Daily Insolvency News Headlines

Tue., March 24, 2015

Tue., March 24, 2015

It does not get much simpler than this: the Greek government is rapidly running out of money and the EU authorities who could provide the cash to bail them out are refusing to do so, the Financial Times reported. That is at the heart of the two-month stand-off between Athens and its eurozone creditors, and the main complaint contained in a five-page letter sent a week ago by Alexis Tsipras, the Greek prime minister, to his German counterpart, Chancellor Angela Merkel, who he was due to meet in Berlin on Monday evening. There are only two sources of cash Greece can tap: the €7.2bn remaining in its current bailout, or by issuing short-term debt that is then purchased by Greek banks. But eurozone authorities are refusing to allow either until Athens implements sweeping economic reforms, which Greek authorities have been resisting. Neither side is budging. When will Greece run out of money? That’s the €7.2bn question, and nobody knows the precise answer since national treasuries always seem to find ways to shift cash around — and Athens has thus far been pretty good at scraping together funds from bank accounts held by independent government agencies. Read more. (Subscription required.)

Tue., March 24, 2015

Liquidators for ES Bankers (Dubai) Ltd (ESBD) have estimated they will pay out 82.7 percent of the $93.5 million owed to depositors in the stricken bank, advisory firm Deloitte said on its website, Reuters reported. However, unsecured creditors of the Dubai arm of the Espirito Santo empire, which stumbled after accounting irregularities were identified at one of its holding companies earlier last year, will get none of the $14 million they are owed, the document added. In October 2014, a Dubai judge approved an application to liquidate the local business following an earlier freezing of deposits to protect customers. It was part of global legal action taken after a 4.9 billion euro ($5.35 billion) bailout for Banco Espirito Santo, formerly Portugal's largest listed bank, in the wake of the accounting issues. A total of $77.3 million was available for depositors, said the document, an update to depositors, dated January 25, published on Deloitte's website. Deloitte's Philip Bowers and Neville Kahn were appointed as joint liquidators of ESBD in October. Read more.

Tue., March 24, 2015

The European Central Bank will purchase large amounts of public and private debt for at least 18 months and until it is convinced that inflation will stabilize near annual rates of 2%, the bank’s president Mario Draghi said on Monday, underscoring the ECB’s willingness to flood the eurozone with freshly minted money far into the future, The Wall Street Journal reported. In testimony to European parliament, Mr. Draghi also urged Greece to commit to fully honoring its debt obligations. Its government also must be specific about areas of economic and fiscal reforms where it is in agreement with its international creditors and, where there is disagreement, “how (the reforms) are going to be replaced has to be specified,” he said. Referring to the ECB’s bond purchase program, now entering its third week, Mr. Draghi said: “We intend to carry out our purchases at least until end-September 2016, and in any case until we see a sustained adjustment in the path of inflation which is consistent with our aim of achieving inflation rates below, but close to, 2% over the medium term.” Mr. Draghi’s testimony comes two weeks after the ECB launched a program to purchase more than €1 trillion in bonds—mostly government debt—by September 2016. The purpose of the program, known as quantitative easing, or QE, is to raise inflation rates closer to the ECB’s target of near 2%. Read more. (Subscription required.)

Tue., March 24, 2015

Bonds of 11 Chinese companies now yield more than 15 percent as investors brace for the nation’s second onshore default amid record maturities in the coming quarter, Bloomberg News reported. Companies in Asia’s largest economy need to repay 1.5 trillion yuan ($242 billion) of local-currency notes in the period to June 30, the most for a quarter in Bloomberg data going back to 1998. The yield on Cloud Live Technology Group Co.’s 2017 debt has jumped 137 basis points to 17.7 percent as of March 20 since the Beijing-based Internet company said on March 4 its ability to meet debt obligations next month face “big uncertainties.” Political, economic and regulatory factors are converging to make defaults more likely. Premier Li Keqiang told parliament this month he is prepared to tolerate individual cases of “financial risk,” growth is the slowest in more than two decades, an anti-graft campaign is halting projects and authorities are limiting investors’ scope to buy riskier bonds. Read more.

Tue., March 24, 2015

Steps should be taken to ensure that the euro zone currency bloc could withstand a possible insolvency of one of its members, Germany's Bundesbank said in its monthly report on Monday. "The financial and state debt crisis ... has yet to be overcome," the Bundesbank said in the report, reiterating that individual states and investors should take primary responsibility for their debts. "In this respect, the currency union ought to be able to withstand the extreme case of the insolvency of a member state." The Bundesbank's statement, which came with recommendations that steps be taken to ensure big banks can be wound up while minimising any impact on countries, addresses a taboo in the euro zone, namely that a member state could become insolvent. The remarks come at a sensitive moment, when Greece's new government is attempting to negotiate a new deal with its international lenders including euro zone countries such as Germany. Read more.

Tue., March 24, 2015

Allied Irish Banks (AIB) has obtained €9.3 million judgment orders on consent at the Commercial Court against Galway businessmen Tom and John Nestor. The bank also secured orders allowing it to enforce the judgment across the EU, the Irish Times reported. The orders, granted to the bank’s counsel Kelly Smith by Mr Justice Brian Cregan, arises from various facilities advanced by the bank in 2012. Judgment was granted jointly and severally against Tom Nestor, Averard East, Taylor’s Hill, Galway and John Nestor, Gleann na Trá, Sandy Road, Galway. In court documents, AIB official Graham Kelly said that in circumstances where properties held as security for the defendant’s personal debts were of key strategic importance to their trading businesses, the bank had “exhausted all avenues” in trying to reach a consensual resolution with the defendants’ regarding their borrowings. Mr Kelly said that included offering them “numerous” opportunities to submit a satisfactory restructuring proposal. Read more.

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