Headlines

Brussels’ attacks on corporate tax deals risks undermining business certainty in Europe, according to one of the states accused of handing out illegal tax benefits, the Financial Times reported. Pierre Gramegna, finance minister of Luxembourg, said the European Commission’s decision to use the state aid rules to challenge corporate tax agreements “raises so many issues about predictability and certainty”.

Brazil’s recession deepened in the third quarter into what economists say is the country’s worst crisis since the Great Depression, as political gridlock and a giant corruption scandal have halted investment and forced consumers to pare spending to the bone, The Wall Street Journal reported. Gross domestic product shrank 4.5% in the third quarter from a year earlier, the biggest contraction since Brazil started measuring GDP by the current system in 1996, Brazil’s statistics agency said Tuesday.

Ireland’s biggest insurer RSA made a loss of €176.6 million in 2014 while also receiving a capital injection of €137 million from its UK parent, its latest filed accounts show, the Irish Times reported. These are a legacy of irregularities in its claims and finance functions and issues around bodily injury claims that arose in 2013 and resulted in three senior executives being suspended and litigation between the insurer and its former chief executive in Ireland, Philip Smith.

Oilsands junior Laricina Energy Ltd. has settled debt obligations with the credit arm of the Canada Pension Plan Investment Board, with the result that its equity is now about 89 per cent owned by the board and its subsidiaries, it announced Tuesday, The Calgary Herald reported. The private company entered Companies’ Creditors Arrangement Act protection in March after it defaulted on a production covenant related to its CPP Credit Investments Inc. secured debt.

For the past month, the Bank of England has been telling us ultra-low interest rates should be combined with measures to hold back the growth of consumer credit. On Tuesday, it will reveal whether action will follow the warnings, when it publishes the results of its annual stress tests for banks and its latest financial stability report, the Financial Times reported.

China Shanshui Cement warned investors it will default on more than $300 million of onshore debt payments due on Thursday and will seek to appoint liquidators, a sign Chinese authorities are more willing to let weak firms fail, Reuters reported. The privately controlled company, with a market capitalisation of $2.7 billion, has felt the squeeze from falling demand in a sector struggling with overcapacity as the giant economy shifts gears. It reported a 31 percent decline in revenues and a net loss for the first half of the year.

The Austrian supermarket chain Zielpunkt is formally beginning insolvency proceedings with the Vienna court of commerce, The Local reported. Nearly 3,000 employees are expected to lose their jobs before Christmas. Zielpunkt's owner, Upper Austrian businessman Georg Pfeiffer, has been accused of deliberately letting the business fail after gaining control of dozens of Zielpunkt properties and of timing the insolvency filing for the end of November so that he could avoid paying Christmas bonuses to the chain's employees (saving him around €18 million).

A new euro zone fund for troubled banks will become operational from January as planned because a sufficient number of member states have completed the legal procedures, EU officials said on Monday, the Irish Times reported. The euro zone’s Single Resolution Fund (SRF) was agreed after the 2009-2012 euro zone debt and banking crisis to make sure that in case of new bankruptcies, banks would foot the bill rather than taxpayers. For the fund to be operational, a minimum number of euro zone states had to ratify by Monday the agreement underpinning the SRF.

As China's economy slows and Beijing becomes more relaxed about letting its companies fail, a rising number of foreign bondholders risk being caught up in the country's unpredictable court system, Reuters reported. Last month, solar producer Baoding Tianwei Group became China's first ever state-owned company to default on a bond coupon payment, showing Beijing's increasing willingness to let companies go bust in a bid to reform its corporate market. Also in April, Kaisa Group became the first Chinese property developer to fail to pay a coupon on its U.S.

Legislation before Cabinet on Tuesday to reduce the term of bankruptcy to one year would be “the single most positive thing” the Government has done for people in debt, according to the Irish Mortgage Holders Organisation (IMHO), the Irish Times reported. A Government source on Monday night said it was expected the Bill by Labour TD Willie Penrose would be “broadly accepted” by the Cabinet, although there will be “some minor amendments” by the Government on “mainly technical issues”. In the bill, the discharge term for bankruptcy is reduced from three years to one year.