Many smaller Spanish companies are fighting for survival amid the country's biggest economic slump in decades, Dow Jones Daily Bankruptcy Review reported today. Spain is also at the heart of a sovereign-debt crisis in Europe, which has been boiling over in recent weeks. Financial markets fear Spain will follow Greece and Ireland and eventually need a bailout, but a bailout for the larger Spanish economy is the worst-case scenario for markets that fear it could destabilize the euro zone.

Creditors of Conergy have agreed to a debt restructuring of the German solar company, which would likely hand over control to hedge funds Sothic Capital and York through a debt-for-equity swap, Reuters reported yesterday. The company said on Friday that it plans to reduce its capital stock by 88 percent, virtually wiping out existing shareholders, in order to then raise fresh equity amounting to as much as 188 million euros ($250.2 million). By taking a stake of nearly 70 percent in exchange, Conergy's credit burden would be reduced from a current 323 million euros to just 135 million euros.

Even as Europe’s leaders were praising the Irish government’s deficit-cutting efforts, the country received a dramatically different verdict Friday from a credit rating agency: a steep downgrade and a warning of more to come, the International Herald Tribune reported. Having pledged late Thursday to do “whatever is required” to contain the debt crisis and defend their embattled currency, European Union leaders reconvened for the final day of a summit meeting.

Europe's leaders endorsed plans for a new fund to rescue indebted euro-zone countries, and proposed treaty changes to make that possible, but failed to resolve deepening disagreements over whether more radical action is needed to quell a debt crisis that has raged on the region's fringe for more than a year, The Wall Street Journal reported. Meeting in Brussels for the final 2010 summit, European Union leaders agreed to replace the region's emergency rescue fund, which ends in 2013, with a permanent crisis-finance program.

Creditors of Conergy are close to clinching a debt restructuring deal under which hedge funds York and Sothic Capital could gain control of the ailing solar company, two people familiar with the matter said, Reuters reported. "Both parties are very close to an agreement," one person said, adding that a breakdown of talks between banks and hedge funds was no longer an option. Under to the deal, York and Sothic will own more than 70 percent in Conergy, while the current 29.08-percent stake of major shareholder Commerzbank will be reduced to about 9 percent, the people said.

The Dutch Supreme Court ordered an end to KPNQwest's bankruptcy investigation, reducing the likelihood that administrators can recover 4.2 billion euros ($5.59 billion) in unpaid debt from shareholders KPN and Qwest, Reuters reported. KPNQwest, a wholesale fibre glass telecoms joint venture between U.S. phone carrier Qwest and Dutch telecoms group KPN for corporate customers, was listed in 1999 but went bankrupt in 2002 after the telecoms and technology bubble burst.

For months, Spain's residential mortgage sector has performed an impressive feat: Despite tumbling home prices and sky-high unemployment, just a small portion of mortgage borrowers have fallen behind on their payments. Now, some analysts and economists are wondering if Spain is in for a wave of defaults in coming months amid further job cuts meant to address the country's broader economic problems, The Wall Street Journal reported.

Europe’s smoldering financial crisis flared up on Wednesday, with riots over austerity spending in Greece, new signs of troubles in Spain and little indication that European leaders were moving any closer to agreement on a systemic approach to long-term stability, the International Herald Tribune reported. The day’s events emphasized the complex social, political and economic challenges facing government leaders at a European Union summit meeting on Thursday and Friday in Brussels.

A seven-judge Supreme Court has begun hearing the appeal by property investor Paddy McKillen aimed at preventing the proposed transfer to the National Assets Management Agency (Nama) of some €2.1 billion in loans made to himself and his companies, the Irish Times reported. The proposed acquisition would be “a commercial disaster” for Mr McKillen and was based on a total denial of his constitutional right to fair procedures, Michael Cush, for Mr McKillen, argued yesterday.

Ireland's parliament late Wednesday passed legislation to instruct financial institutions to sell assets and to impose losses on banks' subordinated creditors, as part of a plan to restructure the country's banking system agreed with the European Union and International Monetary Fund, Dow Jones reported. The Credit Institutions (Stabilisation) Bill passed the final stage of voting in the lower house of parliament, or Dail, by a majority of 78 votes to 71. The ruling Fianna Fail-led coalition passed the bill with the help of Green Party and Independent lawmakers.