Daily Insolvency News Headlines

Thu., August 14, 2014

Thu., August 14, 2014

Cork brothers Michael and John O’Flynn have succeeded in removing the interim examiner appointed to four key companies in their construction group and have been put back in charge of their business by the High Court, the Irish Times reported. Ms Justice Mary Irvine today blocked Blackstone subsidiary Carbon Finance from enforcing personal or corporate loans demands. The judge also stood down four Receivers appointed to the O’Flynn companies, revoking their appointment over certain assets and entities within the O’Flynn Construction Group. Judge Irvine also restrained new directors appointed by Carbon Finance to the O’Flynn companies from purporting to act as directors of Colebridge International Limited or any other O’Flynn company. She removed the interim examiner appointed to the four companies on July 29th last and directed Carbon Finance to immediately re-appoint the O’Flynn brothers as directors to their companies. They had been removed following the appointment of Receivers by Carbon. Judge Irvine’s orders became effective immediately. A full trial of all issues before the court will take place in the new law term, beginning on October 7th. The judge said Carbon Finance had not acted in utmost good faith and had not fully disclosed all relevant information to Judge Brian McMahon on July 29th when he had agreed to Carbon’s application for the appointment of the examiner. Read more.

Thu., August 14, 2014

Prime Minister Aleksandar Vučić said Wednesday he believed it possible to find a solution for around 40 restructuring companies and save them from bankruptcy. Vučić and Labor Minister Aleksandar Vulin met in Belgrade with officials of the Confederation of Autonomous Trade Unions led by Ljubisav Orbović and representatives of worker unions from 40 companies undergoing restructuring. There is a total of 156 restructuring companies in Serbia. It was Vučić's and Vulin's first meeting with one of the representative unions since the adoption of the laws on labour and pension and disability insurance in mid-July, which were opposed by the unions. Vučić told reporters after the meeting it was key that the government had got support from unions not to treat everything within the restructuring companies as property during their upcoming sale. He proposed at the meeting to form a committee for restructuring companies according to their industrial branch, adding that he would seek support from other unions as well for measures to help those companies, in order to privatise all the restructuring companies and another 584 that have yet to go through the process. The government is prepared to write off the companies' debts, which form 65 percent of all the debts owed by the restructuring companies, he pointed out. Those companies owe EUR 2.4 billion to the government, but those debts cannot be collected, he said. That is not all, because they cost the state EUR 750 million annually, so a solution for them has to be found, he noted. "We were going in the wrong direction for some 15-20 years, given out aid, but never solved the problem," he said. Read more.

Thu., August 14, 2014

The Reserve Bank of India (RBI) is working with the Centre to improve governance in public sector banks, RBI governor Raghuram Rajan said on Wednesday and called for a bankruptcy code to prevent misuse of the system in future. The governor also warned of crony capitalism slowing down the economy, the Hindustan Times reported. “Do we need a bankruptcy code? absolutely! It is something I have been saying for six years in reports that we need a bankruptcy code,” he said. “There are some people who have used the system in one way that I (the person) get all the benefits you (system) bare the costs...We are trying to get reasonable powers for banks...not to be held up in every court and to be able to get their money back,” he added. Rajan also reiterated that reducing interest rates was not the right thing to do currently as it would only fuel inflation unless supply-side issues were addressed. Citing that one of the greatest dangers to the growth of developing countries including India is the middle-income trap, where crony capitalism is slowing down growth, the RBI governor said: “Crony capitalism kills transparency, kills competition, is harmful to free economic enterprise and economic growth. Some countries that have had this problem got stuck in middle-income trap.” Lending, particularly to the infrastructure sector, has left many banks with bad loans and the central bank and government were working together to clean it up, he said. “We are working very hard to reduce bad loans in the public sector system...The government and RBI have seized up the issue and working very hard to make sure we reform the system.” Read more.

Thu., August 14, 2014

The Financial Supervisory Commission (FSC) yesterday placed Global Life Insurance Co (國寶人壽) and Singfor Life Insurance Co (幸福人壽) under government receivership, as the two insurers had failed to contain financial losses or management malpractices, the Taipei Times reported. “We have no choice but to take the drastic step at 5:30pm to maintain market order and stability,” FSC Chairman William Tseng (曾銘宗) told a news conference. As of June 30, Global Life’s negative net worth had ballooned to NT$25.2 billion (US$831.7 million) from NT$100 million in 2006, while that of Singfor had expanded to NT$23.9 billion from NT$1.7 billion during the same period, the commission’s data showed.“Continued delay will raise compensation costs that have to be paid to buyers,” Tseng said. The FSC had prodded the two insurers to draw up financial improvement measures, but neither came up with an effective plan. Tseng said the receivership, which is to last for two years, will not affect the rights of their employees, customers and policies. Read more.

Thu., August 14, 2014

Chinese lending unexpectedly and drastically slowed in July to the lowest level since the depths of the global financial crisis, as a weak property market appeared to drive down demand for new loans, despite recent moves to ease credit, the International New York Times reported. A broad measure of new credit was 273.1 billion renminbi, or $44.3 billion, in July, the central bank reported on its website Wednesday. That is the lowest monthly total since October 2008, the month before China announced a huge stimulus program that was seen as crucial to the country’s success in avoiding the deep recessions in the United States and Europe. The plunge in new credit puts more pressure on China’s economy, which is on track this year to grow at the slowest pace in a generation, since the slowdown after the 1989 crackdown on the student democracy movement in Tiananmen Square. Economists said the figures might prompt the government to accelerate its efforts to increase growth, including reducing the amount of funds that banks must set aside as reserves. Read more. (Subscription required.)

Thu., August 14, 2014

Argentina came out swinging today against the US judge overseeing its debt default case, in defiance of a threatened contempt order, and disappointed market hopes it might soon restart talks with the hedge funds suing the country, the Irish Times reported. A group of holdout investors have sued the South American country for full repayment on bonds that went into default in 2002. The funds rejected debt restructurings in 2005 and 2010, holding out for better terms. US Judge Thomas Griesa, overseeing Argentina’s long-running battle with the funds, said in New York on Friday that he would issue a contempt order unless the government stopped claiming it had met its obligations and was not in default. Far from backing off of those assertions, cabinet chief Jorge Capitanich said Judge Griesa had been paralysed by his own lack of understanding of the case and that no new talks had been scheduled with the hedge funds. “The proper conditions do not exist to negotiate,” Mr Capitanich said. Holders of restructured bonds have asked Griesa to release money that Argentina had deposited in June, intended as a coupon payment. Capitanich criticized the judge for not acting on those requests. “His lack of decision clearly comes from not understanding the process, not understanding Argentina’s status as a sovereign country, not understanding that his actions violate sovereign immunity, which transcends judicial concerns and enters the realm of international relations, which are managed by the executive branch of the US government,” Mr Capitanich said. Read more.

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