Headlines

French retailer Vivarte has made a start to restructure its burdensome debt pile by entering a four-month conciliation process, the company announced in a statement on Monday, Reuters reported. A mandataire ad hoc was previously appointed to mediate talks between Vivarte and its lenders after Vivarte failed to get agreement from two-thirds of its lenders to suspend loan covenant tests by a deadline of January 22. In response, lenders appointed financial advisory firm Houlihan Lokey.

Indian PV manufacturer Indosolar has asked to have its debt restructured because it says low equipment prices mean it is unable to make a profit, PV-Tech reported. In a stock exchange filing last week, the Indian company said one of its plants, a 160MW plant in Greater Noida, Uttar Pradesh, had been idled because the high cost of production against the low prices for PV cells “did not yield margins”.

Non-performing loans are likely to have plateaued at Ireland’s two largest banks ahead of the ECB’s comprehensive review, according to Fitch Ratings. The ratings agency said their latest annual results incorporate some of the observations from the Central Bank of Ireland’s recent balance sheet assessment on loan impairment provisions and risk-weighted assets, leaving them better positioned for the ECB review and well placed to return to sustainable profitability.

Five of Europe’s largest lenders face up to another €10bn in litigation costs in the next two years due to alleged foreign exchange manipulation and other legal issues, underscoring how past misbehaviour continues to drag down profits, the Financial Times reported. Barclays, Deutsche Bank, UBS, Royal Bank of Scotland and HSBC will have to set aside between €8.5bn and €10.6bn for litigation in 2014 and 2015, according to estimates by three senior analysts. That would come up top of the €16.4bn those five banks had already provisioned for legal costs through the end of 2013.

The Spanish government is working against the clock to reach a deal with builders over a multibillion euro bail-out for nine bankrupt motorways which could directly hit the country's deficit, Reuters reported. Talks that have dragged on for months were abandoned at the end of last year, but have now resumed in the hope of finding a solution before the first of the companies starts liquidation proceedings in about a month.

Austria should set up a so-called bad bank to manage the assets of Hypo Alpe-Adria-Bank International AG rather than pursue a riskier strategy of shuttering the nationalized lender, Austrian Central Bank Governor Ewald Nowotny said, Bloomberg News reported. The bad bank would manage about 17.8 billion euros ($24.7 billion) of Hypo Alpe’s assets, Nowotny said today on Austrian state broadcaster ORF. A task force formed to consider the bank’s future concluded that the costs of letting it go insolvent exceed the benefits, he said.

French steel maker Ascometal went into administration on Friday, putting at risk up to 2,000 jobs in a fresh headache for the Socialist government as it tries to bring down unemployment from record levels, Reuters reported. Ascometal, whose roots lie in the former French steel firm Usinor that was later absorbed by No. 1 global steel giant ArcelorMittal, has been hurt by an economic downturn in Europe, particularly in the automotive sector. Declining demand in Europe, where Ascometal generates most of its sales, has undermined a 2011 takeover of the company by U.S.

Spain's government on Friday approved new rules to help struggling companies cut debt and avoid bankruptcy as the country heads into economic recovery with weak job growth, Reuters reported. The overhaul is designed to ease loan refinancings by making it harder for small creditors to veto deals. It also creates a mechanism for creditors to write off part of a borrower's debt. "The aim is to prevent a liquidity problem or temporary solvency issue from forcing a company with good earnings and growth perspectives ...

The amount of debt globally has soared more than 40 percent to $100 trillion since the first signs of the financial crisis as governments borrowed to pull their economies out of recession and companies took advantage of record low interest rates, according to the Bank for International Settlements, Bloomberg reported. The $30 trillion increase from $70 trillion between mid-2007 and mid-2013 compares with a $3.86 trillion decline in the value of equities to $53.8 trillion in the same period, according to data compiled by Bloomberg.

The Shanghai government has approved a city-owned investment company to buy non-performing loans from local banks, state media reported on Friday, becoming the latest Chinese local government bracing for an expected rise in bad debt, Reuters reported. Shanghai's launch of a dedicated "bad loan bank" follows similar moves by the wealthy eastern provinces of Jiangsu and Zhejiang. Analysts expect a rise in bad loans in the coming years as China's economy slows, with loans to local governments and industries suffering from overcapacity a key source of concern.