take a 2.6% cut and those earning €255,000 and above taking a 12.5% reduction in take home pay. Read more.

Singapore’s Gentler Debt Rap Slows Bankruptcy Petitions
Tue., June 16, 2009

Ever since a new scheme to deal with debtors kicked in on May 18, banks are believed to be filing fewer bankruptcy petitions, The Business Times reported. That is because they are assessing how the debt repayment scheme (DRS) works - and what it can do for them - instead of taking the extreme legal route. Before this, anyone who owed a debt of more than $10,000 faced the shadow of bankruptcy and the stigma that it carries. Now, another door has opened as anyone with a debt of up to $100,000 can be dealt with under DRS - in which he can be given a repayment plan of 3-5 years, without the bankrupt label. This has immediately made banks step back and take stock. It has also resulted in a drop in bankruptcy petitions. 'From 18 May to 7 June 2009, the High Court received 90 bankruptcy applications, of which 43 (48 per cent) involved debts less than $100,000,' said an Insolvency & Public Trustee's Office (IPTO) spokeswoman. This is a significant drop from the period before DRS kicked in. Between January and April this year, bankruptcy petitions have ranged between 243 to 296 a month. Observers say that since DRS applies to debts of up to $100,000, it may effectively have raised the ceiling for bankruptcy applications from $10,000 to 10 times that amount. Read more.

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