Daily Insolvency News Headlines

Thu., December 11, 2014

Thu., December 11, 2014

Iceland’s government signaled this week that it is closing in on a plan that would unfreeze the assets of three failed banks for creditors owed tens of billions of dollars, The Wall Street Journal reported. At a meeting Tuesday, a government lawyer told some creditors that Iceland would propose a plan early next year to restructure the debt of Kaupthing Bank hf, Glitnir Bank hf and Landsbanki, according to people familiar with the talks. The banks, formerly the country’s three largest, collapsed in 2008 after their debt-fueled overseas expansion fell apart amid the global financial crisis. Strict capital controls put in place during the crisis restrict assets from leaving the tiny island country. Those controls, which keep collateral out of the reach of creditors not based in Iceland, have stalled the restructuring process as creditors have sought access to assets. The creditors have proposed a repayment plan to Iceland’s central bank that would give them some of the proceeds from the bank’s asset sales, a note guaranteeing a portion of future asset-sale proceeds and an equity stake in the failed banks that would give them some measure of control over the future sale of assets, one of the people said. Read more. (Subscription required.)

Thu., December 11, 2014

Business groups warned Britain’s government on Wednesday that it risked undermining international efforts to rewrite tax rules after officials published plans to target multinational companies, including Google, that use complex strategies to cut their British tax bills, the International New York Times reported. Details of a new measure, which has become known as the “Google tax,” were released on Wednesday, a week after George Osborne, the chancellor of the Exchequer, promised a crackdown on tax-avoidance strategies. The unilateral nature of Britain’s action came in for sharp criticism from the Confederation of British Industry, the country’s main business lobbying group. The Organization for Economic Cooperation and Development, which is seeking an international agreement on tax-avoidance issues, said it would have been better for the British government to await the outcome of its talks. The low level of taxes paid by some multinational companies has become a big issue in Britain, which has a general election in May. A number of well-known companies use subsidiaries and offshore operations to push profits to jurisdictions where corporate taxes are low. Often this is done through complex transactions including payments made within corporations for interest, royalties or patents. Some companies set up their operations so as not to have a taxable presence in countries where they generate considerable revenue. Read more.

Thu., December 11, 2014

Market fears over Venezuela’s creditworthiness are approaching panic levels as the price of oil plunges, the Financial Times reported. The cost of insuring the South American country’s government debt against default surged to a new high on Wednesday after Opec cut its demand forecast for next year and Brent crude prices fell below $65 a barrel. The five-year credit-default swap on Venezuelan government debt surged more than 832 basis points — its biggest one-day jump on record — to 4019.57 basis points. This makes Venezuelan debt the most expensive to insure in the world, surpassing even Argentina’s, which went into default for the eighth time in its history this year. The cost of insuring a portfolio of Venezuelan sovereign debt for five years against default has quadrupled since June, when oil began its downward spiral. Among the major oil producers, Venezuela is arguably the most vulnerable to the ongoing oil crash. With oil accounting for roughly 96 per cent of its export earnings and 48 per cent of budget revenue, the slump in oil prices has taken a toll on the country’s already dire finances. Read more. (Subscription required.)

Thu., December 11, 2014

Germany's Yi-Ko Holding, formerly the biggest operator of Burger King restaurants in the country, has filed for insolvency, Yi-Ko's lawyers said, putting 3,000 jobs at risk. Burger King had told Yi-Ko three weeks ago to shut down its 89 restaurants across Germany immediately, saying the franchisee had violated its rules on the treatment of employees. The move did not affect the remaining 599 Burger King restaurants in Germany. Law firm Graf von Westphalen, acting for Yi-Ko, said on Wednesday they submitted an insolvency filing with a court in the northern German town of Stade after talks to come to an agreement with Burger King failed. "We negotiated intensely until the end," the law firm said. Burger King said in a statement that it had been unable to assess the risks of staying in business with Yi-Ko in the short time available. Read more.

Thu., December 11, 2014

Moving to battle high unemployment and a stagnant economy, the Socialist government of President François Hollande on Wednesday announced a long-promised program meant to stoke growth and create jobs, the International New York Times reported. The measures, including allowing more retail stores to open on Sundays, fall far short of what some experts say is needed to revive the stagnant French economy. Nonetheless, important members of Mr. Hollande’s own Socialist Party denounced the proposals as too threatening to the French way of life — in perhaps the clearest signal of why economic change is so hard to achieve in contemporary France. Read more. (Subscription required.)

Thu., December 11, 2014

The European Central Bank on Thursday will again offer banks a chance to get cheap long-term loans, but a disappointing uptake could put it under more pressure to help kickstart the moribund economy, FMT.com reported. By pumping more liquidity into the financial system, the Frankfurt-based central bank aims to boost the eurozone economy via private-sector loans and, in turn, halt a stubborn drop in inflation. The ECB unveiled a lending programme called the Targeted Long-Term Refinancing Operations (TLTRO) in June, announcing eight rounds of borrowing to banks until 2016. Under the first round in September, it said it had leant 82.6 billion euros ($102.4 billion) to 255 banks, below the forecasts of analysts who had pencilled in an uptake of at least 100 billion euros. Read more.

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