Daily Insolvency News Headlines

Fri., January 16, 2015

Fri., January 16, 2015

The liquidator of insolvent Setanta Insurance expects there could be a “significant shortfall” between available funds and the total value of claims, The Irish Times reported. Paul Mercieca of Deloitte, who was appointed as liquidator to the Dublin-based insurance company in April 2014, said that as a result of the expected shortfall he intends to make advance applications to the Insurance Compensation Fund on behalf of claimants. The State-backed fund, which was established in 1964, is one into which all Irish insurers pay into to cover claims in the event of a company going bust. A maximum of 65 per cent of the value of a claim, or €825,000, (whichever is less) can be recovered from the fund. Setanta, which was licensed by the Maltese Financial Services Authority (MFSA), collapsed early last year leaving up to 75,000 van and car drivers without cover. The firm, which had been in the process of winding down its business since January 2014, collapsed three months later when shareholders were informed that the proposed solvent run-off of the business was no longer possible, and a decision was taken to immediately dissolve the business. The company had been selling mostly commercial motor insurance through a network of brokers in the Republic. It had been popular with smaller businesses who use vans for their deliveries and trading. Read more.

Fri., January 16, 2015

Shares in some mid-size Chinese real estate developers fell sharply on Thursday, as fears grew that the troubles hitting Kaisa Group could spread to other firms in the sector, Reuters reported. Local government officials blocking real estate sales and anti-corruption probes are adding to worries about the prospects of companies in China's already highly leveraged property industry. Shanghai developer Glorious Property Holdings fell as much as 35 pct on Thursday, while China South City Holdings was down 10 pct. Bond prices also took a hit, with Shenzhen-based Fantasia Holdings' notes down as much as 17 points before recovering partially. Kaisa has been hit by a string of bad news over the past two months, beginning with the disclosure that the local government had stopped it selling unsold units at some of its developments in Shenzhen. It now runs the risk of becoming the first Chinese property firm to default on its foreign debt after it missed an interest payment on one of its bonds bond last week. Those problems have led to rumours of trouble at other mid-sized developers, with Glorious Property hit by local media reports saying construction on some of its projects has allegedly been halted for more than a year. http://www.reuters.com/article/2015/01/15/kaisa-group-debt-markets-idUSL... ">Read more.

Fri., January 16, 2015

Target Corp will exit the Canadian market after less than two years in a surprise retreat that will throw more than 17,000 employees out of work and trigger a $5.4 billion quarterly loss. Shares of the U.S. discount retailer, which was granted creditor protection for its money-losing Canadian subsidiary, at one point rose more than 4 percent on the move. The stock was up 2.2 percent at $75.94 in afternoon trade on the New York Stock Exchange. The company announced on Thursday it is shutting all of its 133 Canadian stores and said it expects to report about $5.4 billion in pretax losses for its fourth quarter, which finishes at the end of January. Losses are mostly due to the writedown of the Canadian investment, along with exit costs and operating losses. Minneapolis-based Target, the No. 2 discount chain in the United States, has struggled in Canada since its March 2013 launch. It faced huge supply chain problems due to a myriad of problems at its warehouses, poor communication with headquarters and the use of inexperienced staff. That left stores poorly stocked and selection limited, disappointing shoppers who had eagerly anticipated its arrival in a market where the discount space was long dominated by Wal-Mart Stores Inc. Read more.

Fri., January 16, 2015

China’s 40m public sector employees are to lose their exemption from paying into the state pension system, as the government looks to curb public outrage over excess benefits for civil servants, the Financial Times reported. China’s dual-track urban pension system — in which corporate employees must contribute 8 per cent of their salary to the pension system but government employees contribute nothing — has been a source of populist outrage for years. The State Council, China’s cabinet, on Wednesday announced a long-awaited plan that will move to equalise the two systems. The reform follows years of delays and intra-government wrangling. The State Council introduced a pilot pension reform in 2008 but it ran aground when professors and doctors began retiring early to avoid being ensnared by benefit cuts. While addressing concerns over fairness, the pension reform may do little to address the looming pension shortfall caused by China’s ageing population. The number of people aged 65 and over will rise from 132m in 2015 to 331m by 2050, while the number aged 15-64 will fall from 1bn to 849m, according to projections by the UN. Read more. (Subscription required.)

Fri., January 16, 2015

The proposed end of insolvency litigation’s exemption from the Legal Aid, Sentencing, and Punishment of Offenders Act (LAPSO) has been challenged by an Early Day Motion tabled in Parliament, Credit Today reported. MP’s have thrown their support for a review of the decision to end the exemption before the Act comes into force in April, with 22 signatures of support recorded as of 14 January, primarily from the Labour party. Giles Frampton, president of insolvency trade body R3, has also supported the proposal. Frampton said: “The end of insolvency litigation’s exemption from the Legal Aid, Sentencing, and Punishment of Offenders Act would have a detrimental effect on creditors, including small businesses and the taxpayer. Insolvency litigation is currently exempt from the ‘no-win, no-fee’ legal funding introduced by the Act in 2012. A report from the University of Wolverhampton last year found that insolvency practitioners are pursuing up to £300m of creditor funds using the ‘no-won, no-fee’ funding – £160m is returned to creditors from rogue directors every year. Read more.

Fri., January 16, 2015

The Cabinet yesterday gave the nod to the fourth of five government bills comprising a package of bankruptcy-related legislation, The Cyprus Mail reported. Collectively known as the insolvency framework, the bills are designed to update and amend personal and corporate bankruptcy laws to help borrowers restructure their debt. Enactment of the new legislation, designed primarily to reduce banks’ exposure to bad loans, is an obligation stemming from Cyprus’ bailout agreement with international lenders. Three other bills have already been submitted to the House. One introduces and regulates the profession of insolvency practitioners, another deals with debt restructuring of viable businesses (examinership) and the third amends current liquidation laws. The fourth bill approved on Wednesday concerns personal repayment schemes and debt forgiveness, and will now be forwarded to parliament. The fifth and final bill, concerning the insolvency of natural persons, has been completed but is currently being reviewed by the troika of lenders. In order to qualify for a personal repayment scheme, an individual’s total debts (secured and unsecured) must not exceed €300,000, and the value of their primary residence must be €250,000 at the most. Additionally, debtors must demonstrate they are unable to repay their debts due to worsening of their financial situation caused by events beyond their control, and these events must have occurred no earlier than two years before applying for the scheme. Debtors must also prove that their income has taken a hit of at least 25 per cent due to these events. Read more. <

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