Reforms aimed at improving the chances of more insolvent businesses being saved and ending abuses of the present set-up through contentious pre-pack arrangements have produced a mixed response from lawyers and professional bodies, The Telegraph reported. The Insolvency Practitioners Association has given the proposals a cautious welcome, while the Association of British Insurers hopes the changes will reduce the attractions of businesses being pre-packaged for a quick exit out of administration after they have failed. Consultations on the new set-up proposed by the government's Insolvency Service closed yesterday with R3, the trade body for insolvency professionals, offering qualified support. The review was triggered by concern about the operation of Company Voluntary Arrangements, the procedure that provides distressed companies with the breathing space to survive and unease that the pre-pack arrangements were providing a shortcut to quick profits for investors. Read more.
Daily Insolvency News Headlines
Tue., September 8, 2009
The Chinese Ministry of Finance said Tuesday that it would issue 6 billion yuan worth of government bonds in Hong Kong, a major step to internationalize its currency at a time of concern about the dollar, The New York Times reported. The yuan bond issue, worth about $879 million, will “promote the yuan in neighboring countries,” the Finance Ministry said on its Web site, and "improve the yuan’s international status.” “The first step toward internationalization is regionalization,” Shi Lei, a foreign currency analyst at Bank of China in Beijing, said in an interview. “China wants to develop the offshore market in Hong Kong.” While domestic banks like Bank of China and the Export-Import Bank of China have issued yuan-denominated bonds in Hong Kong for a couple of years at the encouragement of Beijing, this is the first time that government bonds, the equivalent of U.S. Treasury securities, are to be issued. The sale is set for Sept. 28. Read more.
Thomas Cook will review the make-up of its board and consider its long-term options for raising capital, following this week's expected placing of a 44 per cent stake in the European tour operator, the Financial Times reported. Company insiders say they expect significant interest from institutional investors in the disposal of the stake held by the creditor banks of Arcandor, the insolvent German retailer, worth about £790 million. The placing is pencilled in for Thursday after the banking consortium headed by Royal Bank of Scotland, Commerzbank and Bayern LB chose it as the preferred option above a sale to a strategic buyer. Thomas Cook's management, led by chief executive Manny Fontenla-Novoa, weighed up a possible management buy-out, but fundraising for the required £2.5 billion proved an insurmountable obstacle. However, management views the placing as the next best option, removing the threat of one investor holding a sizeable chunk of the stake and enabling the group to resume acquisitions, said an insider. Read more. (Subscription required.)
U.S. and Canadian authorities set a Nov. 13 deadline for creditor claims against AbitibiBowater, the newsprint maker said Friday. The Quebec Superior Court in Canada and the U.S. Bankruptcy Court for the District of Delaware also established procedural rules for filing the creditor claims, The Associated Press reported. "Launching the claims process at this juncture demonstrates continued progress in AbitibiBowater's restructuring efforts," said AbitibiBowater CEO David J. Paterson. "This key step in our creditor protection filings will allow the company to better assess the scope and nature of creditor claims and assist AbitibiBowater in formulating a restructuring plan." Read more.
Luxury sportscar maker Koenigsegg has presented the Swedish government with a new plan for financing its purchase of Saab Automobile, a government official said on Monday. State Secretary Joran Hagglund told Reuters the plan no longer involved any extra loan from the Swedish state on top of guarantees for funding from the European Investment Bank (EIB). He declined to comment on the details of the plan. Sweden's Dagens Industri business daily reported late on Monday that a Chinese car manufacturer would be going in on the Saab deal as part owner, quoting an unnamed source as saying that it has helped cover what is understood to be a 3 billion Swedish crown ($420 million) gap in financing for the purchase. "You should look into GM's circle of partners in China when you are looking after who is putting money into Koenigsegg Group," the source was quoted as saying in the paper. Dagens Industri added that there was a big possibility that the Shanghai Automotive Industry Corporation (SAIC) is the Chinese investor. Hagglund said the Swedish government was still negotiating with Koenigsegg on a possible guarantee for a loan to Saab from the EIB, funds which are seen as vital for the Koenigsegg deal to go through as well as for Saab's survival. Read more.
The Group of 20’s plan for global rules to rein in bankers’ pay may cost lenders top performers and limit the freedom of companies to set employee rewards, according to the British and German banking associations, Bloomberg reported. “We are concerned that any suggestion of caps on individual pay deals could pose a real risk of chasing talent from one financial center to another,” said Angela Knight, chief executive officer of the British Bankers Association, in an e-mailed statement. G-20 finance ministers and central bankers agreed on a blueprint for changes to financial services regulations, including global standards on pay, Sept. 5 in London. Detailed proposals, scheduled to be presented at a meeting of heads of government Sept. 24-25 in Pittsburgh, will suggest how banks can be forced to “prevent excessive short-term risk taking.” Read more.