Headlines

The unemployment rate in the eurozone edged up to 8.1 percent in August from 8 percent in July, the European Union said Thursday, as government support cushioned much of the economic impact of the pandemic, the International New York Times reported. But economists fear that the jobless rate could surge when the programs expire, or employers go bankrupt or are forced to lay off workers permanently. Germany, France and many other countries compensate workers for some of the income they lose when their employers put them on furlough or reduced hours.

It may be little surprise the pandemic has infected Canadians with more stress over debt, but a new survey offers the eye-openers that people fear the stigma of mental illness more than poverty and business failure, and young people are more afraid than their elders, the Financial Post reported. With Mental Illness Awareness Week being marked in Canada next week, almost three quarters of the 1,510 respondents polled Sept. 23-25 in the Angus Reid Forum by insolvency company Bromwich+Smith said mental illness carries the heaviest stigma.

Rolls-Royce Holdings Plc unveiled a long-awaited financing plan, targeting up to 5 billion pounds ($6.5 billion) of fresh capital to buttress the U.K. jet-engine-maker against an historic aerospace downturn that still has years to go, Bloomberg News reported. The London-based company will tap existing shareholders for 2 billion pounds in a rights issue, and is seeking a further 3 billion pounds in bonds and loans, it said in a statement Thursday. Rolls-Royce shares fell as much 12%, extending a two-year decline, while its euro bonds jumped by the most since they were issued.

The scale of the economic shock caused by the Covid-19 pandemic will lead to as much as €11.7 billion of revenue shortfalls across Irish small- and medium-sized businesses (SMEs), which many will not be able to survive, according to a new Central Bank report, The Irish Times reported. The bank estimates that the gap between companies’ sales and running costs will range between €10.3 billion and €11.7 billion, led by firms in the food and accommodation sector, even after companies have been helped by Government wage subsidy schemes and widespread cost-cutting.

The International Monetary Fund sounded a warning over rising global debt levels and proposed reforms to the debt-restructuring process for countries that struggle to meet their obligations, a number that is set to rise as the pandemic batters economies, Bloomberg News reported.

Zambia has started talks with its bondholders a day after an investor committee rejected the country’s request for an interest-payment standstill, saying it needed more information on restructuring plans, Bloomberg News reported. Dialog has commenced between representatives of some of the Eurobond holders and Lazard Freres SAS and White & Case LLP, which are advising Zambia’s government, according to two people familiar with matter, who asked not to be identified as the talks are sensitive. While Zambia’s Finance Minister addressed creditors in a webcast on Sept.

Shareholders of United Arab Emirates-based Arabtec Holding PJSC, which helped build the world’s tallest skyscraper, voted to dissolve the debt-laden firm in a move likely to threaten thousands of jobs and scores of suppliers and sub-contractors in the Persian Gulf, Bloomberg News reported. Construction companies that sprang up more than a decade ago as a building bonanza swept Dubai and much of the Gulf are facing a reckoning as governments pull back on spending.

Germany is bracing for a surge in insolvencies starting Thursday, when a moratorium to help companies survive the coronavirus outbreak comes to an end, Bloomberg News reported. From this month, businesses that can’t pay their bills will again be forced to seek court protection. Since March, that hasn’t been the case for those that could pin their lack of liquidity on the pandemic and show they stood a good chance of overcoming the crisis. “Those that could be saved were rescued,” said Tillman Peeters, managing partner at Frankfurt-based financial advisory firm Falkensteg.

In Germany the duty to file for insolvency will apply again from 1 October for all businesses facing liquidity problems, bringing risks for companies which delay filing for insolvency, and making payments contestable again, Pinsent Masons reported. For businesses in crisis due to the impact of Covid-19, the German Federal Government had in March suspended the duty to file for insolvency until 30 September 2020. This suspension was extended, but only for overindebted businesses as far as they are still solvent.

The Treasurer says he expects the reforms to cover around 76% of businesses facing insolvency today – 98% of whom who have less than 20 employees, The Weekly SOURCE reported. Taking elements from the United States’ Bankruptcy Code, the measures – which have yet to be legislated but will start on 1 January 2021 – will see a shift from the current ‘creditor-in-possession’ regime to a ‘debtor-in-possession’ system.