Daily Insolvency News Headlines

Tue., March 24, 2015

Tue., March 24, 2015

Steps should be taken to ensure that the euro zone currency bloc could withstand a possible insolvency of one of its members, Germany's Bundesbank said in its monthly report on Monday. "The financial and state debt crisis ... has yet to be overcome," the Bundesbank said in the report, reiterating that individual states and investors should take primary responsibility for their debts. "In this respect, the currency union ought to be able to withstand the extreme case of the insolvency of a member state." The Bundesbank's statement, which came with recommendations that steps be taken to ensure big banks can be wound up while minimising any impact on countries, addresses a taboo in the euro zone, namely that a member state could become insolvent. The remarks come at a sensitive moment, when Greece's new government is attempting to negotiate a new deal with its international lenders including euro zone countries such as Germany. Read more.

Tue., March 24, 2015

Allied Irish Banks (AIB) has obtained €9.3 million judgment orders on consent at the Commercial Court against Galway businessmen Tom and John Nestor. The bank also secured orders allowing it to enforce the judgment across the EU, the Irish Times reported. The orders, granted to the bank’s counsel Kelly Smith by Mr Justice Brian Cregan, arises from various facilities advanced by the bank in 2012. Judgment was granted jointly and severally against Tom Nestor, Averard East, Taylor’s Hill, Galway and John Nestor, Gleann na Trá, Sandy Road, Galway. In court documents, AIB official Graham Kelly said that in circumstances where properties held as security for the defendant’s personal debts were of key strategic importance to their trading businesses, the bank had “exhausted all avenues” in trying to reach a consensual resolution with the defendants’ regarding their borrowings. Mr Kelly said that included offering them “numerous” opportunities to submit a satisfactory restructuring proposal. Read more.

Mon., March 23, 2015

Mon., March 23, 2015

Greece’s prime minister and fellow eurozone leaders emerged from a meeting early on Friday morning touting a breakthrough agreement to unlock much-needed bailout funds for Athens — only to fall into disagreement hours later about what it all meant, the Financial Times reported. Two days of intensive and occasionally heated negotiations at an EU summit in Brussels amounted to little more than a repeat of talks a month ago between eurozone finance ministers that officials then also hailed as the definitive agreement to get the final bailout review under way. So similar were the two deals that, much like the one finalised last month, leaders involved in the talks could not agree on what was agreed within 12 hours after a late-night meeting aimed at resolving all differences. Athens is facing a severe cash crunch. It needs fresh sources of financing to pay wages and pensions at the end of this month following a €1bn revenue shortfall in the first two months of the year, according to Athens bankers. Read more. (Subscription required.)

Mon., March 23, 2015

Market opinion is divided over the importance of proposed German legislation that would effectively force senior bondholders down the credit capital structure when a failing bank is resolved, Reuters reported. "What the lawmakers have done is effectively put in a clause that clarifies the creditor hierarchy for senior debt and sets out clearly that senior debt is below derivatives and structured notes when it comes to resolution," said one debt banker. "It gives a very practical bail-in hierarchy," the banker said. "It makes sense to exclude things like corporate deposits and derivatives." Under the Bank Recovery and Resolution Directive (BRRD), derivatives can be bailed in but may be excluded at the discretion of the resolution authorities. The amendments to the German Banking Act may also offer an advantage by helping to bring the country into line with incoming regulatory requirements around loss-absorbing buffers. "The idea of TLAC [total loss absorption capacity] is that you separate out the various operating liabilities that are entangled with senior unsecured debt," said Simon McGeary, head of European new products at Citigroup. "In Germany, all senior unsecured debt would automatically be subordinated to those," he said. The changes could mean that banks will not issue as much sub debt as some were planning in order to meet TLAC requirements. Read more.

Mon., March 23, 2015

A Brazilian judge has accepted charges filed by state prosecutors against 11 companies accused of forming a cartel to raise prices on the construction and upkeep of subway and train systems in the state of Sao Paulo, The Wall Street Journal reported. A press officer of the prosecutor’s office said Saturday that Judge Marcos Pimentel Tamassia accepted the charges that involve contracts signed between 2000 and 2007. She spoke on condition of anonymity because she was not authorized to comment the case. Among the companies charged are Germany’s Siemens, CAF of Spain, Mitsui of Japan, Bombardier of Canada and Alstom of France. None of the companies were available for comment on Saturday. Prosecutors have said that the companies were involved in price fixing, and that those that won bids then contracted the losing companies to provide services. Brazil’s antitrust agency, the Administrative Council for Economic Defense, has said that the companies used several anticompetitive strategies, such as the prearrangement of offers tendered in bidding processes. At times, it said, the cartel would also determine which company would win a bid by allowing only one to tender an offer. Read more. (Subscription required.)

Mon., March 23, 2015

Zimbabwe’s beleaguered mobile network operator Telecel Zimbabwe’s finances are in a sorry state amid indications the company is bankrupt. The company reportedly has management inefficiencies, high director fees and is riddled with hefty management fees paid out to its foreign shareholders. Since its inception in 1998, Telecel has gone through major changes in shareholding at an international level. The original shareholders were led by Rwandan-born Miko Rwayitare, before the company was bought by Orascom from Egypt, which later sold to Vimpelcom, a Russian company that is now trying to dispose of its 60% equity stake in the operator either to Isabel dos Santos’ company, Unitel S.A, or Africa’s largest mobile operator MTN of South Africa. Isabel is Angolan president Jose Eduardo dos Santos’ billionaire daughter. Read more.

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