Daily Insolvency News Headlines

Wed., January 28, 2015

Wed., January 28, 2015

It’s no secret what Yanis Varoufakis thinks Greece should do with its debt. The economics professor at the University of Athens, who announced his appointment as the country’s finance minister in a posting on his personal blog on Tuesday, has been arguing since the beginning of the crisis that Greece should default while staying a member of the euro area, the Irish Times reported. As well as on his website, Mr Varoufakis shares his opinions with 128,000 Twitter followers. Greece should have never joined the euro area, but now that it’s in, a departure would be like falling from a cliff, he said. “The last line in Hotel California explains where we are: you can check out any time, but you can never leave,” he back in 2012. Now he gets to take demands for a radically different approach to Greece to European capitals as the new government in Athens tries to implement its pre-election pledges. Read more.

Wed., January 28, 2015

Germany’s finance minister said on Tuesday that Ukraine should start negotiations with its creditors on how to restructure its debts as part of a wider plan to stabilize the conflict-ridden country, The Wall Street Journal reported. Efforts by the international community, including the International Monetary Fund, to secure Ukraine’s financial needs “are linked to Ukraine also making efforts to talk to its creditors about an extension of maturities, so a kind of debt restructuring,” Wolfgang Schäuble said following talks with his European Union counterparts. Among debts coming due this year is a €3 billion ($3.4 billion) loan from Russia. Mr. Schauble’s comments come after Ukraine’s finance minister, Natalie Jaresko, said last week that she would reach out to creditors to discuss the country’s debt sustainability. The IMF, the EU and the Group of Seven industrialized nations, which Germany is presiding at the moment, are trying to figure out how to fill an estimated $15 billion gap in Ukraine’s finances for this year and the first quarter of next year. The European Commission, the EU’s executive, has proposed lending Ukraine an extra €1.8 billion through early 2016—a figure that some EU governments believe to be too low. Read more. (Subscription required.)

Wed., January 28, 2015

Cliffs Natural Resources Inc. sought creditor protection in Canada for its Bloom Lake iron ore mine, potentially cutting the cost of closing it down, Bloomberg News reported. Bloom Lake General Partner Ltd. and certain affiliates started restructuring proceedings in Montreal under Canada’s Companies’ Creditors Arrangement Act, Cliffs said in a statement on Tuesday. Cliffs, the largest U.S. iron ore producer, has been looking at options to sell Bloom Lake for several months and said earlier this month it suspended production there amid a slump in prices. The Cleveland-based company said in November it may cost as much as $700 million to close the Quebec project, which was acquired as part of a $4.3 billion takeover of Consolidated Thompson Iron Mines Ltd. in 2011. Today’s announcement is “anticlimactic” because it’s unclear whether Cliffs can save money through a Canadian bankruptcy, said Sam Dubinsky, an analyst at Wells Fargo Securities. Some people had hoped Cliffs could save more than $600 million this way, he said. “Management could also have done a better job setting expectations,” Dubinsky, who’s based in New York and recommends selling Cliffs, said in a note. Read more.

Wed., January 28, 2015

A group of Canadian and other investments banks agreed to pay a total of 32.5 million Canadian dollars (US$26.1 million) to settle claims related to their role as underwriters to help Sino-Forest Corp. sell stock, The Wall Street Journal reported. The dealers “do not admit any wrongdoing or liability” under the agreement, which would settle shareholder allegations that Sino-Forest’s public filings “contained false and misleading statements about [its] financial results, assets, business and transactions,” according to a copy of the pact filed with the Ontario Superior court. The agreement still needs court approval. “We believe this to be the largest underwriter settlement in Canadian history,” said Dimitri Lascaris, a lawyer for Sino-Forest investors. Sino-Forest was once one of the largest forest-products companies listed in Canada, but it collapsed in 2012 amid allegations that it fraudulently inflated the value of its timber assets in China. Read more. (Subscription required.)

Wed., January 28, 2015

Canadian wireless startup Mobilicity said on Tuesday it will participate in an upcoming government auction of airwaves. The struggling wireless carrier, which sought creditor protection in the fall of 2013, has been trying unsuccessfully to find a buyer for months after its attempts to sell to well-established rival Telus were stymied by the Canadian government, which is seeking to boost competition in the wireless sector. Mobilicity, which is formally known as Data & Audio Visual Enterprises, said some of its backers have now agreed to put up the roughly C$65 million ($52.4 million) it needs to buy a seat at the table in the auction of high-frequency AWS-3 spectrum, set to be held in March. Industry insiders have warned that the attractiveness of Mobilicity to potential suitors wane if competitors secure the spectrum they need in the upcoming auctions of AWS-3 and 2500 megahertz airwaves, while Mobilicity itself misses out. The carrier is seeking an extension of its creditor protection status until May 8, 2015, to complete the auction process and then evaluate its options based on the auction results. Read more.

Wed., January 28, 2015

Troubled Chinese property developer Kaisa Group failed to remove a local government block on sales at its Shenzhen projects during talks with public officials on Monday, a company source familiar with the discussions said. Kaisa's top executives held a high-level meeting with senior Shenzhen government officials on Monday afternoon in the Longgang district in northern Shenzhen, where two of Kaisa's new projects are blocked, according to the source. "There was no progress at all in the meeting," the Kaisa executive said. A Shenzhen official told homeowners that the government "needs some time to resolve this incident" as the Kaisa case was linked to China's crackdown on corruption, according to the pro-Beijing Wen Wei Po newspaper on Monday, citing a deputy director of a government bureau that deals with public complaints. The Kaisa source told Reuters he wasn't at the meeting in person but was briefed on the discussions by those who were. Negotiations are continuing. Read more.

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