Daily Insolvency News Headlines

Wed., December 10, 2014

Wed., December 10, 2014

Eneva SA, the ailing Brazilian producer controlled by Germany's E.ON SE, filed late on Tuesday for credit protection in a Rio de Janeiro court after failing to refinance part of its 2.33 billion reais ($900 million) in outstanding debt, Reuters reported. In a statement, the Rio de Janeiro-based company said the bankruptcy protection petition will allow it to preserve cash and continue its operations. Banks, which were the biggest chunk of Eneva's creditors, refused to renew an accord to refinance the company's debt after expiring Nov. 21, the statement noted. Eneva will replace Chief Executive Officer Fabio Bicudo with Alexandre Americano, according to a separate statement, adding that three board members stepped down in the wake of the bankruptcy petition. Efforts by Bicudo, a former Goldman Sachs Group Inc dealmaker, to revamp the firm's capital structure proved insufficient to reduce Eneva's onerous debt burden. In June, the company raised 175 million reais in fresh capital, sold control of the Pecem II project to E.ON for 408 million reais and sought a loan for the project. Bicudo was asked to become Eneva's chairman, the company said. E.ON gained control of Eneva, formerly MPX Energia SA, last year after the commodities, energy and logistics empire controlled by the company's founder, Brazilian tycoon Eike Batista, collapsed. The bankruptcy protection plan allows a company to suspend debt payments to creditors and present a revamped business plan within 60 days. Read more.

Wed., December 10, 2014

Kuwait is finalising what will be the Gulf's first insolvency legislation designed to help failed businesses recover from financial difficulties rather than be shutdown, leaving creditors out of pocket, ArabianBusiness.com reported. The draft law would allow companies at the brink of financial collapse to seek court protection and business rehabilitation, instead of liquidation, DLA Piper regional managing partner Abdul Aziz Al Yaqout, who has been working on the legislation, told Arabian Business. The company's assets would be preserved to allow it to continue trading and potentially recover losses owed to creditors. The process of business rehabilitation, common in the West, saved General Motors following the global financial crisis. The lack of insolvency protection for businesses, especially for entrepreneurs, has often been cited as a deterrent to establishing or growing a business that require hefty loans. The UAE also is writing an insolvency law that is believed to be designed to allow businesses to rehabilitated under court protection. Read more.

Wed., December 10, 2014

Investment Dar, the Kuwaiti firm best-known for its stake in luxury carmaker Aston Martin, hopes to complete a second debt-for-assets deal with creditors by the end of March, it said in a bourse statement on Tuesday, Reuters reported. The sharia-compliant firm said on Nov. 18 it had received the backing of a "significant majority of investors" for the proposal, which would see creditors voluntarily exchanging debt for ownership of a portfolio of assets. It is the latest attempt to reduce debt at Investment Dar, which overextended itself during the boom years of the mid-2000s and then struggled to manage its borrowings in the wake of the global financial crisis. The proposal, originally made in May but amended with new terms in June, is an alternative to the 1 billion dinar ($3.4 billion) debt restructuring plan agreed in 2011. No details or terms for the so-called settlement-in-kind proposal have been released, although the Nov. 18 update said there would be no losses imposed on creditors under the plan and no change to the existing maturity of the debt. Investment Dar will circulate a draft framework for a deal by the end of next week so lenders can review the documentation and have any bilateral discussions with Investment Dar's adviser, Houlihan Lokey, before an all-creditor meeting on Jan. 21, Tuesday's statement said. Read more.

Wed., December 10, 2014

Brazilian officials are pushing conservative policies that President Dilma Rousseff recently criticized as a threat to the poor, amid investors’ calls to shore up her government’s credibility and avoid a credit-rating downgrade, The Wall Street Journal reported. Members of Ms. Rousseff’s newly appointed economic team are signaling that they are considering unpopular measures such as tax increases and spending cuts, which the Brazilian leader adamantly opposed during her recent re-election campaign. Her administration has also cut to 0.8% from 3% Brazil’s 2015 growth forecast. The central bank, meanwhile, has resumed raising borrowing costs after keeping them unchanged since April, when the presidential campaign began to heat up. Bank directors are now trumpeting the message that the tightening will go as far as needed to cool down consumer prices. “While the central bank’s efforts aim at weakening inflation in a two-year span, the benefits of bringing inflation down to target by late 2016 could be lasting, or even permanent,” the central bank’s chief, Alexandre Tombini, told lawmakers on Tuesday during a scheduled testimony in the Chamber of Deputies. Brazil’s central bank is part of the government, with Mr. Tombini reporting directly to Ms. Rousseff, but is considered to be largely insulated from political interference in recent years. Mr. Tombini’s remarks come before the start of Ms. Rousseff’s second administration, which begins in January, as she focuses on fixing an economy gone astray amid weak global growth and falling commodity prices. Credit-rating firms have threatened to remove Brazil’s investment-grade status if its deteriorating public accounts don’t improve and economic growth remains weak. Read more. (Subscription required.)

Wed., December 10, 2014

Greek financial markets plummeted on Tuesday as investors took fright at the premier's decision to hold a no-confidence vote in his administration fuelling fresh political instability and fears of the radical Syriza party taking power, The Independent reported. The Athens share index fell by almost 13 per cent, the biggest single-day drop since 1987 and a heftier decline than any registered in the recent years of financial crisis in the Mediterranean country. Yesterday has already been named “Black Tuesday”. The panic followed the surprise decision taken on Monday by the Prime Minister, Antonis Samaras, to call a snap presidential election. Analysts said an early presidential poll increased the likelihood of a snap general election, which could take place as early as next month. Syriza, which opposes the terms of the country’s €245bn rescue by the European Union and the International Monetary Fund, is currently ahead in the polls, with around 30 per cent of the vote share. The decision to call elections was unexpected and political analysts say the vote will be widely viewed as a confidence vote in the current administration. The poll, which was originally planned for February next year, has been brought forward to 17 December. Read more.

Wed., December 10, 2014

More than 23,000 defaulting mortgage holders are facing the prospect of legal action to repossess their homes and investment properties as banks step up efforts to confront the arrears backlog, the Irish Times reported. New figures from the Central Bank suggest that banks had proposed solutions for 93 per cent of arrears cases by the end of September, exceeding their year-end target to propose solutions in 85 per cent of cases. In almost half of those cases, however, the proposed solution involves loss of ownership. Davy economist Conall MacCoille described this as an “exceptionally high” rate, adding the final outcome in 23,751 of the cases that have reached the “concluded solution” phase may result in the loss of ownership. Read more.

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