Daily Insolvency News Headlines

Wed., October 22, 2014

Wed., October 22, 2014

HSBC Holdings Plc (HSBA) Chairman Douglas Flint said separating his bank’s securities arm from its consumer unit may cost as much as 2 billion pounds ($3.2 billion), Bloomberg News reported. “Ringfencing will cost one billion, two billion to implement, which is a structural separation that is going to be very expensive,” Flint told the House of Lords’s European Union Economic and Financial Affairs Subcommittee in London today. British lenders must build firewalls between their consumer and investment banks by 2019 to meet rules proposed by John Vickers’s Independent Commission on Banking. They must submit their plans to the Bank of England by Jan. 6, the central bank said this month. It won’t be clear if separating the businesses will help prevent a repeat of the 2008 banking crisis that pushed Britain into its worst recession since World War II, “till we have another crisis,” said Flint, who took over as chairman of Europe’s largest bank in 2010. “It’s not clear to me that structure in and of itself changes anything,” he said. Flint, 59, also said the EU is making a mistake constraining banks’ pay outside the 28-member bloc. Read more.

Wed., October 22, 2014

LDK Solar Co., the Chinese solar-cell maker that defaulted on its bonds this year, filed for bankruptcy in the U.S. to help carry out restructurings already under way in Hong Kong and the Cayman Islands, Bloomberg News reported. Xinyu, China-based LDK filed for Chapter 15 protection today in Wilmington, Delaware, listing about $1.13 billion in debt and $510 million in assets as of May 31. Chapter 15 is the section of the bankruptcy code used by foreign companies restructuring abroad to fend off creditors and distribute payments in the U.S. Affiliates in the U.S., including LDK Solar Systems Inc., sought protection under Chapter 11. “Since 2011, the group’s financial performance has significantly deteriorated,” in part due to overcapacity in the solar-cell market, Tammy Fu, a provisional liquidator for the company in Grand Cayman, said in a court filing. LDK is at least the fourth Chinese solar company in little more than a year that has sought bankruptcy or been forced to restructure its debt. Suntech Power Holdings Co., once the world’s largest solar-panel maker, and Zhejiang Topoint Photovoltaic Co. both filed under Chapter 15 this year. Read more.

Wed., October 22, 2014

The European Union’s banking watchdog has warned that Bulgaria’s authorities have breached European law by continuing to block depositors’ access to their money at a large troubled lender the government seized four months ago, the International New York Times reported. The warning comes after a run on deposits forced the lender, Corporate Commercial Bank, to close in June, leaving tens of thousands of consumers and businesses without access to their cash in the European Union’s poorest member state. On Monday evening, the European Banking Authority, based in London, urged the Bulgarian authorities to provide access to more than half of the deposits — about $2.4 billion, which are insured by the state under European Union law. In the meantime, a group of bondholders, including investors in the United States and Europe, is also considering suing the Bulgarian government. The bank, known by its Bulgarian initials, K.T.B., defaulted on $150 million in bonds in August. The central bank has said that a decision on the future of K.T.B. would be made by Nov. 20 at the latest, pending the results of an audit, as officials continue to wrangle over whether the state should bail out the bank or find private investors in the hope of saving it. The audit results are expected this week. If they show K.T.B. to be insolvent, the central bank could revoke its license and seek its bankruptcy. Read more. (Subscription required.)

Wed., October 22, 2014

Regulators in Portugal and Britain have temporarily banned short-selling of Portugal Telecom’s stock after the company’s shares declined to a record low on Monday over its exposure to a company with ties to the Espírito Santo family, the International New York Times DealBook blog reported. The Portuguese securities regulator, the Comissão do Mercado de Valores Mobiliários, temporarily restricted short-selling of Portugal Telecom late Monday, citing the company’s 10 percent drop in its share price that day. The Financial Conduct Authority of Britain followed suit, adopting a short-selling ban that runs through 11:59 p.m. local time on Tuesday. The telecom provider’s shares have been under pressure since Rioforte Investments, a unit of Espírito Santo International, was denied creditor protection by a court in Luxembourg on Friday. Portugal Telecom holds about 897 million euros, or about $1.15 billion, of Rioforte’s debt. Financial struggles at Espírito Santo International have weighed on a variety of companies in the family empire, forcing several units to file for bankruptcy. Read more. (Subscription required.)

Wed., October 22, 2014

Permanent TSB, which is 99.2 per cent owned by the State, is expected to announce details of its capital-raising plan on Sunday after the European Central Bank publishes the results of its pan-European comprehensive assessments, which PTSB is expected to fail, the Irish Times reported. It is not clear how much capital PTSB will be required to raise but the expectation is it will be below €1 billion. While the ECB will announce the results of the test and the capital shortfall facing PTSB, the Irish bank is likely to reveal the amount it will seek from the markets is considerably less than the deficit identified by the regulator. The ECB exercise was a point-in-time examination of PTSB’s books relating to December 2013. Since then, the picture around PTSB’s finances has improved considerably, particularly in relation to collateral values on Irish property and its mortgage arrears. Read more.

Wed., October 22, 2014

Womenswear retailer Boutique Jacob Inc. is abandoning its restructuring efforts and closing all its 92 stores in Canada, the Chronicle Herald reported on a Canadian Press story. The Montreal-based clothing chain says efforts over the last few months to “try to breathe new life into the company” have failed. The insolvent retailer has been liquidating inventory at its Canadian stores since filing for protection under the Companies’ Creditors Arrangement Act in May. It says it will proceed with selling all of the remaining merchandise at its stores and online at Jacob.ca. The company has been under creditor protection since November 2010 when it underwent operational restructuring, which included closing some 50 stores. Jacob was founded in 1977. Spokeswoman Cristelle Basmaji said the retailer has been working over the past few months to develop a “viable relaunch plan” and find new financing, but those efforts have failed. Read more.

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