Daily Insolvency News Headlines

Mon., April 20, 2015

Mon., April 20, 2015

Lawmakers in Cyprus passed key insolvency laws designed to open the taps for more international bailout cash, The Wall Street Journal reported. The vote makes it possible to operate foreclosure laws that international creditors have demanded as a condition for extending more loans to Cyprus. Recession, high unemployment and declining incomes have produced defaults on more than half of all private loans. The new laws should make it easier for banks to demand payment or seize assets, thereby reducing the banks’ own liabilities. Lawmakers had passed some of the legislative package last year, but delayed enforcement until they could approve other bills also passed Saturday that are designed to offer protection to some vulnerable categories of debtors. The International Monetary Fund has been withholding €88 million ($95 million) in rescue money, citing Cyprus’s delay in giving banks the legal tools to deal with their load of bad debt. One new law permits a bank to write off up to €25,000 from an existing loan. Another enables solvent debtors to apply for legal protection against losing their homes or place of business if they are valued at €350,000 or less. Cyprus government officials said passage of this package of debt-related bills means the country should be able to tap international markets for a second time since its March 2013 bailout. This could include participation in the European Central Bank’s bond-buying €1.1 trillion stimulus program. Read more. (Subscription required.)

Mon., April 20, 2015

By the standards of his frenzied schedule here last week, the meeting on Friday between Yanis Varoufakis, the Greek finance minister, and Lee C. Buchheit, the dean of international debt lawyers, was a quiet one, the International New York Times reported. There was none of the media scrum that had followed Mr. Varoufakis around town during the semiannual meetings of the International Monetary Fund and World Bank, as he paid calls on the I.M.F. chief, Christine Lagarde; the head of the European Central Bank, Mario Draghi; the United States Treasury secretary, Jacob J. Lew, and even President Obama. But the get-together with Mr. Buchheit carried critical meaning, according to experts here. After all, it was Mr. Buchheit who helped broker Greece’s most recent debt refinancing, in 2012. As Greece now gropes for a resolution to its current financial problems, the meeting suggests Athens might still be holding out hope for a restructuring of its debt burden of 303 billion euros, or $327 billion. What Mr. Varoufakis and Mr. Buchheit discussed is not publicly known, and neither would comment on the meeting. But that Mr. Varoufakis might still be exploring a restructuring underscores just how close Greece is to defaulting on its staggering debt, billions of euros of which must be repaid in the coming weeks. Read more. (Subscription required.)

Mon., April 20, 2015

French President François Hollande said on a television interview on Sunday he’d spend at least €4 billion ($4.3 billion) on a new program that will subsidize working youth, The Wall Street Journal reported. During a wide-ranging two-hour interview on French cable channel Canal Plus, Mr. Hollande said his government will start to supplement the wages for those who are working and under 25 years old to incentivize young people to take on short-term jobs and part-time work. “It’ll cost €4 billion, or maybe a bit more, but when we’re facing this problem, what counts most is employment,” the French leader said, adding the program would be rolled out for the coming school year. Later in the same interview, he announced measures to streamline the process of firing workers so that companies “no longer view full-time contracts as a risk.” He said terminated employees who contest their firings at labor tribunals will have their cases settled between three to six months and their awarded damages would be fixed to a scale. Read more. (Subscription required.)

Mon., April 20, 2015

Chinese policy makers are dealing with a financial conundrum. Overall economic growth is slipping, which argues for looser monetary policy. But the risk is that any new money is diverted to the country’s frothy stock markets, the International New York Times reported. Against this backdrop, the central bank and securities regulator appear to be taking coordinated action. On Sunday, China’s central bank freed up roughly $200 billion for new lending, a widely expected stimulus measure devised to pump more money into the economy. It is latest sign that economic growth may be slowing faster than the leadership in Beijing anticipated. The move by the People’s Bank of China came just two days after the country’s securities regulator curtailed sources of new funding for margin financing — or buying stocks on borrowed money. Shanghai’s main index more than doubled over the last 12 months, driven by an influx of inexperienced new investors and rising levels of borrowing in order to bet on shares. In combination, the policies could help direct more of the new lending into productive sectors of the economy, while reducing the chance that the money further fuels the stock market. Read more. (Subscription required.)

Mon., April 20, 2015

Another Brazilian company has fallen to the corruption scandal surrounding Brazil’s petroleum giant, Petrobras: Schahin Group requested on Friday a bankruptcy court’s protection for 28 of its subsidiaries. The company’s statement said that the filing covered 6.5 billion reais, or $2.1 billion worth of liabilities, and that “the closure of national and international credit markets” had made “it impossible to finance the activities of the companies.” It added that it would “abandon its activities in the field of engineering and construction to focus on the oil and gas area.” Schahin is the fourth big Petrobras subcontractor to seek court protection, after OAS, Alumini Engenharia and Galvão Engenharia. The Industrial and Commercial Bank of China and Mizuho Bank of Japan are among Schahin’s largest creditors, and other global banks are also owed money. HSBC and Deutsche Bank have both sued Schahin over unpaid loans. Schahin also has about $650 million in global bonds. Read more. (Subscription required.)

Mon., April 20, 2015

Former Siteserv executive Patrick Jordan has bought aircraft maintenance specialist Atlantic Aviation Group out of High Court protection in a €2.5 million deal, the Irish Times reported. The business, formerly known as Transaero, had been in examinership since January after its Russian parent ran into difficulties, but emerged from the process this week after the High Court approved a rescue deal put together by Michael McAteer of Grant Thornton. Mr Jordan is taking over the company in a transaction understood to be valued at €2.5 million. Under its terms he is paying €1 million for the business and putting up €1.5 million in working capital. In 2006, Mr Jordan sold his building services company, Easy Access, to Siteserv for €17 million cash and shares. He remained as chief operations officer until 2012, the year that the Irish Banking Resolution Corporation sold Siteserv to a Denis O’Brien-owned company in a move that sparked controversy. Read more.

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