Daily Insolvency News Headlines

Tue., January 20, 2015

Tue., January 20, 2015

Brazil will next month increase taxes on fuel and loans to individuals and adjust other duties to help plug the government’s yawning budget deficit, the Financial Times reported. New finance minister Joaquim Levy announced the measures on the eve of a visit to the World Economic Forum in Davos, during which he will seek to convince investors that Latin America’s biggest economy is setting its finances back on track. “The increase in revenue due to the above measures is expected to be R$20.63bn in 2015,” the finance ministry said in a statement. Brazil’s President Dilma Rousseff is battling to prevent a downgrade of Brazil’s prized investment grade credit rating after her government embarked on a prolonged fiscal stimulus programme during her first term in office. After narrowly winning re-election in October, she appointed fiscal hawk Mr Levy, a former treasury secretary and private sector fund manager, to implement an austerity programme. Read more. (Subscription required.)

Tue., January 20, 2015

Russia’s economy will shrink by close to 5 per cent this year, the European Bank for Reconstruction and Development forecast, while average growth for eastern Europe and the former Soviet Union will fall into negative territory for the first time since 2009, the Financial Times reported. The development bank for the former Communist bloc said plunging oil prices and western sanctions would lead to a contraction in the Russia’s economy of 4.8 per cent this year, compared with a forecast drop of 0.2 per cent in September. The EBRD also forecast that Ukraine’s economy would shrink 5 per cent in 2015, on top of a 7.5 per cent decline last year. The bank warned that Ukraine’s foreign exchange reserves were “dangerously low”, adding it was “concerned” at the time being taken to put together a new international financial aid package. Noting Russia’s “systemic importance” to the region because of its close economic links and workers’ remittances, the EBRD slashed its average growth forecast for its 35 countries of operation to minus 0.3 per cent, from a plus 1.7 per cent forecast in September. Read more. (Subscription required.)

Tue., January 20, 2015

The European Central Bank is poised to head into uncharted territory as it nears a decision Thursday on whether to launch a controversial stimulus program aimed at boosting Europe’s fading economy, The Wall Street Journal reported. The bank’s challenge: engineer a plan that impresses investors, passes muster with conservative ECB members and—most of all—helps bring Europe out of its slump. The meeting comes as Europe is on the ropes. The region’s gross domestic product remains below 2008 levels and unemployment is stubbornly high at double-digit levels, inflicting pain on Spain, Italy, Greece and other struggling economies. Anti-euro parties are flourishing in parts of the region as politicians tap into voter discontent over Europe-imposed policies. Read more. (Subscription required.)

Tue., January 20, 2015

Kenmare Resources, the Irish mineral sands miner hit by the fall in commodity prices, is seeking to finalise a deal with lenders to restructure its debt load by the end of the month. Dublin-based Kenmare has struggled with the size of its debt and a succession of operating problems, including power-supply interruptions. The company, founded in 1986, “has disappointed on many levels over a long time”, said one shareholder, the Irish Times reported. Shares in Kenmare have fallen more than 80 per cent since the company’s board, backed by its largest investor, M&G, rejected a takeover approach by Australian rival Iluka last June. The boost to Kenmare from an all-share approach quickly dissipated, and big investors such as BlackRock and JPMorgan have steadily reduced their stakes over recent weeks. Mineral sands prices have historically been closely linked to world economic growth. Prices fell last year, hampering Kenmare’s recovery from problems at its Moma mine in Mozambique, which produces ilmenite for use in paint manufacturing. Kenmare’s market capitalisation in London is now just £70 million, and the company, which reported a $31.8 million loss for the first half of 2014, recorded net debt of $312 million at June 30th. Bank loans came to $349.6 million. Kenmare has about $80 million of debt coming due at the end of 2015 and the miner and its banks are in talks about a restructuring that would follow two similar exercises last year. Read more.

Tue., January 20, 2015

Administrators for currency trading firm Alpari (UK) Ltd said they had received a number of inquiries from potential buyers of the business hit by heavy losses from last week's surge in the value of the Swiss franc, Reuters reported. Alpari lost millions of dollars after the Swiss National Bank removed its currency cap on Thursday and administrators appointed on Monday said that efforts to find a buyer for Alpari (UK) over the weekend failed and they would hold talks with interested suitors in the coming days. U.S. retail FX broker FXCM was a potential buyer for Alpari UK, according to industry news site Forex Magnates, citing unnamed sources. FXCM's own customers lost more than $200 million from the Swiss franc's move and it got a $300 million loan from Leucadia National Corp to keep operating. IG Index could be interested in some Alpari assets, but not the whole firm, the Wall Street Journal reported. IG would be interested in suitable assets at the right price, a person familiar with the matter said. Read more. <

Tue., January 20, 2015

A Galway-based company is being sued by a Luxembourg investor over the alleged effective cancellation of a €2 million loan note when it was converted into shares before the firm was sold off, the Irish Times reported. In Commercial Court proceedings, it is claimed Éire Composites, which designs and manufactures lightweight high-performance materials for the aerospace, marine and motor sectors, was bought by businessman Thomas Flanagan last November despite objections by Carlo Tassara Assets Management Ltd (CTAM), with registered offices in Luxembourg. CTAM, whose parent Carlo Tassara SpA invested €3.3 million in Éire Composites in 2007, says it is challenging an alleged effective cancellation of a €2 million loan note to the company by its conversion into shares, despite numerous objections (from CTAM). It is also seeking orders against three Éire Composites directors at the time of alleged conversion – William Costello, Patrick Feerick and Conchur Ó Brádaigh – in relation to personal guarantees provided over liabilities in event of default on loan repayments. CTAM’s proceedings are also against Mr Flanagan who, it is alleged, bought the firm in the full knowledge of the loan note conversion dispute. Read more.

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