Germany

The German government has dropped plans to introduce a privilege for state creditors in insolvency cases, the justice ministry said Monday, Dow Jones Daily Bankruptcy Review reported. The government had planned to reintroduce such a privilege for fiscal authorities as part of its EUR80 billion austerity drive, but the justice ministry had concerns and called for an alternative model and convinced the finance ministry in talks last week. "On Friday, we agreed that tax authorities' privilege will be replaced by a different compensation," the spokesman said.

German regulator Bafin closed noa bank GmbH & Co, a tiny Frankfurt-based retail lender focused on ethical and ecological banking, adding the bank was not systemically relevant, Reuters reported. Bafin ordered the closure as a way to "secure the assets", the regulator said. Noa bank was forbidden from making payments and taking deposits because the insolvency of its unit noa Factoring AG threatened to imperil the parent, Bafin said in a statement. Bafin said the bank had assets of 179.2 million euros ($231 million) on Aug.

The euro has conspicuously failed to rally in light of Germany’s strongest quarterly growth since unification. Why? The punchy German economy makes things worse for the euro, not better, The Source blog at The Wall Street Journal reported. It highlights the yawning gap between the strongest of the single currency’s 16 members, and its weakest links. Remember that earlier this week, Greece’s gross domestic product was shown to have declined by 1.5% in the second quarter — a drop of 3.5% on the year.

Bondholders who own the debt of insolvent German retailer Karstadt's properties have called another special meeting in London on Sept. 2 to discuss some of the terms of billionaire investor Nicholas Berggruen's takeover offer, according to a notice from the group reviewed by Dow Jones. The bondholder group, which represents senior class A noteholders in the Fleet Street Finance Two PLC securitization, has called the meeting ahead of an Essen court deadline to reach an agreement with Berggruen over his takeover plan by midnight Sept. 2.

An Essen court will decide Tuesday if it will grant another extension for billionaire investor Nicholas Berggruen and creditors of retailer Karstadt to continue sales negotiations for the insolvent German department store chain, a spokesman for Karstadt's insolvency administrator said Sunday, Dow Jones reported. Berggruen and Karstadt's creditors were unlikely to reach an agreement on Berggruen's takeover plan for Karstadt before a midnight Sunday deadline to sign a contract.

Borletti Group's new offer to acquire insolvent German retailer Karstadt includes a €100 million investment and wouldn't separate the department chain into several units, as proposed by investor Nicholas Berggruen in June, the Italian group's head, Maurizio Borletti, said Wednesday, Dow Jones Daily Bankruptcy Review reported. Berggruen won a bid to acquire Karstadt in June, but the deal is contingent on reaching agreements on rental and other conditions with Karstadt's creditors. The final agreement has been held up as Berggruen and creditors discuss formal details ahead of an Aug.

Dubai International Capital, the private equity arm of the Gulf Arab emirate, said it will focus on bringing German aluminium maker Almatis out of bankruptcy after a long-running battle with a dissident lender ended, Reuters Africa reported. Oaktree Capital Management LP withdrew its opposition to DIC's plan to retain control of the bankrupt firm after a settlement offer was leaked. Oaktree and Dubai have been battling over the best way to refinance Almatis, which filed for bankruptcy in the United States with more than $1 billion in debt, for the past year.

Oaktree Capital Management LP is willing to give up its fight for control of Almatis BV, a bankrupt aluminum maker, for full payment of its loans and an end to threatened legal action, according to a "confidential" court filing on Monday, Reuters reported. In a letter dated July 27 to an Almatis lawyer, Oaktree's lawyer outlined six conditions for ending Oaktree's battle with Dubai International Capital LLC over the European aluminum company.

Property group Highstreet has agreed to a compromise on rents with insolvent retailer Karstadt, a move which will help investor Nicolas Berggruen rescue the department store operator, according to German daily Bild am Sonntag, Reuters reported. A disagreement on store rents had prevented Berggruen from striking a deal with the highstreet consortium, which consists of Goldman Sachs, Deutsche Bank and Pirelli Real Estate. Highstreet had warned Berggruen that Karstadt, which owns the famous KaDeWe department store in Berlin, could still be liquidated if an accord on rents did not emerge soon.

European regulators have accused Germany and its banks of reneging on a deal to publish full details of sovereign debt holdings, as part of the four-month-long stress test exercise of the country’s banking sector.