Headlines

MI Developments Inc. has abandoned a stalking horse bid for some of the tracks and real estate of its Magna Entertainment Corp. (MEC) unit, which is operating under chapter 11 bankruptcy protection, The Globe and Mail reported. The real estate company said it may still bid for some of the assets in order to recover money on loans it made to MEC. "We made our stalking horse bid because we believe that MEC owns some very valuable and attractive assets," MI Developments chief executive officer Dennis Mills said yesterday.

Insolvent Tasman Mortgages won’t be defending claims in court made by Blue Chip investors that the company lied to procure the investors loans and was involved in fraudulent activity, The National Business Review reported. Tasman Mortgages was liquidated on March 27 by the now owners Lombard Group--the group had purchased the firm from Blue Chip in May 2007. The Blue Chip group collapsed in February last year owing investors more than $80 million. Liquidator Steven Khov, of Waterstone Insolvency, says they decided that it wasn’t “economically viable” to continue the case.

Ecuador has offered to buy back up to $3.2 billion in defaulted bonds at a large discount in a move that reinforces President Rafael Correa popular tough stance on debt ahead of a presidential election on Sunday, Reuters reported. Finance Minister Elsa Viteri said on Monday Ecuador was offering 30 cents per dollar in a process that would involve a "modified Dutch auction." She did not spell out the terms of the modified Dutch auction. In a standard Dutch auction, the lot for sale is offered at an initial price, which if there are no takers, is then reduced until there is a bid.

Alistair Darling has decided to concede for the first time that the government will not recoup the full costs of its banking interventions and that the bill could be as high as £60 billion, the Financial Times reported. Following the example of the US, the chancellor will make a provision in the Budget for taxpayer losses from the banking sector, which will be added to last year’s public borrowing totals and public sector debt.

Struggling German retailer Arcandor AG said Monday it could need €900 million ($1.2 billion) in new loans as it forges ahead with a massive restructuring plan, and is considering shuttering or selling 1,600 stores, Forbes reported on an Associated Press story. The Essen-based company said at a press conference it was looking at new bank loans and possible government assistance to come up with the money over the next five years in addition to the refinancing of €630 million in other loans in June.

Some of the most important details of the German government's plan to pool toxic assets into multiple "bad banks" have yet to be decided, not least of them how bad the assets need to be for them to go into the bad banks, The Wall Street Journal reported. German Finance Minister Peer Steinbrück's preferred strategy would see the government taking over illiquid assets and the banks slowly shouldering the bulk of risks from those that are toxic.

AbitibiBowater Inc. tried a creative debt-restructuring process out of court, but in the end filed for bankruptcy protection in the United States and the Companies' Creditors Arrangement Act in Canada, the Financial Post reported. "This was not the path that was preferred," said company spokesman Seth Kursman, "but we had exhausted all other options." He said the company's liquidity positions were severely constrained by more than $6 billion of debt. AbitibiBowater tried to keep the company out of the bankruptcy courts.

Fiat's chief executive has returned to the United States for talks as pressure builds to seal a partnership deal with Chrysler before the end of the month, sources at the Italian car maker said on Monday. Chief Executive Sergio Marchionne is going to Detroit and Washington, where the government has given Fiat and Chrysler an April 30 deadline to get the U.S. car maker's unions and bondholders to agree the deal, the sources told Reuters on condition of anonymity.

Falling demand for cashmere among recession-hit shoppers in the West is cutting into earnings among nomadic herders in Mongolia, whose goats produce the soft fiber used in high-end sweaters, scarves and coats. The result: herder loan defaults, The Wall Street Journal reported. Mongolians are calling the current situation a financial zud, invoking a local term for unusually harsh winters that devastate herds. The credit crisis on the steppe has root causes similar to those of the subprime mess in the U.S.

A Tel Aviv court has appointed a receiver for the Israeli rough diamond trader Stelman, the Israel Diamond Exchange reported. Stelman’s bank debts are reportedly over $20 million. Stelman is a family-owned company with headquarters in Antwerp. According to reports, it is currently striving to reach debt settlements. Stelman was a major Diamond Trading Company (DTC) sightholder and a leading rough diamond trader. According to reports, aside from a debt of $5 million to Erez Daliyot, no Israeli diamond companies are owed money by Stelman.