Headlines

While an estimated 500 bondholders in Bridgecorp-linked finance company Compass Capital wait for repayment of more than $14 million of investments, the company’s executive director and sole employee was paid $90,000 in redundancy earlier this month, The National Business Review reported. A hearing at the High Court heard that Ian Gladwell was paid the money on March 17, the day after NZ Guardian Trust, representing the bondholders, said it was appointing receivers. Redundancy was payable under his contract of employment but Mr Gladwell was not entitled to the money until March 31.

Debt-ridden Chinese carrier East Star Airlines, grounded by the government earlier this month, faces liquidation, the official Xinhua news agency said on Friday. Six creditors of East Star Airlines have asked a court in the central city of Wuhan to start liquidation proceedings against the privately-run carrier, Xinhua said, citing unnamed city officials. It did not name the creditors but said the carrier's 16 bank accounts had been frozen by the court.

Canadian Superior Energy Inc said on Thursday that a Canadian court had extended its creditor protection to May 4, Reuters reported. The oil and gas producer said the extension under the Companies' Creditors Arrangement Act by a Calgary, Alberta, court meant it can continue its restructuring while keeping its creditors at bay. Canadian Superior originally won protection from the court on March 6. The junior oil producer said that while the order is in effect, it would work with a court-appointed monitor as it goes forward with its plan of arrangement for its creditors.

The German finance ministry Thursday confirmed it has received a report from PricewaterhouseCoopers LLP saying the default risk at troubled mortgage financier Hypo Real Estate Holding AG could amount to up to 60% of total assets, but only if the bank went bust without the government taking a stake, Dow Jones Newswires reported. Finance ministry spokesman Stefan Olbermann said that the finance ministry has had a copy of the report by PwC since Tuesday. Olbermann said: "It refers to an insolvency of Hypo RE without the federal government taking a stake.

The U.K. economy’s contraction in the fourth quarter was deeper than previously estimated as consumer spending and construction slumped the most since 1980, Bloomberg reported. Gross domestic product fell 1.6 percent from the third quarter, exceeding the prior measurement of 1.5 percent, which was also the median forecast of 27 economists in a Bloomberg News survey. Construction dropped 4.9 percent and consumer spending declined 1 percent.

The International Monetary Fund reached a deal with Serbia on Thursday to provide a 27-month, 3 billion euro loan to help the country address its vulnerability to the financial crisis, The New York Times reported. The agreement for the loan of about $4 billion was announced at a news conference in Belgrade by Serbian government officials and Albert Jaeger, a fund representative. The deal, which still requires the approval of the monetary fund’s board in Washington, will force painful budget cuts on Serbia, the country’s finance minister, Diana Dragutinovic, told reporters.

More than a third of management buyouts in the U.K. since the start of the year occurred at companies in receivership, the U.K.'s form of bankruptcy, as private-equity firms target failed businesses, The Wall Street Journal reported. Research on the first quarter of 2009 by the Centre for Management Buyout Research shows companies in receivership surpassed family-owned and closely held businesses as a source of management buyouts for the first time since CBMOR began gathering data in 2000. Since the start of the year, of 61 U.K.

Lombard Group has appointed a liquidator to both its Tasman Mortgages subsidiaries ahead of an Inland Revenue application to wind up one of the companies over unpaid tax, The National Business Review reported. Lombard says putting both companies into liquidation will assist in "concluding their affairs." However, court reporter Bob Dey reports that the move comes too late, just four days before a court hearing of Inland Revenue’s application. This means the High Court may void the voluntary appointment of Lombard’s chosen liquidator, Stephen Underwood of Decisive Securities.

The British division of HSBC PLC said Wednesday that it may lay off as many as 1,200 staff following a review of operations, although the Unite union claimed that 2,900 staff would be affected. HSBC UK said the 1,200 cuts represent about 2% of its 58,000 employees in Britain and are being made in information technology, human resources and other support operations -- not in front-line branch staff. Some employees would be able to take other positions within the company, HSBC said.

The crash of Seoul’s Kumkang Valve Mfg. Ltd. came not because orders dried up but after the fallout from currency contracts that Chief Executive Officer Choi Kyung Shik signed with banks and now says he didn’t understand, Bloomberg reported. In September, Kumkang filed for bankruptcy because of changing exchange rates and terms of the deals. In November, one bank closed the last of Choi’s contracts, costing him $15 million, half of his annual revenue last year. Choi’s firm joined more than 50,000 businesses around the globe that are in a similar predicament.