Daily Insolvency News Headlines

Fri., March 20, 2015

Fri., March 20, 2015

The country’s savings rate, long one of the highest in the world, is now below zero. In short, Japan’s citizens are spending more than they earn, the International New York Times reported. By comparison, the rate in the United States, where consumers have a reputation for living beyond their means, is on the rise, hitting 5.5 percent in January. The reversal is stark. For decades, many Japanese hoarded cash, a habit that took hold in the years after World War II, when government protections like unemployment insurance and public pensions were scarce. Today, Japan is in a bind. Prime Minister Shinzo Abe is trying to inject life into the lackluster economy, in part by getting people to spend more. Yet stagnant wages mean many cannot do so without shortchanging their futures. Japan’s large aging population is already drawing down nest eggs, and younger people aren’t filling the void. Read more. (Subscription required.)

Fri., March 20, 2015

Spain's bank restructuring fund (FROB) said late on Wednesday it would not bail out the Spanish affiliate of Andorra's Banca Privada d'Andorra (BPA) Banco Madrid, clearing the way for insolvency proceedings at the lender, Reuters reported. FROB, the state-funded vehicle which bailed out several Spanish banks during the height of the financial crisis in 2012, said the lender's problems did not pose a systemic risk which warranted the use of public funds. Banco Madrid began bankruptcy proceedings on Monday after customers rushed to empty accounts in the wake of U.S. allegations its parent BPA laundered money for international criminal gangs. The Bank of Spain has frozen all financial activity at Banco Madrid while anti-corruption prosecutors investigate possible fraudulent activities at the lender. The firm, which focused on private banking, had about 6 billion euros ($6.47 billion) of assets under management and 15,000 clients with deposits before the allegations. Read more.

Fri., March 20, 2015

Beginning next October, corporate reorganization professionals in Britain are going to have do something quite amazing: At the start of a case, they are going to have to estimate what their total fees will be. And if they exceed that amount, they will have to go back to the creditors and obtain further approval, the International New York Times DealBook blog reported. Various proposals have been floated to help rein in costs, like greater judicial oversight and fixed fees, but the British proposal may have hit on an intriguing idea. If the “other people’s money” argument is meant to suggest that restructuring professionals are not subject to market forces — either because bankruptcy is so extreme that managers will willingly overspend, or because managers don’t exercise oversight when they have one foot out the door — the British approach could provide real benefits. Namely, if professionals all had to provide reasonably binding cost figures upfront, the parties to a case could make sensible adjustments to staffing, committing to pay for a “just right” amount of reorganization and number of restructuring professionals. Read more. (Subscription required.)

Fri., March 20, 2015

Former Banco Espírito Santo SA Chief Executive Ricardo Salgado on Thursday dismissed findings from an audit conducted into the bank’s collapse that pointed the finger at his administration and accused the country’s central bank of leading a smear campaign against him, The Wall Street Journal reported. In his second public appearance since the bank failed in August, Mr. Salgado told a Portuguese parliamentary commission that the audit ordered by the Bank of Portugal and conducted by Deloitte lacked proof and relevant information for many of its conclusions, which were incomplete and mostly wrong, he said. Mr. Salgado also accused the central bank of releasing only parts of the audit and of omitting four pages of disclaimers from Deloitte about the limitations of the audit. He repeated many of his statements from his first hearing in December, saying decisions from the country’s central bank—and not his management-led to the bank being bailed out and broken up in the summer. Read more. (Subscription required.)

Fri., March 20, 2015

German Chancellor Angela Merkel is poised to intervene directly in a deepening rift between Greece and its international creditors, a sign of Berlin’s growing concern that the acrimony threatens the unity of the eurozone, The Wall Street Journal reported. Ms. Merkel and other key leaders are due to talk with Greek Prime Minister Alexis Tsipras on the sidelines of a European Union summit on Thursday night. The chancellor has also invited Mr. Tsipras for face-to-face talks in Berlin on Monday. Neither meeting is likely to resolve the dispute over Greece’s financing needs and economic policies, European officials say. But they show that the Greek crisis is seen in Berlin as enough of a threat to Europe’s stability for heads of government to get involved, these people say. The chancellor’s message for Mr. Tsipras—that Greece has no alternative to cooperating with finance officials’ demands—is likely to disappoint the Greek leader’s hope for a lenient funding deal. Read more. (Subscription required.)

Fri., March 20, 2015

Stricken Italian Serie A side Parma were officially declared bankrupt on Thursday, a day after their chairman Giampietro Manenti was arrested in a money-laundering probe, Reuters reported. Parma's players have not been paid all season and it took just 10 minutes for a court to declare the club, rooted to the bottom of the league after finishing sixth last season, bankrupt. They have twice been docked points this season and are more than 100 million euros ($106.65 million) in debt. The court in Parma appointed accountants Angelo Anedda and Alberto Guiotto as receivers. "I believe we'll play on Sunday against Torino," board member Osvaldo Riccobene told reporters at the end of the hearing. Parma are last in Serie A with nine points, 16 away from safety with 13 games to play. "It's a positive day for us," Parma goalkeeper Antonio Mirante told Sky Sports Italia after a friendly game against Fidenza. "At least now we know there are professionals who are handling the situation and have someone we can rely on." The crisis has had farcical undertones, with Parma's players having to do their own laundry and drive the team bus while games were postponed because the club could not afford stewards or police at their Tardini stadium. Read more.

Syndicate content