Daily Insolvency News Headlines

Mon., September 15, 2014

Mon., September 15, 2014

The “good” bank created after the bailout of the Portuguese lender Banco Espírito Santo last month was dealt a setback on Saturday when the three-person management team selected to turn around its business abruptly resigned, the International New York Times DealBook blog reported. In a joint statement on Saturday, the chief executive of Novo Banco, Vítor Bento, and his two top lieutenants, José Honório and João Moreira Rato, said they were resigning because their mandate to run the bank had “significantly changed” since they were appointed to run its predecessor, Banco Espírito Santo, in July. Portuguese regulators were forced to engineer a rescue of Banco Espírito Santo in August after the bank was undone by its exposure to its struggling corporate parent. The bank, one of Portugal’s largest financial institutions, was shut down and its healthy businesses were transferred to Novo Banco. The bank had been run for decades by the Espírito Santo family as part of complex web of family-controlled companies, but regulators raised questions this year about “irregularities” in its corporate parent’s finances. Several businesses controlled by the family have since sought creditor protection. Read more.

Mon., September 15, 2014

Brazil's federal prosecutors have filed criminal charges against Eike Batista, a once high-flying Brazilian businessman, compounding his legal troubles. Prosecutors in Rio de Janeiro charged Mr. Batista with financial crimes and requested the freezing of 1.5 billion Brazilian reais ($640 million) in assets belonging to the businessman and people close to him, according to documents posted on the public prosecutor's website. A judge will now examine the charges and decide if the case should go ahead, according to Sergio Bermudes, Mr. Batista's lawyer. Mr. Bermudes told The Wall Street Journal that the businessman's legal team will prove that the charges are untrue. The entrepreneur could face as many as 13 years in prison if convicted, the prosecutors' office said in a statement . Such an outcome for a wealthy individual, though, would be unusual in Brazil. The nation's justice system can take years to bring people accused of a crime to trial, and even when a case does reach court, the outcome is far from certain. Federal officials accuse Mr. Batista of manipulating financial markets by claiming to be ready to invest as much as another $1 billion in his distressed oil company, formerly known as OGX Petroleo e Gas Participacoes SA, but never putting in the money, even when the company was in distress. Mr. Batista has said that he didn't invest because the company's situation changed after he made the commitment. Prosecutors also say Mr. Batista took advantage of privileged information on more than one occasion in 2013 when selling shares of OGX. Read more.

Mon., September 15, 2014

Panic has hit the British market over the uncertainty around the upcoming Scottish referendum with investors pulling out $27 billion out of UK financial assets in August — the biggest capital outflow since the Lehman crisis in 2008, The Times of India reported. The London-based consultancy CrossBorder Capital has confirmed the biggest drain of financial assets since the collapse of Lehman Brothers in 2008. On Thursday, Scotland will vote in the historic referendum to decide whether it would continue to be part of the United Kingdom or become an independent country. The most recent ICM poll released on Friday put the gap at just 51% intending to vote "No" to 49% in favour of "Yes". CrossBorder Capital said financial outflows from the UK totalled $27 billion in August, compared with inflows of $8.9 billion the same month last year. In comparison, in 2013, a net $ 63 billion (£39bn) flowed into the nation's economy. "Sterling outflows gathered pace in August and now look like intensifying again with the possibility of Scottish independence coming to the front of investors' minds," said Michael Howell, the managing director of CrossBorder Capital. It said "Investors have pulled money out of the UK at the fastest pace seen since the crisis in 2008". Read more.

Mon., September 15, 2014

Failed South African lender African Bank Investments (Abil) plans to re-list on the Johannesburg exchange in February and may expand into secured lending and insurance, its government-appointed supervisor was quoted saying by a local newspaper on Friday, Reuters reported. Tom Winterboer, appointed by the central bank to restructure the unsecured lender after it faltered under a mountain of bad debts in August, also told Business Day the bank had collected "well over" 2 billion rand ($182 million) from borrowers over the past month. The central bank stepped in to rescue the bank by placing it under external supervision last month and arranged a planned $940 million rights offering of shares underwritten by other local lenders. It also separated Abil's good loans from a 17 billion rand($1.6 billion) "bad book", which it took over for 7 billion rand, and appointed a Winterboer, a PricewaterhouseCoopers executive, to lead a restructuring process. The "good bank" is worth 26 billion rand after bad debts. "We are looking at listing in the second half of February, which means applications to the Johannesburg Stock Exchange must be in by early November," Business Day quoted Winterboer as saying. Read more.

Mon., September 15, 2014

Housing sales in China in the first eight months of the year fell 10.9% to 3.43 trillion yuan ($559 billion), according to data from the National Bureau of Statistics issued Saturday, The Wall Street Journal reported. Sales in the first seven months of the year were down 10.5% from a year earlier at 2.98 trillion yuan. Property developers across the country have been struggling with weak sales, bulging inventories and tight credit conditions since the start of the year, and some authorities, mostly at the local level, have been loosening policies to support the sluggish market. Analysts and investors are closely watching for signs recovery in the housing market, which is an important driver of China's economic growth. More than 30 local governments have loosened property restrictions such as limits on second home purchases, but buyers are staying on the sidelines because they expect prices to fall further on rising inventories. Many Chinese property developers said in their first-half earnings reports that they expect to sell the bulk of their inventories in September and October, which are usually the peak months for property sales. Read more. (Subscription required.)

Mon., September 15, 2014

Receivers have taken control of the HCJV, a property company linked to the Caulfield McCarthy retail group, one of the State’s biggest SuperValu franchisees with stores and shopping centres in eight locations, the Irish Times reported. Irish Bank Resolution Corporation (IBRC) has appointed Sean McNamara of Smith & Williamson accountants to take control of seven of the properties on foot of unpaid loans totalling more than €80 million, owed by HCJV and several of its subsidiaries, which are also in receivership. The Caulfield McCarthy group includes outlets at the Hypercentre in Waterford, Loughboy in Kilkenny, Bandon in Cork, Tipperary town, Malahide in Dublin, and Enniscorthy and New Ross in Wexford. IBRC backed HCJV company director Anne Marie Caulfield, her brother Thomas Caulfield, and John McCarthy, a former employee of SuperValu’s owner Musgrave, in a management buyout of the group from its original shareholders in 2004 in a deal reportedly worth up to €70 million. The loans were due to be sold on by IBRC as part of its liquidation but, according to the receivership appointment notices, it was the bank that put in Smith & Williamson, and not any third party loan buyer. Read more.

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