Headlines

Richard Branson’s Virgin Atlantic Airways Ltd. faces a crunch vote in less than three weeks to determine whether a hard-won 1.2 billion-pound ($1.6 billion) rescue goes ahead or if the airline is headed for collapse, Bloomberg News reported. Meetings of four creditor groups will be held on Aug. 25 after the company began a legal process in the U.K. to stop any holdouts from blocking the package. Virgin told a London court Tuesday that it will fold next month if the financing plan fails. It filed an ancillary petition for Chapter 15 bankruptcy protection in the U.S.

Panama’s Copa Airlines on Wednesday reported that it earned almost no income between April and June, with revenue falling 98% as coronavirus-related measures virtually shuttered the Panama City airport that serves as its home base, Reuters reported. Panama’s tough anti-coronavirus measures, including a travel ban that will go at least through August, has also become a radical test of Copa’s resilience. In normal times, Copa is considered Latin America’s most financially successful airline, known for steady profits, low debt and a strong cash position.

Ecuador is aiming to secure additional financing by the end of August to help plug its fiscal gap after wrapping up a deal to restructure $17.4 billion of debt, according to Finance Minister Richard Martinez, Bloomberg News reported. President Lenin Moreno’s administration is negotiating a new program with the International Monetary Fund as well as some $2 billion in bilateral loans from China. Martinez said the Asian Infrastructure Investment Bank is also considering a $50 million loan to support small and medium enterprises. “August is key,” Martinez said in an interview from Quito.

Britain’s banks took a gloomier view than almost all their European peers in their second quarter earnings, as coronavirus fears, Brexit and low interest rates caused them to bake tougher “worst-case” scenarios into their risk models, Reuters reported. Investors had expected a torrid set of half-year results, but Barclays, Standard Chartered, Lloyds, NatWest Group NWG.L and HSBC fell short of these low expectations.

It took months of tough talks for Argentina to reach agreement on restructuring $65 billion (49.65 billion pounds) in debt, Reuters reported. Now, economists and policymakers say, the real work begins: reviving Latin America’s No. 3 economy from its currency and fiscal crises. Though both government and creditors celebrated Tuesday’s deal that should help Argentina avert a messy default, it still faces a 10%-plus contraction this year, an over-valued peso, spiking poverty and a deep fiscal hole.

China’s efforts to curb predatory lending to the country’s small and medium-sized enterprises could harm the sector rather than helping it by cutting off access to crucial finance, analysts have warned, the Financial Times reported. Multiple shadow banking lenders have told the Financial Times they would stop servicing medium to high-risk borrowers after the Supreme Court announced a plan last month to “significantly” cut the interest rate shadow banks could charge.

Commerzbank took a greater hit from the collapse of Wirecard in the second quarter than from the economic fallout of the coronavirus pandemic, according to people familiar with the matter, the Financial Times reported. Germany's second-largest listed lender, which is embroiled in a leadership crisis after both its chairman and chief executive announced plans to resign last month, wrote off €175m of loans it made to the defunct payments provider, which filed for insolvency in June.

Metro Bank fell to a £241m loss in the first half of the year, becoming the latest lender setting aside hefty sums to deal with expected loan losses as it predicted an even more severe economic downturn than its peers, the Financial Times reported. The bank, which is dealing with the first recession since it was established a decade ago, reported £112m of expected credit losses, up from just £4.4m in the same period last year. The majority of the total — £97m — was due to changes in economic forecasts rather than actual customer defaults.

Trade body UK Hospitality has issued new calls for the government to provide “decisive support” to restaurants, pubs, and bars after a new survey found that over 75 percent of hospitality businesses in the U.K. risk being unable to pay their bills within 12 months, as a result of the COVID-19 pandemic, Eater reported. The survey, carried out by UK Hospitality in partnership with data analysts CGA, found that as many as 20 percent of businesses are at “significant risk” of insolvency or “expect” insolvency within the next year.

Drugmaker Mallinckrodt Plc may seek bankruptcy protection to resolve a dispute with the government over its blockbuster Acthar drug and claims that it profited from the opioid addiction crisis, Bloomberg News reoprted. The company is working with external advisers, creditors and litigation claimants and is considering “all options to address legal and financial challenges,” according to its second-quarter earnings statement Tuesday. This could include Chapter 11 bankruptcy for its main business and most subsidiaries.