Daily Insolvency News Headlines

Mon., August 24, 2015

Mon., August 24, 2015

The People’s Bank of China is preparing to flood the banking system with liquidity to boost lending, according to officials and advisers to the central bank, as its recent currency moves are squeezing yuan funds out of the market and renewing concerns over capital leaving Chinese shores, The Wall Street Journal reported. The planned step—which involves cutting the deposits banks are required to hold in reserve—signals that the Chinese central bank’s exchange-rate maneuvering in the past two weeks is backfiring, forcing it to again resort to the reserve-requirement reduction, the same easing measure that so far has failed to help spur economic activity. The move, which could come before the end of this month or early next month, would involve a half-percentage-point reduction in the reserve-requirement ratio, potentially releasing 678 billion yuan ($106.2 billion) in funds for banks to make loans. It would be the third comprehensive reduction in the reserve requirement this year. Another option being considered at the PBOC is to target the cut only at banks that lend large amounts to small and private businesses—the ones deemed key to China’s future growth—though such a strategy hasn’t proven effective in the past in channeling credit to those borrowers. Read more. (Subscription required.)

Mon., August 24, 2015

Greek bank bonds dropped like a stone this week as the prospect of painful haircuts came to the fore, potentially heralding a new era for senior debt investors who have previously been protected throughout Europe's various financial crises, Reuters reported. The Eurogroup's statement after approving Greece's 86bn third bailout increased the chances of losses being imposed on senior debt by placing senior bondholders at risk of bail-in while explicitly excluding depositors. Greek bank debt is now quoted at cash prices of anything between 29 and 48.9 after plummeting as much as 25.5 points in a week. "It's been clear to us for a while that senior debt will be in play for bail-in," said Raphael Robelin, partner, co-chief investment officer, co-head of investment grade debt at BlueBay. "The template over the last five years may have been to leave senior untouched, but the Eurogroup's statement clearly shows this is coming to an end, with senior bonds subordinated to depositors." European authorities have previously bailed in subordinated debt, but stopped short of including senior debt for fear of contagion that could impact banks' ability to raise funding. Read more.

Mon., August 24, 2015

The High Court grounded an aircraft, allegedly belonging to a state airline of the Democratic Republic of Congo, from leaving Dublin Airport in a dispute over a debt of €10 million, the Irish Times reported. The interim injunction prevents both the Democratic Republic of the Congo (DRC) and La Société Congo Airlines from moving, operating or otherwise interfering with the aircraft – an Airbus A320 undergoing works in Dublin – without their consent. The injunction also prohibits the aircraft’s removal from the jurisdiction. The interim injunction was granted, on an ex-parte basis where only one side was present in court, by Mr Justice John Hedigan. The order was sought by a US company Miminco LLC and two American citizens John Dormer Tyson and Ilunga Jean Mukendi who are owed some $11.5 million by the Congolese government. The US parties say they got into a dispute with the DRC in relation to the ownership of two diamond mines they bought. Read more.

Mon., August 24, 2015

The financial regulator will set up companies specializing in debt restructuring programs next year, seeking to let them take over jobs from lenders struggling to manage debt-driven corporations, The Korea Times reported. The Financial Services Commission (FSC) said Friday it will establish debt-restructuring companies by collecting funds from banks. About 10 financial institutions are expected to join the project, including the state-run Korea Development Bank (KDB) and the Export-Import Bank of Korea (Korea Eximbank). "How much do bankers know about the shipbuilding industry? said an FSC spokesman. "Creditors have little knowledge in solving problems of debt-stricken companies. That's why we are pushing to establish specialized companies focusing on debt restructuring," The plan comes as financial institutions struggle to restructure debt-driven corporations. Last month, Daewoo Shipbuilding and Marine Engineering announced that its operating losses reached 3 trillion won in the second quarter, uncovering hidden losses accumulated for the past few years, prompting creditors to panic. KDB and Korea Eximbank are two key creditors of the shipbuilder. The financial regulator said it will assign one debt-restructuring company to be in charge of one debt-stricken company. Read more.

Mon., August 24, 2015

The new owners of BHS are set to raise £70m as they attempt to rescue the beleaguered department store chain just months after acquiring it, The Telegraph reported. Retail Acquisitions, which bought BHS in March from Sir Philip Green, are in talks with a number of lenders, including hedge funds, to secure new financing to implement future plans. The little-known vehicle, which is led by former stockbroker Keith Smith, confirmed the talks in a statement, saying: “We have said all along that we would refinance to help accelerate the turnaround plan for the UK business. “Every penny raised will support the regeneration of our portfolio of stores, returning this iconic British brand to its rightful place on the high street.” The move to secure new funding comes after Retail Acquisitions revealed their ambitious regeneration plans to turn the struggling clothing and home ware retailer around earlier this year. Read more.

Mon., August 24, 2015

Creditors have granted the German unit of bankrupt Dutch engineering services company Imtech a credit line worth a "significant" sum in the millions of euros, Imtech Germany's insolvency administrator said on Friday. It is currently unclear whether Imtech Germany will need to draw on the credit line because its liquidity has developed better than expected, Peter Alexander Borchardt said in a statement. He also said Imtech Germany's roughly 4,000 employees would be paid their wages as planned next week, thanks to a government programme that steps in to pay workers when a company becomes insolvent. Read more.

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