Ireland

Aer Arann’s future was secured yesterday after Ms Justice Mary Finlay Geoghegan agreed in principle to approve a modified scheme of arrangement put forward by the airline’s examiner, The Irish Times reported. This followed an 11th-hour deal between the Revenue Commissioners and Stobart, a British transport and logistics group that proposes to inject €2.5 million into Aer Arann. The Revenue Commissioners will now receive €436,000 that it is owed as a super-preferential creditor within 19 months.

Nama loaned an extra €47 million to developers earlier this year, even though many were not repaying debts they already owed the asset management agency, The Irish Times reported. In the first six months of this year, Nama paid five Irish banks a total of €8.4 billion to acquire property loans with a nominal value of €16.4 billion. Figures for the second quarter, released yesterday, show of the 1,190 debts it acquired, 887 were “non-performing”, meaning the developers who originally borrowed the money were not meeting interest or principal repayments.

The cost of insuring Irish government debt against the risk of default hit a record as investors continued to fret about the cost of bailing out the country's banks, Dow Jones Daily Bankruptcy Review reported. Insurance costs for other highly indebted euro-zone debt also rose amid ongoing worries about government finances. Insurance on $10 million of Irish debt, as measured by five-year credit default swaps, rose $27,000 to $525,000 a year, according to data provider Markit. One trader said Allied Irish Banks PLC's statement that the disposal of its U.K.

Property investor Paddy McKillen has lost his Commercial Court action to prevent the transfer of some €2.1 billion of his loans to the National Asset Management Agency (Nama), The Irish Times reported. Nama had argued the size of the loan portfolio represented a “systemic risk” to the Irish financial system, justifying acquisition in the national interest. The case represented the first major challenge to the manner in which Nama operates.

Ireland's central bank proposed on Thursday stricter requirements for how financial services firms deal with customers as part of efforts to beef up consumer protection in the aftermath of a disastrous property crash, Reuters reported. Years of reckless lending brought Ireland's banks to the brink of collapse and have left many borrowers struggling to repay hefty mortgages. The Central Bank of Ireland wants lending practices tightened to prevent a repeat of the banking crisis.

The future of DVD rental chain Chartbusters hangs in the balance just 18 months after the High Court approved a rescue plan for the troubled company, The Irish Times reported. The company is understood to be preparing to appoint a liquidator to wind up the business, which operates about 20 stores and employs an estimated 170 full- and part-time staff in the Republic. Chartbusters began as a DVD rental outfit in the early 1990s, but branched into internet kiosks and tanning booths as competition put this business under pressure over the last decade.

Ireland's embattled Prime Minister Brian Cowen admitted Wednesday that accelerating €15 billion ($20.78 billion) in planned budget cuts will damp economic growth, but warned the country runs the risk of "not being able to borrow at all" if the steps aren't taken, The Wall Street Journal reported. Ireland's reputation has taken a battering on international markets amid doubts about its ability to bring its deficit, the highest in Europe, back under control. Record-high borrowing costs have forced the government to cancel the two remaining bond auctions planned this year.

When Anglo Irish Bank announced a long-awaited exchange offer for its junior debt last week, there was shock in the market at the harshness of the terms. There were also howls of protest privately from the debtholders themselves to the advisers of Anglo Irish, the institution bailed out nearly two years ago by Ireland’s government after being hit hard by the country’s property slump, the Financial Times reported. One irate investor described the offer as equivalent to a North Korean election.

Anglo Irish Bank’s former chief executive David Drumm has until Friday next to file a statement of his assets and liabilities in his bankruptcy proceedings in the US, the Commercial Court in Dublin heard yesterday, The Irish Times reported. Mr Justice Peter Kelly adjourned Anglo’s actions against Mr Drumm and his wife as a result of Mr Drumm’s unexpected decision earlier this month to file for voluntary bankruptcy in the US.

Anglo Irish Bank’s offer to swap its subordinated debt for new bonds is “tantamount to a default” because of the penalties inflicted on investors who refuse to take part, according to the Canadian credit ratings agency, DBRS, The Irish Times reported. The bank’s non-senior ratings will be reduced by one notch step to D for “Default” after Anglo completes the exchange, the Toronto-based agency said. The nationalised bank is offering investors 20 cents on the euro in new bonds on dated subordinated debt and 1 cent for every €1,000 face amount for those declining to take part.