Daily Insolvency News Headlines

Fri., December 12, 2014

Fri., December 12, 2014

China is adding more cash to its financial system to spur growth, according to people with knowledge of the matter, even as the country’s leadership expresses a willingness to accept a slower economic pace—what President Xi Jinping has called a “new normal,” The Wall Street Journal reported. China’s central bank is pumping about 400 billion yuan (nearly $65 billion) into the country’s banking system, these people said, as it seeks to help Chinese banks lend money to reinvigorate weakening growth. The injection comes as senior leaders, President Xi and Premier Li Keqiang , said the world’s second-largest economy faces significant downward pressure and reiterated that it needs to adjust to slower but high-quality growth. At the conclusion Thursday of a three-day meeting on setting economic priorities for next year, China’s top leaders repeated their pledge to press ahead on structural reforms designed to make China’s economic growth more sustainable, such as shutting down highly polluting factories, reducing industrial overcapacity and taking other difficult economic measures. Read more. (Subscription required.)

Fri., December 12, 2014

The Espirito Santo Group (GES), whose collapse led to a state rescue of Portugal's second-largest bank in August, was a financially fragile "house of cards" for years and its chief knew of irregularities there, a former GES shareholder said, Reuters reported. Pedro Queiroz Pereira, chairman of conglomerate Semapa, told a parliament committee he had ordered a team of experts to scrutinise GES accounts after its chief and the Espirito Santo family patriarch Ricardo Salgado tried to sell debt of GES holding companies to Semapa and even win control of Semapa. Semapa held a stake in ES Control -- a top-level holding company of GES -- up until a year ago. "But we concluded that the group's financial situation was calamitous," he told the committee in a hearing that lasted until late on Wednesday. Read more.

Fri., December 12, 2014

Lawmakers gave initial approval Thursday to a government program containing the outline for an economic overhaul aimed at stabilizing the country’s finances, as Western backers prepare a new aid package, The Wall Street Journal reported. Prime Minister Arseniy Yatsenyuk had raised the risk of possible default in calling on parliament to support the measures, although his finance minister played down the likelihood of that scenario. Ukraine’s international creditors have demanded sweeping economic changes, including spending cuts and other politically painful measures, as a condition for any further assistance. “Without the help of our international partners it is almost impossible” to get out of the crisis, Mr. Yatsenuyk told lawmakers. “Nobody will just hand us the help. To get the help, we need to put through all these tough reforms you were talking about during the elections.” Ukraine’s economy is set to contract at least 7% this year, suffering from the loss of territory and the armed conflict with pro-Russian separatists in the country’s east. Last week, Ukraine’s central bank reported that its reserves had fallen below $10 billion, a critical level, as the currency has lost half its value this year. Read more. (Subscription required.)

Fri., December 12, 2014

Australia and New Zealand Banking Group on Thursday announced measures to ease financial burden on drought-hit farmers in Queensland and New South Wales states, bowing to government pressure to stop farm foreclosures. Federal Agriculture Minister Barnaby Joyce issued an ultimatum to the country's major banks, telling them to stop throwing drought-stricken farmers off their properties or risk government intervention, the Australian newspaper reported. Most of the country has seen below average levels of rainfall over the last two years, data from the Australian Bureau of Meteorology shows, with the eastern states of Queensland and New South Wales particularly hard hit. The drought has forced record slaughtering of cattle and is likely to hit production of wheat, cotton and canola, while output of summer crops such as sorghum, hay and corn is set to fall to five-year low. Read more.

Fri., December 12, 2014

Greece is again the word in financial markets. For now, though, the crisis vocabulary doesn’t include Ireland, Portugal, Spain or Italy. Greece Crisis 2.0, coming five years after it sent the first shockwaves through Europe, may prove less infectious this time thanks to nations’ improved finances and the backstops provided by euro area politicians and central bankers, Bloomberg News reported. “On the potential of contagion of other countries in the euro area, we believe the situation is very different from the one we had,” Credit Suisse Group AG economist Giovanni Zanni wrote in a report yesterday. “The imbalances in peripheral countries are a lot less extreme.” That’s underscored by estimates from Capital Economics Ltd., which show Greece’s budget deficit alone has shrunk from almost 16 percent of gross domestic product in 2009 to less than 2 percent this year. The country returned to the debt market this year for the first time since 2010. Deficits in Spain, Portugal and Ireland have been about halved. The turnaround -- alongside stronger regional defenses and speculation that the European Central Bank will soon buy government debt -- is a reason why investors held off dumping the bonds of Europe’s peripheries this week. “Markets have noticed and spreads excluding Greece have generally been well behaved,” said London-based Zanni. Read more. (Subscription required.)

Fri., December 12, 2014

A 25-year-old solar energy company has collapsed into voluntary administration, letting go a number of staff, but administrators say proposals on the table to recapitalise the business could offer the company a lifeline. CBD Energy is the latest in a long string of solar companies to fold this year, with commentators labelling the industry a “roller coaster” market. A second meeting of creditors will be held next week on December 19, with Grant Thornton Australia’s Trevor Mark Pogroske and Said Jahani acting as administrators, after being appointed on November 14. Grant Thornton confirmed to SmartCompany the creditors will vote on the potential bidders at this meeting, giving CBD a strong opportunity to continue to operate. An administrator’s report seen by SmartCompany indicates inadequate cash flow was the major reason for the collapse. Administrators comments also pointed to issues of the ongoing trading losses of a number of subsidiaries, high overhead cost base that was not adjusted down as revenues declined, alleged misappropriation of funds by the former executive director, poor management structure and a lack of corporate governance principals. Read more.

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