Headlines

Skyways Express AB and its subsidiary City Airline AB Tuesday canceled all flights with immediate effect and said it will file for bankruptcy during the day as its owner said it could no longer finance the Swedish regional airline, Dow Jones reported. The small carriers are part of a Nordic airline group created by Ukrainian entrepreneur Igor Kolomoisky through his investment company Mansvell Enterprises Ltd. which has collapsed this year as high fuel prices and sluggish growth have played havoc with Europe's airline sector.

The corporate regulator is claiming success with its crackdown on the insolvency profession and says it will continue to be a key area of focus, The Australian reported. The Australian Securities & Investments Commission has broken new ground by issuing its first annual report into the insolvency industry, identifying and describing recent enforcement actions in the wake of being granted additional funding to increase surveillance.

The specter of funding problems is once again haunting Europe's banks. Even after the European Central Bank pumped more than €1 trillion ($1.278 trillion) of cheap three-year loans into hundreds of banks, the Continent's financial system remains vulnerable to the prospect that stampedes of customers could yank their deposits from institutions perceived as shaky, The Wall Street Journal reported. That threat was shoved into the spotlight last week when customers withdrew more than €700 million from Greek banks in a single day.

There has been no official announcement. No terms or conditions have been disclosed. But Greece’s banking system is being propped up by an estimated €100bn or so of emergency liquidity provided by the country’s central bank – approved secretly by the European Central Bank in Frankfurt. If Greece were to leave the eurozone, the immediate cause might be an ECB decision to pull the plug. Extensive use of “emergency liquidity assistance” (ELA) to help banks in the weakest economies has been one of the less-noticed features of the eurozone crisis.

Indian banks Monday discussed proposed changes to the corporate debt restructuring mechanism to minimize their losses and ensure that founders of stressed companies have skin in the game, the Deal Journal India blog reported. The mechanism is a formal process aimed at achieving an agreement between a stressed company’s lenders to restructure its debt. The proposals ranged from asking founders to issue personal guarantees and pledging entire holdings to requiring stressed companies to give creditors seats on their boards, said R.K. Dubey, executive director at Central Bank of India. Mr.

The Chinese official was adamant the city of Weifang would keep its rayon factory open, noting that local authorities had just stepped in to help the plant's owner repay $60 million in commercial paper, Reuters reported. The bailout averted what would have been China's first ever bond default and was good news for domestic bond investors, who were reassured that in China even mid-sized state-owned firms can count on "too-big-to-fail" treatment.

France's Francois Hollande will push a proposal for mutualising European debt at an informal summit of EU leaders in Brussels this week, increasing pressure on German Chancellor Angela Merkel to drop her opposition to the idea, Reuters reported. The new French president raised the idea of bonds jointly underwritten by all euro zone member states during G8 talks at the weekend and intends to raise it again when EU leaders meet on May 23, even if it goes against Merkel's wishes.

Lenders are being pressed to identify borrowers who are unlikely to be able to repay mortgages and to push for agreed sales of properties and the repayment of any shortfall under plans being devised for the Central Bank, the Irish Times reported. The regulator said it was “not comfortable” with the level of mortgage arrears and wants the banks to do more to tackle the worsening mortgage crisis.

Two weeks have passed since Bankia was part-nationalized, yet Madrid still hasn't explained how it plans to recapitalize Spain's biggest domestic lender, The Wall Street Journal reported. That is a long time to leave a systemically important bank in limbo. Unless the government acts fast to end the uncertainty, confidence in its ability to handle the crisis will continue to evaporate. Madrid was poorly prepared to take control of Bankia, only hiring Goldman Sachs to advise on options two days after it agreed to convert €4.5 billion ($5.75 billion) of preference shares into equity.

A group of Elpida Memory bondholders opposes Micron Technology's offer to buy the bankrupt Japanese chipmaker and has reached out to South Korea's SK hynix and U.S.-based GlobalFoundries to ready a potential alternative plan, a source with direct knowledge of the matter said, Reuters reported. SK hynix, which had dropped out during the second and final round of bidding for Elpida, is interested in the memory chipmaker's Taipei operations, while GlobalFoundries is interested in its Hiroshima operations, said the source, who asked not to be identified.