Daily Insolvency News Headlines

Mon., March 23, 2015

Mon., March 23, 2015

Greece’s prime minister and fellow eurozone leaders emerged from a meeting early on Friday morning touting a breakthrough agreement to unlock much-needed bailout funds for Athens — only to fall into disagreement hours later about what it all meant, the Financial Times reported. Two days of intensive and occasionally heated negotiations at an EU summit in Brussels amounted to little more than a repeat of talks a month ago between eurozone finance ministers that officials then also hailed as the definitive agreement to get the final bailout review under way. So similar were the two deals that, much like the one finalised last month, leaders involved in the talks could not agree on what was agreed within 12 hours after a late-night meeting aimed at resolving all differences. Athens is facing a severe cash crunch. It needs fresh sources of financing to pay wages and pensions at the end of this month following a €1bn revenue shortfall in the first two months of the year, according to Athens bankers. Read more. (Subscription required.)

Mon., March 23, 2015

Market opinion is divided over the importance of proposed German legislation that would effectively force senior bondholders down the credit capital structure when a failing bank is resolved, Reuters reported. "What the lawmakers have done is effectively put in a clause that clarifies the creditor hierarchy for senior debt and sets out clearly that senior debt is below derivatives and structured notes when it comes to resolution," said one debt banker. "It gives a very practical bail-in hierarchy," the banker said. "It makes sense to exclude things like corporate deposits and derivatives." Under the Bank Recovery and Resolution Directive (BRRD), derivatives can be bailed in but may be excluded at the discretion of the resolution authorities. The amendments to the German Banking Act may also offer an advantage by helping to bring the country into line with incoming regulatory requirements around loss-absorbing buffers. "The idea of TLAC [total loss absorption capacity] is that you separate out the various operating liabilities that are entangled with senior unsecured debt," said Simon McGeary, head of European new products at Citigroup. "In Germany, all senior unsecured debt would automatically be subordinated to those," he said. The changes could mean that banks will not issue as much sub debt as some were planning in order to meet TLAC requirements. Read more.

Mon., March 23, 2015

A Brazilian judge has accepted charges filed by state prosecutors against 11 companies accused of forming a cartel to raise prices on the construction and upkeep of subway and train systems in the state of Sao Paulo, The Wall Street Journal reported. A press officer of the prosecutor’s office said Saturday that Judge Marcos Pimentel Tamassia accepted the charges that involve contracts signed between 2000 and 2007. She spoke on condition of anonymity because she was not authorized to comment the case. Among the companies charged are Germany’s Siemens, CAF of Spain, Mitsui of Japan, Bombardier of Canada and Alstom of France. None of the companies were available for comment on Saturday. Prosecutors have said that the companies were involved in price fixing, and that those that won bids then contracted the losing companies to provide services. Brazil’s antitrust agency, the Administrative Council for Economic Defense, has said that the companies used several anticompetitive strategies, such as the prearrangement of offers tendered in bidding processes. At times, it said, the cartel would also determine which company would win a bid by allowing only one to tender an offer. Read more. (Subscription required.)

Mon., March 23, 2015

Zimbabwe’s beleaguered mobile network operator Telecel Zimbabwe’s finances are in a sorry state amid indications the company is bankrupt. The company reportedly has management inefficiencies, high director fees and is riddled with hefty management fees paid out to its foreign shareholders. Since its inception in 1998, Telecel has gone through major changes in shareholding at an international level. The original shareholders were led by Rwandan-born Miko Rwayitare, before the company was bought by Orascom from Egypt, which later sold to Vimpelcom, a Russian company that is now trying to dispose of its 60% equity stake in the operator either to Isabel dos Santos’ company, Unitel S.A, or Africa’s largest mobile operator MTN of South Africa. Isabel is Angolan president Jose Eduardo dos Santos’ billionaire daughter. Read more.

Mon., March 23, 2015

The U.S. and Europe are to blame for China’s formation of its own development bank after the Asian power was neglected in the structures of existing international banks, a top European Union official said Saturday, The Wall Street Journal reported. “China is aggressively stepping into an area where if we paid more attention, we would have had more normal relationships,” Kristalina Georgieva, vice president of the European Commission, said at the Brussels Forum, a foreign-policy conference. Several European countries, including the U.K., France and Germany, have in the past two weeks announced their intention to join the board of the China-led Asian Infrastructure Investment Bank, which is seen as a rival to the U.S.-led World Bank and the International Monetary Fund. Chinese officials have offered the founding members a voice in shaping the rules of the new bank, with applications open until March 31. Read more. (Subscription required.)

Mon., March 23, 2015

Small firms in Scotland are at risk of collapse because public bodies are withholding £120 million of debts owed to private construction companies, The National reported. According to research carried out by industry body the Specialist Engineering Contractors (SEC) Group Scotland, “little effort” is being made to ensure secondary or sub-contractors get the same treatment as primary contractors who are paid within 30 days. The primary reason for withholding the cash is to improve the public bodies’ working capital. But SEC, which delivers nearly two-fifths of the £4 billion spent by the public sector in Scotland, insists delays are putting small firms at risk of insolvency. Figures also revealed that 72 per cent of public bodies and almost two-thirds (64 per cent) of universities make no attempt to monitor supply chain payments, according to SEC. Newell McGuiness, managing director of SEC member Select, said: “This information makes very depressing reading. “It suggests that while organisations which depend on money from the public purse would appear on the surface to be backing moves against late payment, the reality is somewhat different. Read more.

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