For a year and a half, Antonis Samaras has kept Greece’s bailout programme broadly on track despite his coalition government’s shrunken parliamentary majority and resistance within his cabinet to implementing tough structural reforms, the Financial Times reported. For the Greek premier, stern admonitions from Angela Merkel, German chancellor, and other EU leaders that Athens must work harder to fulfil its obligations to international lenders have given way to recognition of the “sacrifices made by the Greek people” as fiscal targets are finally met. Greece is poised to outperform this year’s target of a balanced budget and record a primary surplus of more than €800m, permitting Athens to seek further debt relief following its partial default in 2012. With the current account also in surplus and the economy set for positive growth next year, Mr Samaras is no longer so willing to bend to creditors’ demands. Greek lawmakers approved the 2014 budget early on Sunday in defiance of EU regulations that it should first be approved by the commission and, in the case of Athens, by the International Monetary Fund. It boldly assumes that Athens will be able to raise funds on international capital markets next year for the first time since its partial default in 2012. Read more. (Subscription required.)
Daily Insolvency News Headlines
Mon., December 9, 2013
Eastern Germany's savings banks have written down their stake in stricken Landesbank Berlin (LBB) to 1 euro, the head of the association representing them said. "We have drawn a line under it in the hope that we're through now," OSV President Michael Ermrich told Reuters, adding that he did not expect a dividend from LBB in the next two to three years. On Friday, sources had told Reuters that Germany's savings banks would have to shoulder as much as 1.2 billion euros ($1.6 billion) in further writedowns on LBB, which is being dismantled into a savings bank and a real estate business. About 400 German savings banks bought LBB for more than 5.5 billion euros ($7.5 billion) in 2007. They had already booked 2.2 billion in writedowns already in previous years, about 40 percent of the original purchase price. Read more.
The new chairman of State Bank of India has pledged to crack down on rising levels of corporate bad debt that have alarmed policy makers and foreign investors in Asia’s third-largest economy, the Financial Times reported. Arundhati Bhattacharya took over the state-backed bank in October. India’s biggest lender, which controls about a fifth of the country’s $1.5tn of bank assets, has struggled to cope with a sharp increase in non-performing loans in the aftermath of India’s recent economic slowdown. Describing bad debts as the “biggest challenge in front of the Indian banking system”, she plans an aggressive drive to improve asset quality. In particular, she aims to push so-called “promoters”, as the country’s main tycoons and family-business owners are known, to sell assets and raise fresh equity to repay debts. Read more. (Subscription required.) (Subscription required.)
Aer Lingus is threatening legal action if Siptu goes ahead with a strike in the latest twist in the ongoing row over the €780 million hole in the pension fund that it operates jointly with Dublin Airport Authority (DAA), the Irish Times reported. Siptu is set to begin balloting members in the airline and airport operator next week for industrial action as the trade union says there is growing frustration over the delay in resolving the dispute. However, Aer Lingus says it intends to take legal advice as to whether the threatened industrial action is in actual fact a “trade dispute” under the Industrial Relations Act 1990. If Siptu is acting outside this legislation, the airline adds, it could hold the union and its officers “personally liable in respect of any losses” that it suffers as a result. Siptu official Dermot O’Loughlin said yesterday members were concerned that they had to continue paying contributions into the pension fund at the rate of about €500,000 a week, which they were effectively losing because it was insolvent. Read more.
Nzoia Sugar Company has denied a report by the Auditor General last week that indicated that it is technically insolvent and operating on a negative working capital, allAfrica.com reported. The company is reported to have debts amounting to Sh16billion hence making it hard to even meet its basic financial obligations. The second largest sugar milling company however said the report presented to Parliament's Public Investments Committee, did not include all the required records especially the cash books while carrying out the forensic audit. In a statement on Friday, Nzoia Sugar company's Managing Director Saul Wasilwa said the audit focused on the period prior to 2004 when the company was making losses amounting to Sh17billion and ignored the period after, when it was back to profitability. "From 2004-2011 the company consistently made profits peaking off at Sh428million in 2009. The profit for 2012/13 was Sh226million. The company has put in place strategies that will make it remain profitable, "he reiterated. Wasilwa says the miller is able to meet its financial obligations 'but at the moment, the company like any other in the industry, is faced by challenges caused by declining sugar prices." Read more.
The fight over defunct Nortel Networks' $7.5 billion in cash will be decided in joint U.S.-Canadian court hearings and not in arbitration, a U.S. appeals court ruled on Friday. The U.S. Court of Appeals for the Third Circuit in Philadelphia upheld a bankruptcy court ruling in March that there was never an agreement to use arbitration to divide the pile of cash among various Nortel estates around the world. Nortel sought protection from creditors in courts around the world in 2009 and its businesses were quickly sold, reducing a once-global corporate giant to little more than a pile of cash. But it was never decided how to allocate the money raised between different insolvency and bankruptcy proceedings in different countries. An agreement governing the money refers to undefined "dispute resolvers" that Nortel's European estates argued was arbitration. The U.S. Bankruptcy Court in Wilmington, Delaware disagreed, and the Court of Appeals affirmed that ruling. "In context, the words 'dispute resolver(s)' indicate that the parties allowed themselves latitude to select courts or arbitrators or others to adjudicate the parties' disputes," wrote Judge Julio Fuentes in a 17-page opinion. "To respect that contractual latitude, we reject the idea that the parties must arbitrate disputes over asset allocation." He was joined by Judges Maryanne Trump Barry and Morton Greenberg. Creditors of Nortel, once a telecoms giant with a $250 billion market value and 93,000 employees, cannot be paid until the estates in Canada, the United States and Europe know how much money they will have to distribute. Read more.