Daily Insolvency News Headlines

Thu., July 23, 2015

Thu., July 23, 2015

Athens has been thrown further emergency assistance after the European Central Bank (ECB) increased liquidity for Greek lenders ahead of a crucial vote on a third bailout programme for the debt-stricken nation, The Guardian reported. While lawmakers argued over reforms set as the price of rescue loans from international creditors, the ECB’s governing council agreed to raise the cap on emergency assistance for the country’s fragile banking system by €900m (£629m) on Wednesday. The move was immediately received with relief. Greek banks, newly opened after three weeks of enforced closure, have become a weather-vane for normality in a country whose close brush with bankruptcy has kept it on the frontline of Europe’s debt drama. The decision – the second such injection of emergency funds since late June – will allow Greece’s cash machines to keep operating as the tourist season gathers pace, despite the continued imposition of capital controls across the banking sector. The ceiling on funds was previously set at €89.5bn. Read more.

Thu., July 23, 2015

Poland has persuaded at least three major companies to contribute to a bailout of troubled coal miner Kompania Weglowa, despite some executives' misgivings about the commercial logic of getting involved, sources with knowledge of the matter said. After weeks of talks with more than a dozen firms it hoped would take part in the rescue, government officials have received proposals from three: copper miner KGHM, utility PGE and chemicals producer Grupa Azoty , the sources said. "Arms are being twisted," said a source close to one of the companies involved. The government, facing a tough re-election battle in October, cannot afford to let Kompania Weglowa go bankrupt because it depends on votes from mining regions, but it is also barred by European Union rules from giving state aid. The solution -- persuading firms to invest in a fund which will become a Kompania Weglowa shareholder -- has raised concerns among some investors that the government is sacrificing free market principles for the sake of political expediency. The three companies preparing to take part in the rescue are state-controlled, but a significant part of their equity is held by private shareholders who want the firms to return profits and dividends. Read more.

Thu., July 23, 2015

A judge in the Bahamas has declined to recognize the U.S. bankruptcy filing by Baha Mar Ltd, the developer of a $3.5 billion mega resort, a source familiar with the ruling said on Wednesday. Recognition of the Chapter 11 U.S. bankruptcy filing would have prevented creditors from taking action against Baha Mar Ltd in the Bahamas. The decision by Supreme Court Justice Ian Winder was the latest snag in the nearly completed project, which is considered vital for the Caribbean country's fragile economy. Baha Mar said in a statement it was disappointed by the ruling. "We do not believe today's ruling, for which the government strenuously argued, assures the necessary protection of the assets of Baha Mar, and we do not believe that it is best for the over 2,500 current employees of Baha Mar." Work has been halted as the local developer, Sarkis Izmirlian, and contractor China Construction America (CCA), a unit of China State Construction Engineering Corp Ltd , have traded blame for missing two completion deadlines. Read more.

Thu., July 23, 2015

Zambia is planning its largest sale of debt as the copper-rich country seeks to plug a yawning gap in government finances, the Financial Times reported. The southern African nation is planning to raise over $1bn this week and is expected to pay a higher rate than it has for previous issues as investors adopt a more cautious approach to buying emerging and frontier market debt. One investor who attended a meeting with the country’s representatives, including deputy minister of finance Christopher Mvunga, said the new bond would need to yield around 9 per cent to gain significant interest from fixed income investors. When Zambia made its debut on global debt markets the country was able to borrow $750m over 10 years at a borrowing rate of 5.6 per cent. The second sale of debt two years later came at a higher price as investor interest in emerging markets cooled and cost the country 8.6 per cent to borrow $1bn. Zambia, which is Africa’s second largest copper producer, has boasted some of the continent’s fastest economic growth rates during the last decade. But it has struggled as the price of copper, which accounts for two-thirds of exports, has slumped. Read more. (Subscription required.)

Thu., July 23, 2015

An interim examiner has been appointed by the High Court to Mothercare Ireland, which employs 276 people in 18 shops across the State, the Irish Times reported. The aim of seeking court protection and examinership is to achieve a restructuring of the company, save as many jobs as possible and minimise shop closures, the company said. It cannot afford to support unprofitable stores, it added. The firm said it will trade as normal during the examinership process, staff and suppliers will be paid as normal and all gift cards and family card points will be honoured. Mothercare Ireland is a franchise of Mothercare UK and has traded here for 23 years. It is the country’s largest maternity, baby, nursery and children’s clothes retailer. The judge said he was satisfied the company, and two related companies, Mothercare World and Effleby Trading ltd, were entitled to protection and the appointment of an interim examiner and made directions for advertising the petition and returned it for hearing on July 30th. A significant source of the company’s difficulties is having to contend with rents that significantly exceed current market rents, the court was told. The company says the renegotiation and repudiation of rents will be a significant aspect of the examinership process. Read more.

Thu., July 23, 2015

Despite having its budget cut significantly in recent years the Insolvency Service has made orders against 119 rogue directors in the year ending 31 March 2015, compared to 65 the year before, economia reported. The government body has laid off more than a third of its workforce in recent years, going from 3,200 staff to 2,000. Accountancy firm Moore Stephens has called on the new government to back the Insolvency Service as, despite the crackdown, there is still too much criminal director behaviour slipping through the cracks. Jeremy Willmont, head of restructuring and insolvency at Moore Stephens, said, “While it’s great to see more criminal directors banned from running companies, there is a definite feeling that there are still a number slipping through the net due to a lack of resources. “Catching serious criminal behaviour by a company director often takes painstaking investigation work, but many believe that a lack of funding and staff limits the Insolvency Service in how many of these cases it can take forward.” In 2013 it was reported that the Insolvency Service was on the verge of becoming insolvent. It needed an emergency injection of government cash to stay afloat and recorded a deficit of £5m to £7m for 2012-13. It total it required £89m of rescue cash from the business department between 2008 and 2012. Read more.

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