Daily Insolvency News Headlines

Tue., October 14, 2014

Tue., October 14, 2014

eeply subordinated debt issued by German Landesbanken lost as much as six points in the past week as investors factored in the possibility that debt issued by banks that fail Europe's coming stress tests will suffer painful haircuts, Reuters reported. HSH Nordbank, Munich Hypo and Nord/LB are just some of the banks investors are nervously watching as they prepare for the worst when the European Central Bank (ECB) releases the results of its bank health check later this month. "State-owned banks like HSH have a bit of a problem in that they can't easily raise equity from public markets, so you could see a situation where they have to impose losses on bondholders," said Robert Montague, a senior investment analyst at ECM Asset Management. Restrictions on the provision of state aid may prevent European governments from providing new capital to banks exposed as having capital shortfalls - making it more likely that burden-sharing on banks' subordinated debt will be necessary, even if that means reneging on state guarantees. Read more.

Tue., October 14, 2014

Germany and France have tapped a prominent economist from each country for policy advice to counter “the risk of a lost decade in Europe” in an attempt to bridge the growing divide between the two countries over how to revive flagging economic growth in Europe. German Economics Minister Sigmar Gabriel and French Economy and Industry Minister Emmanuel Macron recently solicited help from French economist Jean Pisani-Ferry and Henrik Enderlein, lecturers at the Berlin-based Hertie School of Governance, in separate letters seen by The Wall Street Journal. Warning that Europe’s lagging recovery risks 10 years of “low growth, excessively low inflation, high debt and high unemployment,” the ministers gave the economists a month to identify joint Franco-German initiatives to boost growth in Europe and to recommend measures both countries should implement by 2017 to modernize and strengthen their economies. Germany is facing mounting calls from eurozone leaders, chiefly in France and Italy, along with the International Monetary Fund and European Central Bank to spend more and encourage investment and consumption at home to help pull the currency area out of its current stagnation. Paris and Rome have also asked dispensation from Europe’s tough fiscal rules as they struggle to reduce their budget deficits. Read more. (Subscription required.)

Tue., October 14, 2014

The Chinese developer Agile Property Holdings, battling an industry slowdown and speculation about ties to China’s former security chief, said that it was in talks with banks about extending a bridge loan and that the founder’s family would commit to lending $200 million, the International New York Times reported on a Reuters story. Shares in the company, valued at around $2.1 billion, slumped by as much as 31 percent on Monday to five-year lows as they resumed trading after a week’s halt. The company last week scrapped a proposed $360 million rights issue, which would have gone toward repaying what remains of a $475 million loan due in December, and said its billionaire founder and chairman, Chen Zhou Lin, had been detained. Chinese property companies face tight credit and excess supply as growth in the world’s second-largest economy slows. Weaker sales have choked liquidity at some property developers, pushing them to look for fresh sources of funding. On a call with analysts on Monday, Agile’s chief financial officer, Sam Cheung, said the company was in talks with banks including HSBC, Standard Chartered and Hang Seng Bank about extending the loan. The company, which is currently run by Mr. Chen’s wife and brother, would consider other funding options, he added, including another try at a rights offer, equity financing or commercial property sales. Read more. (Subscription required.)

Tue., October 14, 2014

Ever since the French government unveiled its 2015 budget two weeks ago, fiscal enforcers in Brussels have attempted to convince Paris it must do more – making additional spending cuts and implementing more reforms – for them to accept the plan, the Financial Times reported. In recent days, as the prospect of an EU rejection became imminent, the discussions moved beyond the normal economic channels, pulling in members of the still-to-be-approved European Commission, including Jean-Claude Juncker, its incoming president, and Frenchman Pierre Moscovici, his economic nominee. “Juncker’s line is: help me to help you,” said one EU official involved in the talks. But with Paris due to submit its plan on Wednesday, hopes of an eleventh-hour deal have faded. The chances of the French government making any changes before the outgoing Commission rules on the budget at the end of the month are also waning. Read more. (Subscription required.)

Tue., October 14, 2014

A liquidator has alleged members of a family perpetrated a fraud against their own development firm before it went bust by transferring a €4 million company property to themselves for no charge. A tax bill of €4.4 million remains unpaid, the liquidator said, the Irish Times reported. Aidan Garcia, liquidator of the Sloyan Brothers building/development company wound up in 2007, claims a property at Abbeyglen, Johnstown Road, Cabinteely, Co Dublin, where 44 apartments were built, was transferred to company shareholders Joseph, Seamus and Sean Sloyan and Catherine Doherty, and also to Maura Sloyan and Clare Sloyan-Roche, in March 2006. Mr Garcia, of Copsey Murray Chartered Accountants, claims these individuals never paid the Sloyan Brothers company for the land. He also alleges Allied Irish Banks (AIB) knew the company had not been paid for the land when the bank sanctioned a mortgage for the lands to be repaid once the apartments were built. AIB says it lent the money to the Sloyan family members, not to the company, while the Sloyans contend €4 million was repaid to the company for the Abbeyglen lands. Mr Garcia is suing the six family members and AIB seeking the return to the company of either the Abbeyglen asset or its curent estaimated value of €8 million. Read more.

Tue., October 14, 2014

Revelations related to how 82 executives and board members of a Spanish bank were given credit cards to spend freely on personal items and without apparent controls have dealt a blow to efforts to restore the image of the country’ financial sector, the Irish Times reported. The high court is investigating the credit cards, which were given out by Caja Madrid savings bank and Bankia, the lender that absorbed it in 2010, and they were not registered in official accounts. The cards were in use between 2003 and 2012, when new leadership took over at Bankia, and an estimated €15.5 million was charged to them. Four further bank executives had access to the cards but chose not to use them, according to reports. A string of public figures have been forced to resign from their posts after it emerged earlier this month that they had used the cards. Many were politicians from the governing Popular Party (PP) and the main opposition Socialist Party, or senior union figures. However, last week the royal family was tainted by the scandal, after it emerged that Rafael Spottorno, a private advisor to King Felipe VI, had spent €224,000 with one of the credit cards. He immediately stepped down. Read more.

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