WestLB is at growing risk of being wound down, Europe’s top competition watchdog warned on Friday after it accused the troubled German bank of offloading toxic assets at an inflated value and so benefiting from billions of euros in additional state aid, the Financial Times reported. Joaquín Almunia, EU competition commissioner, said the bank would have to take additional restructuring steps to compensate or the aid – put at €3.4bn ($4.77bn) – would have to be recovered. That could cast a new shadow over WestLB’s ultimate survival.

Germany's stronger-then-expected recovery will not be enough to prevent some 35,000 bankruptcies this year, an insolvency administrators' group said on Thursday. The VID trade association said automotive suppliers, engineering, shipping, and retailers would be especially hard hit. Siegfried Beck, head of the association, told Reuters many firms have left the economic crisis with drastically reduced core capital levels, leaving them weakened and needy for cash.

European Union governments put up hundreds of billions of euros earlier this year to keep financially troubled members like Greece or Ireland from defaulting on their debts. Now Germany is pushing to let hopelessly indebted governments do exactly that - admit they can't pay and hit bond investors with the costs instead of taxpayers, the Associated Press reported. But Berlin may have a hard time winning approval for a crisis resolution mechanism when EU officials meet in Brussels on Thursday and Friday.

Honsel AG, a car-industry supplier based in the central German city of Meschede, filed Monday for insolvency, court officials in the nearby town of Arnsberg said, Monsters and Critics reported. Honsel casts aluminium alloy engine blocks, engine heads, gearbox cases and body parts for big car manufacturers. According to its website, it also owns factories in France, Spain, Brazil and Mexico. No immediate comment could be obtained from the company itself. The website said it had a global workforce of 3,800 and annual sales of 540 million euros (760 million dollars).

French President Nicolas Sarkozy has aligned himself with German chancellor Angela Merkel in her push for changes to the European treaties to fortify the EU’s economic system, The Irish Times reported. In a joint declaration issued in Deauville last night, the two leaders said they had reached a new consensus on measures to strengthen Europe’s system of economic governance.

Former Arcandor AG Chief Executive Officer Thomas Middelhoff’s home and office were searched yesterday as part of a probe into the company’s bankruptcy, Bloomberg reported. Bochum prosecutors are investigating about 20 people over Arcandor’s demise, Gerrit Gabriel, a spokesman for prosecutors, said in an interview today. Investigators raided premises at nine sites throughout Germany, he said. Cologne prosecutors are leading a related probe, he said.

Adesto Technologies Inc., a developer of low-power memory chips for consumer electronics, says it has acquired intellectual property and patents from German semiconductor company Qimonda AG, Dow Jones Daily Bankruptcy Review reported. Adesto bought Qimonda intellectual property and patents related to Conductive Bridging Random Access Memory, or CBRAM, technology. The agreement includes the purchase of 30 CBRAM patent families and the licensing of additional undisclosed patents. Terms of the deal were not disclosed.

Talks with Karstadt's one remaining creditor that filed a complaint against the company's insolvency plan are ongoing, administrator Klaus Hubert Goerg said in a letter to Karstadt staff, holding up Karstadt's sale to billionaire investor Nicholas Berggruen, Dow Jones Daily Bankruptcy Review reported. Originally, Karstadt was to be handed over to Berggruen at the end of September, but the complaint is preventing court approval for the insolvency plan needed to finalize the sale. The talks with the U.K.

The heads of Germany’s largely state-owned Landesbanken have agreed to the need for a radical overhaul and consolidation of their institutions, after talks with finance ministry officials in Berlin, The Irish Times reported. A week after two of the largest Landesbanken, WestLB and BayernLB, agreed to merge and create Germany’s third-largest bank, representatives of the other banks appear open to further mergers before the end of 2011.

Two creditors of German retail firm Karstadt have appealed against the insolvency plan forming the basis of the planned takeover by investor Nicolas Berggruen, the mass circulation newspaper Bild am Sonntag (BamS) wrote on Sunday, Reuters reported. Although the two suppliers, according to BamS information, were owed only around 70,000 euros ($93,410), the move could in theory delay a planned handover at the end of the week starting Sept. 27, by insolvency administrator Klaus Hubert Goerg to billionaire businessman Berggruen.