French unemployment was at a record high in January, adding to the woes of François Hollande, the president, in the run-up to municipal elections next month, the Financial Times reported. The number of jobseekers increased 0.3 per cent compared with December and swelled the ranks of the unemployed in the eurozone’s second-largest economy by 8,900 people. The latest figure, published on Wednesday by the labour ministry, brings the total number of unemployed to a record 3.32m – about 11 per cent of the workforce. The total number of those seeking a full-time job, including those in part-time work, reached 4.92m. One bright spot in the figures was that January’s rise was slower than the 10,200 of newly registered unemployed reported in December and the 17,800 increase in November. On Wednesday, Michel Sapin, the labour minister, seized on that fact as a sign of changing fortunes. He also renewed the government’s determination to focus its efforts on reducing unemployment this year. Read more. (Subscription required.)
Daily Insolvency News Headlines
Thu., February 27, 2014
Spanish entertainment company Zinkia, owner of the children's TV character Pocoyo, entered administration on Wednesday, the latest Spanish company to seek protection from creditors in an economic slowdown, Reuters reported. Despite reaching agreement on refinancing with bondholders, banks and commercial creditors, Zinkia did not manage to renegotiate the terms of a 2.5 million euro ($3.4 million) loan with a private lender, the company said in a statement. "Zinkia continues to negotiate with different creditors and potential investors in order to find a solution which will allow it to come out of administration as quickly as possible with the least damage to its brands," the company said in a statement. Zinkia's shares were suspended from trade by the Spanish stock market regulator after the announcement. Shares have fallen by over a third this year so far. The company gave a profit warning earlier this year saying it expected 2013 core earnings to come in 97 percent less than previously estimated. Read more.
While the spotlight maybe on the new gadgets being launched at Mobile World Congress by some of the world’s biggest tech companies, spare a thought for little old Pantech, South Korea’s ailing smartphone maker, The Wall Street Journal Korea Real Time blog reported. After trying for years to eke out profits and carve a niche for itself in the smartphone industry, Pantech is now seeking help to restructure its debt. Pantech reached out to its creditor banks this week, requesting to be put under a debt-restructuring program that will, the company hopes, allow it to freeze or delay the repayment of its debt. “Through this (debt) workout, we expect to improve Pantech’s financial status and secure a stable flow of liquidity,” the company said in a statement on Tuesday. The move gives Pantech more time to map out a mid- to long-term strategy and seek more external investors, it said. Last year, the company received two life-saving investments from Qualcomm and hometown rival Samsung Electronics, which bought a 10% stake in Pantech. Qualcomm increased its share in the company to 12% through a debt-equity swap.Read more. (Subscription required.)
A landmark ruling will have a game-changing effect on the way landlords are paid in a corporate collapse, essentially giving them super creditor status. But what impact will this have on other creditors, and the insolvency profession? A consortium of landlords appealed and won a case that will see them repaid £3m in back rent due prior to the collapse of digital game retailer GAME from the new owners of the business, AccountancyAge reported. The business collapsed in 2012 with PwC administrators able to continue to trade the business as a going concern before its sale to Baker Acquisitions, without making a payment to the landlords. Previously, if a company entered administration the day after the quarterly rent payment is due on a property, then the rent for that quarter could legally go unpaid, with the landlords becoming a secured creditor and paid a percentage of assets realised during the administration. This process effectively allowed the administrators a three-month grace period, in which they could trade while seeking a buyer. However, the Appeal Court ruling means rent will now be classed as an expense of an administration, which is paid ahead of creditors, and administrators must pay rent for any time that they occupy a property. Read more.
A study by a leading economic think tank has shown the problem of wealth inequality has deteriorated in Germany in recent years. In no other eurozone nation are there such big differences between the rich and the poor, Deutsche Welle reported. The survey by the Berlin-based German Institute for Economic Research showed on Wednesday that the gap between the rich and poor in Europe's biggest economy had been widening steadily in recent years. Differences in financial asset volumes that the affluent and the less well off had at their disposal were larger than in any other nation of the 18-member euro area, the study pointed out. It said that while the 1 percent of people making up the richest members of society owned an average 800,000 euros ($1.1 billion) per person, roughly a fifth of the German population had not amassed any private capital at all. Read more. (Subscription required.)
The Co-operative Group has announced plans to sell its farms business and is considering a sale of its pharmacy chain as it faces a reported loss of more than £2bn, The Guardian reported. Britain's biggest mutually owned company, which is preparing for its worst ever loss according to a BBC report on Wednesday morning, considers the farming business – the biggest in the UK – to be peripheral to its main activities and in need of investment. The network of 750 small pharmacy stores, which employs 6,500 staff, sits apart from the group's grocery operation and the group thinks it also requires investment to compete with rivals such as Alliance Boots. In a statement, the Co-op said: "As part of the wider strategic review of all of its businesses, the Co-operative Group has decided that its farms are non-core and has started a process that is expected to lead to a sale of the business. In addition, it is exploring options for the future of the pharmacy business. This could include the sale in whole or part of the business." The chief executive, Euan Sutherland, who joined nine months ago, is reviewing the Co-op's entire business, which spans groceries, banking, funeral parlours and legal services. A £1.5bn hole in the bank's capital requirements saw the group cede control of 70% of the bank to bondholders, led by US hedge funds. The wider group had £1.2bn of debt at the end of its first half in July and is expecting further losses at its bank. Read more.