Daily Insolvency News Headlines

Thu., September 25, 2014

Thu., September 25, 2014

The World Bank on Wednesday slashed its forecast for Russia's economy over the next two years, saying growth would stagnate amid a lack of structural reforms and Western sanctions over Russia's role in the Ukraine conflict, The Wall Street Journal reported. In its biannual report, the World Bank cut its forecast for Russian economic growth to 0.3% in 2015 and 0.4% in 2016 under its baseline scenario from 1.5% and 2.2%, respectively—well below the government's estimates. Even if Western sanctions are quickly repealed, the economy would only inch upward, while an increase in geopolitical tensions would bring a small recession, the bank said. Even under the most optimistic scenario, which envisages the full resolution of the geopolitical tensions and an end of all sanctions by the end of 2014, the World Bank sees only a 0.9% growth in 2015, increasing to 1.3% in 2016. "The economy is at the threshold of recession and will remain there for a while," said Birgit Hansl, the bank's lead economist on Russia and the main author of the report. Russia's economic growth slowed to near zero in the first half of the year amid declining consumer activity, waning investment and the several rounds of the Western sanctions in response to Russia's policy toward Ukraine. Russia's government has lowered its forecasts, but still sees 1.2% growth in 2015 and 2.3% in 2016. Read more. (Subscription required.)

Thu., September 25, 2014

Cash-strapped China's National Electric Vehicle Sweden (NEVS) said on Wednesday it would lay off up to 200 staff at its Saab car plant in Sweden as production is unlikely to resume anytime soon, Reuters reported. NEVS, which bought the bankrupt Swedish carmaker Saab in 2012, halted already-low output in May because of a shortage of money. In August, it obtained protection from creditors through a Swedish court while trying to secure funding. "The ongoing discussions on collaboration and ownership structure, which have not yet resulted in a binding agreement, indicate that the decision for a start-up of production will take time," NEVS said in a statement. It said the layoffs, due to lack of work, were a step in a reorganisation plan that the company's administrator would present at a creditors' meeting on Oct. 8. NEVS has earlier said it was in talks with two unnamed car firms to secure more money, that it has external debt of about 400 million crowns ($56 million), and that it made a pretax loss last year of 601 million on sales of 41 million. Read more.

Thu., September 25, 2014

South Korea's No. 3 smartphone maker, Pantech Co., which has been under court receivership, is now up for sale on Wednesday, in a desperate move to get the company back on its feet, the Yonhap News Agency reported. The latest development came as the Seoul Central District Court gave its nod to a plan by Pantech creditors led by the Korea Development Bank to sell the company, a month after it commenced the troubled firm's court receivership program. Sale manager Samgjong KPMG will accept bids from potential buyers until 3 p.m. on Oct. 7. The move came as the creditors took into account the fact that Pantech's liquidating value stands at 189.5 billion won (US$182.3 million), whereas its going-concern value is about 382.4 billion won. Industry watchers anticipate that a foreign tech player will buy the troubled firm. Earlier this year, India-based Micromax had expressed its intention to acquire shares in Pantech. Although Pantech graduated from a five-year debt rescheduling program in December 2011, its financial footing weakened again as it struggled with falling sales from increased competition in the local smartphone market dominated by Samsung Electronics Co. and LG Electronics Inc. Read more.

Thu., September 25, 2014

U.S. Steel Canada says a proposal from its parent company and largest secured creditor to lend $185 million will let the insolvent steelmaker maintain its operations for another year and begin a process to sell its two Ontario operations, the Toronto Star reported on a Canadian Press story. According to court documents, company president and general manager Michael McQuade said the proposed debtor-in-possession (DIP) funding was “appropriate” with better terms for it than other creditor proceedings. He said he was advised that the interest rate, fees and terms were below comparable DIP facilities. The 20-page affidavit is part of U.S. Steel Canada’s submission to be decided by the Ontario Superior Court Oct. 6. The American steelmaker is requiring that its funding will be first to be repaid. The company has previously said it won’t consent to its Canadian operation borrowing money from any other lenders with priority. Local 1005 president Rolf Gerstenberger said he’s not surprised by U.S. Steel’s move to be first in line. “All of the unsecured creditors will fight over what’s left,” he told CBC Hamilton. “But we’re not investors or stock brokers. We’ve been there for 30 to 40 years making steel, doing what we’re supposed to do. Read more.

Thu., September 25, 2014

Infineon Technologies AG and its former memory chip unit Qimonda AG on Wednesday reached a partial out- of-court settlement over an insolvency dispute, The Wall Street Journal reported. Under the agreement, German semiconductor company Infineon will pay 260 million euros ($334 million) to the bankrupt unit. Infineon said it would pay a settlement of €135 million and acquire all patents of Qimonda for an additional €125 million. The partial settlement is covered by provisions already recognized and Infineon will pay from existing liquidity, it said. "With this partial settlement, we have made significant progress in the insolvency proceedings over the assets of Qimonda," insolvency administrator Michael Jaffe said. The disputes exclude the pending lawsuit on the economic re-establishment and liability for impairment of capital. The court proceedings of the lawsuit will continue at a court in Munich, Mr. Jaffe said. Read more. (Subscription required.)

Thu., September 25, 2014

Former board members of Barclays have been called on to give evidence to the UK’s anti-fraud agency as part of a probe into the bank’s dealings with Qatar over an emergency cash injection at the height of the financial crisis, the Financial Times reported. The Serious Fraud Office has served Section 2 notices on directors who were on the board when Barclays sought £5.8bn from Qatari investors in 2008 – enabling the bank to avoid a bailout. The move by the SFO comes at a critical moment in the investigation, which has been mired in disputes over accessing key evidence, according to people familiar with the investigation. Section 2 notices compel recipients to hand over documents to the SFO, and deny those giving evidence a right to silence – although, in return, individuals will not be prosecuted provided they do not lie. These witness interviews will involve different board members to those who have already been interviewed under caution. Read more. (Subscription required.)

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