Headlines

Lenders will have to consider financial parameters such as liquidity and debt-servicing ratios while preparing a restructuring plan for loan accounts that have turned bad due to the coronavirus pandemic, the Reserve Bank of India said following the recommendations of an external panel, Bloomberg News reported. The central bank identified 26 sectors affected by the pandemic such as auto, aviation and tourism, which can be offered a resolution subject to criteria including debt-coverage ratio, outstanding liabilities and net worth at pre-Covid levels.

Australia will extend its temporary insolvency and bankruptcy protection rules until the end of this year, Federal Treasurer Josh Frydenberg said on Monday, providing businesses a lifeline to recover from the impact of the coronavirus pandemic, Reuters reported. Under the rules, which were first introduced in March and due to expire on Sept. 30, creditors cannot issue bankruptcy notices to businesses for debts below A$20,000 ($14,558). The creditors’ notice period to act on debts could also be extending letting many firms keep trading without paying rent, tax and loans.

The poor, small Southeast Asian country of Laos is set to cede majority control of its electric grid to a Chinese company, as it struggles to stave off a potential debt default, people with direct knowledge of the agreement said, Reuters reported. The deal comes at a time when critics accuse Beijing of “debt trap diplomacy” to gain strategic advantage in countries struggling to repay loans taken out under President Xi Jinping’s global “Belt and Road” infrastructure initiative.

After more than three centuries in business, the Onuma department store in northern Japanese city of Yamagata began bankruptcy proceedings this year - one of many distinguished department stores across the country in dire straits, Reuters reported. Known for fancy food halls, luxury items, impeccable service and, in their heyday, rooftop attractions to entertain families, Japan’s department stores have been in a long slow decline as shopping habits change. Now the coronavirus pandemic, just as it has forced U.S.

PizzaExpress’s creditors approved a company proposal to cut rents and shut 73 of its U.K. restaurants as part of the chain’s effort to fix its finances amid the economic slump, Bloomberg News reported. The plan will put 1,100 job at risk. Almost 90% of the firm creditors and a majority of landlords supported a so-called Company Voluntary Arrangement proposed by the company, according to a regulatory filing on Monday. The deal paves the way for a financial restructuring which will see owner Hony Capital ceding control of operations, except for China, to creditors.

Norwegian Air, which is attempting to secure a second round of financial restructuring, saw a 91% decline in August passenger volume from a year earlier as most of its fleet remained grounded by the coronavirus pandemic, it said on Friday, Reuters reported. The budget carrier has said it will fly 25-30 of its aircraft in the months ahead, while more than 100 remain parked. Creditors and lessors took control of Norwegian in May with a financial rescue that allowed it to access state-guaranteed loans of 3 billion Norwegian crowns ($336 million) and thus prevent a collapse.

German industrial production rose by less than economists had expected in July, fuelling concerns about whether the nascent recovery in the eurozone’s pandemic-stricken economy is running out of steam, the Financial Times reported. The 1.2 per cent month-on-month rise in German industrial output in July reported by the Federal Statistical Office on Monday was the third consecutive month of growth.

More than a quarter of companies forced to take on extra debt to survive the pandemic have warned they may need to cut back their operations, highlighting a mounting crisis that economists warn could hold back business recovery in the UK, the Financial Times reported. More than 40 per cent of companies took on debt during the crisis, according to a survey conducted by the British Chambers of Commerce and banking group TSB. While one in four warned over their future growth plans, about a tenth said they may cease trading altogether.

Thousands of employers are forecast to fail within weeks in a new sign of the pressure on jobs as the Morrison government promises a budget plan to lift the economy out of recession, The Sydney Morning Herald reported. Insolvency firms are preparing for a spike in the number of companies going broke at the end of this month, when safe harbour rules introduced in March to help businesses hibernate through lockdowns are due to end.

Ethiopian Airlines Group is among companies in talks with South Africa’s government about potentially offering support to the country’s insolvent state airline, according to people familiar with the matter, Bloomberg News reported. Africa’s biggest carrier is considering ways to help bankrupt South African Airways fly again after more than five months of dormancy, said the people, who asked not to be identified as the talks are private. Taking a stake in the carrier is one of the options under discussion, they said, though negotiations are ongoing and an agreement may not be reached.