Headlines

A UK court case involving Lehman Brothers and Canadian telecoms firm Nortel could have dramatic consequences for the ranking of creditors in a corporate bankruptcy, Reuters reported. The case, which starts on Wednesday, will look at whether pension funds should rank above other creditors, including the fees paid to the administrators of failed companies. The outcome will be key for the way insolvent companies tackle pension deficits. Lehman's deficit stood at 148 million pounds ($234.9 million) when it filed for bankruptcy, and Nortel's at 2.1 billion pounds.

The Securities and Exchange Commission says the transfer of $1.28 billion in disputed cash and securities from Lehman Brothers Holdings Inc. to Barclays PLC as part of the controversial sale of Lehman's brokerage business could violate U.S. securities law, Dow Jones Daily Bankruptcy Review reported. The SEC said the transfer of assets held in two reserve accounts would violate a consumer-protection rule because it would leave the failed investment bank with insufficient funds to satisfy the claims of customers whose accounts were not transferred to Barclays.

The David Drumm bankruptcy case has been told that the former banker’s wife, Lorraine, now has her own legal representative, The Irish Times reported. In a filing yesterday, attorney Christopher Panos of Boston said he was now representing Ms Drumm. He has requested that copies of all orders, pleadings, etc in the case now be forwarded to him. This means both Mr Drumm and his wife will be receiving copies of the filings in the case.

Commercial banks and micro-lenders are now required to share a wide range of information on their customers, including records of dishonoured checks, compulsory closure of accounts and late payments or credit defaults on all types of facilities, according to the new rules published last week to facilitate the establishment of a reliable risk assessment system.

A cabin crew union of Japan Airlines Corp decided against a strike, despite being granted the right to strike by its members in a vote that began as a protest against planned layoffs, the Nikkei business daily reported. Of the 870 union members, 97 percent cast votes, out of which 89 percent supported a strike, the report said. JAL has about 5,400 flight attendants and most of them belong to a different union that is the airline's largest, the Nikkei said. The union contends that members were able to express their collective will through the vote itself, the daily said.

Two businessmen are being pursued by Bank of Scotland Ireland for judgment orders of some €1.2 million arising from personal guarantees allegedly provided by them over loans to a company, The Irish Times reported. BoSI has brought proceedings against Frank Ennis, Rock Road, Blackrock, Co Dublin, and Milltown Hall, St Anne’s, Dublin, and against Brian Palmer, Brennanstown Road, Cabinteely, over their alleged June 2008 guarantees of the debts of a company, the Doughmaster Ltd, up to a maximum €2 million.

In contrast to the cacophony of comments from European politicians, the International Monetary Fund has kept its voice down as it enters negotiations to provide rescue loans to Ireland, the Financial Times reported. But the fund will provide about a third of the money and a lot of the policy credibility of the bail-out. Having first tried to go it alone during the Greek crisis, eurozone governments have now accepted that they need the IMF’s reputation and expertise.

Ireland's financial crisis morphed into political turmoil Monday, as the country's coalition government began to unravel in the wake of an unpopular international bailout and Prime Minister Brian Cowen pledged to call an election next year if a crucial budget package is approved, The Wall Street Journal reported. Mr. Cowen's concession on early elections was triggered by moves earlier Monday that undercut the stability of the shaky coalition led by his Fianna Fail party.

Providing assistance to struggling parts of the economy could force up interest rates and the value of the Australian economy, Ken Henry has warned. The Treasury secretary, appearing before a senate committee this morning, said the Australian economy could be undergoing a permanent structural change as a result of the mining boom, The Australian reported. The best policy response might be to assist the transition rather than prop up industries facing less prosperous futures.

The number of U.K. business insolvencies fell 17 percent in October from a year earlier as companies’ financial positions improved, Experian Plc said, Bloomberg reported. Insolvencies declined to 1,635 from 1,976 in the same month a year ago, Experian said in a report released by e-mail today in Nottingham, England. The proportion of companies that failed slipped to 0.08 percent from 0.1 percent in October 2009. Experian said Britain’s “largest companies” recorded the biggest improvement in the insolvency rate, falling to 0.1 percent from 0.16 percent.