Europe

If one euro-zone country, such as Spain or Portugal, appears poised to default on its debt, the currency union would likely still survive, SmartBrief reported on a story in The Wall Street Journal. While the European Central Bank cannot rescue a member country by directly lending to it, there are other options, such as having the bank buy debt of the struggling nation on the secondary market. Read more. (Subscription required.)

Lithuanian carrier flyLAL, which was privatized in 2005 and counts Scandinavian airline SAS among its competitors, said on Friday it had filed for bankruptcy, Reuters reported. The indebted airline grounded its flights last weekend after failing to attract an investor. "Being unable to continue flights and without seeing any real chances to renew operations, we were forced to file for bankruptcy," CEO Vytautas Kaikaris said in a statement.

One of Europe’s most high profile architects, Erick van Egeraat Associates, has called in the receivers after a number of major projects were put on hold due to the credit crunch, BD reported. The sudden cancellation of work caused a cash-flow crisis at the Rotterdam-based firm, which also has offices in London, Budapest, Moscow and Prague. Law firm De Bok Roijers Gasseling was appointed by the Dutch courts after van Egeraat himself declared the practice insolvent. The practice has about 50 projects on its books from Leipzig to Budapest to Prague.

Chrysler LLC should be required to return billions of dollars in government loans if Italian carmaker Fiat takes a majority stake in the company, a New Jersey senator said Thursday. Sen. Bob Menendez, a Democrat from New Jersey, urged President Barack Obama to prevent the auto industry bailout from being used to help foreign automakers. The Bush administration provided Chrysler with $4 billion in federal loans earlier this month to help the company reorganize and the Auburn Hills, Michigan-based automaker is seeking another $3 billion.

J Sainsbury is planning to cut more than 5 percent of its London head office staff as part of a restructuring plan in an effort to keep costs down at the supermarket chain, the Financial Times reported. Justin King, chief executive, told staff on Wednesday that he would be cutting more than 200 jobs as part of a restructuring of central teams in the business. Sainsbury said it would be moving from five main business units in its trading division to three--non-food, grocery and fresh food--which would make a number of roles redundant.

Vehicle production in the United Kingdom slumped by nearly half in December from the same month the year before as the credit crisis continued to hit demand hard, a trade group said Thursday. The Society of Motor Manufacturers and Traders, or SMMT, said nearly 48 percent fewer cars were made in December 2008 compared with the previous year. In addition, the group said commercial vehicle production fell about 57 percent in December from the previous year, with full year production down six percent.

Herbert Smith has won the lead role on the administration of the UK subsidiary of telecoms manufacturer Nortel, a deal which will see the UK firm representing the company throughout 18 jurisdictions, Legal Week reported. The firm was appointed by administrators Ernst & Young after it had been advising Nortel on pre-administration matters. The administration order includes entities from across Europe and the Middle East, including France, Germany, Spain and Sweden.

The French government said Tuesday it is prepared to inject as much as €6 billion ($7.86 billion) to jump-start the stalled French automotive industry but warned that companies that close even one plant in France won't get any aid, The Wall Street Journal reported. Prime Minister François Fillon said the government stands ready to provide funds to the cash-starved sector. But Mr. Fillon said that recipients of the aid will have to guarantee they will maintain their industrial operations in France.

As part of her efforts to combat the economic crisis, German Chancellor Angela Merkel is increasing the state's influence in the market, buying holdings in banks and bailing out individual industries and companies, Spiegel Online reported. Is Germany turning into a planned economy? Read more.

Amid the ongoing restructuring processes of Nortel Networks, the Philippine operations will remain safe, Inquirer.net reported. Nortel Asia Communications Director Matthew Wray said operations in the Philippines, as well as their other affiliates across Asia, are working with partners and suppliers to avoid operational disruptions. "Our affiliates across Asia, including the Philippines, are not subject to the creditor protection filings in North America and Europe and are expected to continue to operate as normal," Wray said in an email.