Daily Insolvency News Headlines

Thu., May 21, 2015

Thu., May 21, 2015

Germany’s finance minister said he couldn’t rule out a Greek default, a stance that will add pressure on Athens as negotiations over much-needed financing enter their final stretch. Asked whether he would repeat an assurance he gave in late 2012 that Greece wouldn’t default, Wolfgang Schäuble told The Wall Street Journal and French daily Les Echos that “I would have to think very hard before repeating this in the current situation. The sovereign, democratic decision of the Greek people has left us in a very different situation,” he said, referring to the January election that delivered a radical-left government that has vowed to reverse five years of creditor-mandated austerity and painful economic overhauls. In an interview in his spartan Berlin office on Tuesday, Mr. Schäuble, a key architect of Europe’s controversial austerity-driven response to the eurozone debt crisis, showed no willingness to compromise in the negotiations to unlock the final installment of Greece’s €245 billion ($272 billion) bailout. Without a deal, the program will expire in six weeks, leaving Greece with no option but to default on billions of euros in debt repayments coming due this summer. Read more. (Subscription required.)

Thu., May 21, 2015

Barclays and the Royal Bank of Scotland were among six banks to be fined a total of $5.7 billion (£3.8 billion) by British and US regulators over allegations that they rigged the $5.3 trillion-a-day foreign exchange market, The Standard reported. The settlement, which also involved US banks JP Morgan, Bank of America and Citi, as well as Switzerland’s UBS, means banks have handed authorities around $10 billion to deal with the scandal. Barclays, Citi, JPMorgan and RBS also all pleaded guilty to a US antitrust violation. The affair follows a series of scandals, including the fixing of benchmark interest rate Libor, that have severely damaged the public's perception of the banking industry. FX traders were said to have come together in chatrooms with names like "The Cartel" or "The Bandits Club" to organise methods to influence the value of major currencies in the hope of inflating their profits. "If you aint cheating, you aint trying,” one Barclays trader said in a chatroom. Clients - anyone from hedge funds betting on the market or companies engaging in a major overseas transaction - could have been affected by the activity. "This sort of practice strikes at the heart of business ethics and is yet another blow to the integrity of the banks. Our pension funds invest billions of pounds in the financial markets and if they are being cheated in this way it affects every one of us," said Mark Taylor, Dean of Warwick Business School and a former foreign exchange trader. Read more.

Thu., May 21, 2015

Last month more than 30 provincial taxi drivers drank poison and collapsed together on the busiest shopping street in Beijing in a dramatic protest against economic and working conditions in their home town, the Financial Times reported. The drivers, who the police say all survived, were from Suifenhe, a city on the Russian border in the northeastern province of Heilongjiang. Such lurid acts of protest are an ancient tradition in China but the extremity of their action highlights one of the biggest problems facing Beijing as it tries to manage the worst economic slowdown in nearly three decades: a deepening provincial economic divide. An examination of regional growth rates across the country shows the slowdown has affected some areas far worse than others. Perhaps predictably, the worst-hit places are those that can least afford it. Read more. (Subscription required.)

Thu., May 21, 2015

Russia on Wednesday demanded the timely repayment of all debts owed to it by Ukraine and accused Kiev of effectively preparing the way for default with a new law. It threatened to take the issue to international courts if necessary. The law, approved by Ukraine's parliament on Tuesday, gives the government the right to miss payments to its international creditors as it wrangles over the terms for restructuring $23 billion worth of foreign debt. Russia holds a $3 billion Ukrainian Eurobond whose full repayment is due by the end of the year. Moscow, whose relations with Kiev have been wrecked by a year-long conflict in eastern Ukraine, has declined to join the debt restructuring talks. President Vladimir Putin, speaking at a meeting with government ministers, said he found the new law "strange". "To effectively announce an impending default shows a poor level of professional responsibility, all things considered," said Putin, noting that the International Monetary Fund does not lend to countries in default. Ukraine, its economy battered by recession and rampant graft as well as by the conflict in the east, hopes to secure the next tranche of a $17.5 billion bailout programme with the IMF this summer to shore up its foreign currency reserves. Read more. (Subscription required.)

Thu., May 21, 2015

The deal between the Canadian government and U.S. Steel that allowed the steelmaker to renege on its obligation to make steel in Canada — at plants in Hamilton and Nanticoke in Ontario — will remain a secret, CBC.ca reported. An Ontario Superior Court judge ruled that while it is reasonable that the deal be open, for fairness in the bankruptcy protection process, he dismissed an unsealing motion, saying he didn't have the authority to make that happen. Gary Howe, president of Hamilton Local 1005 of the United Steelworkers Union called the decision "a disappointment, but not surprising." He also said he believes the only next step for the union would be to "continue on with the CCCA [Canada's Companies' Creditors Arrangement Act] charade." In their motion heard at the court a month earlier, lawyers for the United Steelworkers said it would be "fairness 101" to force disclosure of the out-of-court settlement reached between the two sides, after the government took legal action against U.S. Steel for not fulfilling its obligations set out when Stelco was purchased in 2007 by U.S. Steel. Read more. (Subscription required.)

Thu., May 21, 2015

Cliffs Natural Resources Inc said on Wednesday it was seeking court protection from creditors of its Wabush iron ore mine and related assets in Eastern Canada, four months after it sought similar protection for its other Canadian iron ore assets. The U.S.-based iron ore and coal miner said it had concluded that a "more comprehensive restructuring and sale process" would result if it was able to include the Wabush group under the same creditor protection it obtained in January for its larger Bloom Lake iron ore assets in Quebec Superior Court. It would also allow Cliffs a more "streamlined exit" from Eastern Canada, the company said in a filing with the U.S. Securities and Exchange Commission. Cliffs, along with other iron ore miners globally, has been slammed by a collapse in the iron ore price on the back of a supply glut and lower demand from chief customer China. Cliffs idled its Wabush operations in the province of Newfoundland and Labrador in the first quarter of 2014 as the miner sought to cut costs. The Wabush operations consist of mine, rail and port assets. Read more.

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