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The Insolvency and Bankruptcy Code (IBC) has completed five years, and critics have focused mainly on two issues: large write-offs of loans by the banks and undue losses to stakeholders like employees and minority shareholders, The Print reported. On both these issues, fears and allegations that the IBC has been a failure are not supported by facts or rationale. Let us see why these are misplaced beliefs. The job of creditors is to generate a return in exchange for the risk arising from the disbursement of loans. So, unless it is too high, loss on loans is not an unusual incident.
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B.R. Shetty, the founder of stricken UAE hospital operator NMC Health, has sued auditor EY, two former top executives of his companies and two banks in a U.S. court, seeking $8 billion in damages for an alleged multibillion-dollar fraud at his group, Reuters reported. EY said in a statement: "We believe this case is without merit and we intend to defend it vigorously." Several companies linked to the Indian entrepreneur ran into trouble last year after short-seller Muddy Waters questioned NMC's financial statements.
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A self-proclaimed prominent medical academic has been made bankrupt after trying to take legal action over the Whakaari/White Island disaster, Stuff reported. Dr. Miles Roger Wislang was made bankrupt after a hearing in the High Court at Dunedin last month. The application was brought by White Island Tours Ltd. over unpaid legal costs of $62,240.50. The costs arose after he applied for a judicial review application regarding the Whaakari eruption of Dec. 9, 2019, which claimed 21 lives. He argued no visits to the island should have been permitted while the mountain was at alert level two.
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Tsinghua Unigroup, a Chinese state-backed chip maker, said that it received court notice that one of its creditors had initiated bankruptcy proceedings for the group, The Epoch Times reported. Tsinghua Unigroup is a commercial arm of China’s Tsinghua University and an integral part of Chinese Leader Xi Jinping’s semiconductor self-reliance dream. One of its creditors had requested the court to initiate bankruptcy and reorganization proceedings due to Tsinghua Unigroup’s failure to repay debts and its glaring insolvency. The company is a key member of China’s microchip national team.
Colombian airline Avianca obtained financial commitments for US$1.6 billion to finance its exit from chapter 11 bankruptcy law as part of its reorganization, The Rio Times reported. "As a result of the continued support of its creditors, Avianca Holdings filed a motion with the bankruptcy court seeking approval of the terms of the commitment letters for its US$1.6 billion chapter 11 exit financing," the airline said in a statement. Avianca is the largest airline in Colombia and second largest in Latin America, after LATAM of Chile.
Stressed steel plants, acquired under the Insolvency and Bankruptcy Code (IBC) resolution process, are seeing faster returns, Swarajya reported. Despite pandemic-linked blips, domestic demand outlook remains strong, which has helped acquirers ramp up utilization levels. The ongoing steel upcycle will also mean stronger-than-expected realizations over the medium term. Consequently, acquirers may see 20 per cent faster payback and are well set to tap the brownfield potential housed under these assets.
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Facing unease over the spread of a more contagious variant of the coronavirus, the European Central Bank said it would maintain its stimulus in the form of ultra-low interest rates until inflation “durably” reaches its 2% target, the Associated Press reported. The monetary authority for the 19 countries that use the euro said it would not back off its efforts to support the economy, even if that resulted in a “transitory” period of inflation moderately above target. ECB President Christine Lagarde underlined the bank’s determination to persist with supportive policy.
The British government said that the post-Brexit trade rules it negotiated with the European Union “cannot go on” and need a major rewrite, straining already-tense U.K./E.U. relations and drawing a message of concern from the U.S. government, the Associated Press reported. The government said Britain would be justified in unilaterally suspending the legally binding Brexit agreement but had decided not to do so just yet. Since the U.K. left the EU’s economic embrace at the end of 2020, relations have soured over trade arrangements for Northern Ireland, the only part of the U.K.
Indian farmers, protesting against new agriculture laws they say threaten their livelihoods, started a sit-in near parliament in the capital, renewing a push for a repeal of the laws, Reuters reported. In the longest-running growers' protest against Prime Minister Narendra Modi's government, tens of thousands of farmers have camped out on major highways leading to New Delhi for more than seven months.
There’s still at least one thing Americans do better than anyone else in the world: Corporate bankruptcies, Bloomberg reported. Since 2013, hundreds of foreign businesses have taken advantage of U.S. bankruptcy courts to slash debt and clean up their balance sheets, according to an analysis of legal filings. The reason is simple, lawyers and former judges say: America has the most company-friendly bankruptcy rules in the developed world. “The lawyers and judges know how to move things through the system quickly,” said Prof.