Daily Insolvency News Headlines

Mon., July 27, 2015

Mon., July 27, 2015

Ukraine has staved off a default on its $70bn debt pile, rekindling hopes that Kiev can cut a deal with creditors to restructure a substantial proportion of its dues, the Financial Times reported. The cash-strapped eastern European country, which is in the midst of a deep recession and a separatist conflict against Russia-backed rebels, made a $120m interest payment due on Friday as part of its ongoing battle to convince creditors to write down the face value of their holdings. The government originally hoped to strike an agreement to restructure $15.3bn of debt before the summer. However months of negotiation failed to produce a deal and, in May, Ukraine’s parliament adopted a law that granted government the authority to halt debt repayments altogether. “It’s a positive sign but I probably wouldn’t get too carried away,” said Fyodor Bagnenko, a fixed income trader at Dragon Capital, which forecasts that Ukraine and its creditors will eventually compromise on a debt haircut of 20 per cent to 25 per cent.Read more. (Subscription required.)

Mon., July 27, 2015

Some members of Greece’s leftist-led government wanted to raid central bank reserves and hack taxpayer accounts to prepare a return to the drachma, according to reports that highlighted the chaos in the ruling Syriza party, The Guardian reported. It is not clear how seriously the government considered the plans, attributed to former energy minister Panagiotis Lafazanis and ex-finance minister Yanis Varoufakis. Both ministers were sacked this month. However, the revelations have been seized on by opposition parties who are demanding an explanation. The reports on Sunday came at the end of a week of fevered speculation over what Syriza hardliners had in mind as an alternative to the tough bailout terms Tsipras has reluctantly accepted to keep Greece in the eurozone. About a quarter of the party’s 149 MPs rebelled over proposals to pass sweeping austerity measures in exchange for up to €86bn (£60bn) in fresh loans. Tsipras has been struggling to hold the party together. In an interview with Sunday’s edition of the RealNews daily, Lafazanis said he had urged the government to tap the reserves of the Bank of Greece in defiance of the European Central Bank. Lafazanis, the leader of a hardline Syriza faction that has argued for a return to the drachma, said the move would have allowed pensions and public sector wages to be paid if Greece were forced out of the euro. Read more.

Mon., July 27, 2015

Negotiators from Greece’s bailout monitors will fly to Athens on Monday to formally begin talks on a €86bn rescue after days of delays over whether the Greek government would allow creditors to have full access to staff and facilities, the Financial Times reported. Despite an agreement that gives teams from the EU and the International Monetary Fund access to some ministries and data, officials said only middle-ranking technical teams — and not mission chiefs — would participate for now. The IMF, which last week scrapped its €28bn bailout programme that was originally to run until March, on Friday received a request from Athens for a new rescue. It is unlikely to send negotiators until later in the week, officials said. Opening talks on an IMF programme must first be approved by the fund’s board. The decision to send lower-level negotiators on Monday is the latest sign of concern among Greece’s creditors that, despite the summit agreement two weeks ago to restart talks, there remain deep differences on the way forward that could still derail negotiations before an August 20 deadline. Read more. (Subscription required.)

Mon., July 27, 2015

For Hong Kong, it's been one thing after another. A series of anti-China and pro-democracy protests last year prompted stores to close and mainland tour groups to cancel bookings. Meanwhile, a slowing Chinese economy and President Xi Jinping's anti-corruption and austerity campaigns have also made the Chinese more wary of buying pricey cognac and Gucci bags in the city. While still the biggest outbound destination for Chinese tour groups, Hong Kong is in danger of losing its lead. Mainland Chinese travelers to Hong Kong last year grew by the slowest pace since 2009, Bloomberg Intelligence data show. With fewer mainland Chinese staying overnight, average daily rates at Hong Kong's hotels fell for a ninth straight month through June. The Pearl of the Orient also faces rising competition from regional rivals such as Thailand and South Korea, and mainland alternatives including Shenzhen and Shanghai. In addition, China slashed tariffs on products such as face creams and imported sneakers from June 1, reducing Hong Kong's draw as a cheaper shopping destination. The effect on Hong Kong's retailers has been immediate and painful. Retail sales fell in four of the five months through May, with jewelry, watches and other high-end gifts the worst hit. Read more.

Mon., July 27, 2015

A replacement lender for U.S. Steel Canada that will in effect double the cost of keeping two Canadian steel plants afloat was approved by a Toronto court Friday, CBC.ca reported. The application from USSC to replace its parent company, U.S. Steel (USS) with the new lenders, Brookfield Capital Partners, could cost the company $9.25 million, plus administration costs. By changing financiers of a special line of credit for bankruptcy protection proceedings, called debtor-in-possession (DIP) financing, USSC will pay the up-front and exit fees for the loan a second time in less than a year -- a decision welcomed by the union because it remedies what was feared to be a conflict of interest. "From the beginning we have said the DIP financing should not have been held by U.S. Steel," said Bill Ferguson, president of United Steelworkers union Local 8782. "We weren't interested in having the DIP financing shoved up our a-- at some point in the future when we come to a contentious issue." Read more.

Mon., July 27, 2015

The number of people going bankrupt has ticked up for the first time since 2009 when fallout from the global financial crisis reached its peak, The New Zealand Herald reported. Figures from the Insolvency and Trustee Services show 1979 people went bankrupt in the year to June 30, up from 1921 the previous year. The increase is small but it is a change in direction from the past five years where numbers have steadily fallen from the 3054 people who went bankrupt in the year to June 30, 2010. Damien Grant, a director with Waterstone Insolvency, said it was unlikely the increase pointed to a down-turn in the economy as bankruptcies typically increased after a recession. "In my experience you don't see a big increase until after a recession." A recession is defined as three quarters in a row of negative economic activity when gross domestic product numbers fall rather than increase. New Zealand's economic activity went into negative territory at the end of 2008 and didn't become positive again until March 2010. Read more.

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