Sweden-based airline BRA said on Monday it had applied for court-administered reorganisation as it sought to avoid bankruptcy after the rapidly spreading new coronavirus caused a collapse in demand, Reuters reported. The small privately held airline had said only days ago it was temporarily discontinuing all traffic between April 6 and May 31 due to the COVID-19 pandemic, of which there have been more than 6,000 confirmed cases in Sweden.
British department store chain Debenhams is preparing to enter administration for the second time in a year to protect the business from legal action from creditors during the coronavirus emergency that could have pushed it into liquidation, Reuters reported. The retailer said on Monday it had filed a notice of intent (NOI) to appoint an administrator. With Britain in lockdown during the pandemic, Debenhams’ 142 UK stores are currently closed, while the majority of its 22,000 workers are being paid under the government’s furlough scheme. It continues to trade online.
Arcadia, the fashion empire controlled by Philip Green and his family, is likely to close dozens more of its UK stores, with the coronavirus pandemic compounding already difficult trading conditions, the Financial Times reported. “No decisions have been made at this time,” said a spokesman for the company. But the terms of a rescue plan agreed with its creditors in June last year provided for the possible closure of many more stores than the 22 initially earmarked.
Service sector activity crashed across Europe in March as coronavirus lockdowns caused a series of widely watched business surveys to record their largest-ever monthly falls to levels that suggest a severe economic contraction is under way, the Financial Times reported. None of the leading European economies was immune to the economic pain. Italy’s purchasing managers’ index fell to levels far below the worst point in the financial crisis 11 years ago. Spain, France and Germany all recorded the lowest reading in their respective surveys since they started more than 20 years ago.
Around noon on Monday, just when customers might have been starting to sidle into Carluccio’s to order a plate of seafood linguine, the 29-year-old Italian restaurant chain went into administration, the Financial Times reported. It was the first major casualty of the coronavirus lockdown in a sector that has been struggling with some major problems for at least the past two years. Debt levels are high and there is too much competition after private equity piled into the “casual dining” market and encouraged expansion.
Debenhams’ owners have put restructuring firms on standby as they consider putting the struggling department store group into administration for the second time in a year, the Financial Times reported.
European governments are ripping up their insolvency laws to stem the tide of companies set to collapse over the Covid-19 pandemic, but for many businesses it may be too little too late, Bloomberg News reported. As job losses spike across the continent, the U.K. became the latest nation to propose looser insolvency rules, allowing firms to continue trading even if they can’t pay their debts due to the virus-induced lockdowns. Germany, Spain and others have also sought to ease the burden on companies.
With the future of many coronavirus hit firms in their hands, British banks, still scarred by the financial crisis, are worried that they are being asked by a desperate government to make loans that will never be repaid, Reuters reported. This caution, combined with the challenges of an unprecedented demand for loans, is testing the British public’s fragile faith in the lenders, which have spent a decade trying to rebuild their battered reputations and capital positions.
Britain’s largest energy supplier Centrica cancelled its 2019 dividend and cut costs in anticipation of an increase in non payments by customers and a drop in demand due to the COVID-19 outbreak, sending its shares to record lows, Reuters reported. The government has ordered sweeping measures to slow the spread of the new coronavirus, shutting down much of the economy and raising the prospect of mass job losses. Shares in the company hit 34.35 pence on Thursday, morning, their lowest level since the company’s inception in 1997.
For emerging economies, coronavirus struck first through the financial markets. Long before the numbers of cases and deaths in these countries began to spread alarm, many emerging markets experienced a sudden halt in foreign investment inflows, the Financial Times reported in a commentary. Overseas investors have taken $95bn out of EM stocks and bonds since late January, according to the Institute of International Finance, dwarfing the withdrawals that followed the onset of the global financial crisis in September 2008.
