Archegos Capital is preparing for insolvency, triggered by banks’ attempts to recoup some of the $10bn they lost on its soured bets in March, the Financial Times reported. The family office run by Bill Hwang has hired restructuring advisers to assess potential legal claims from banks and to plan for a possible winding down of its operations.
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Liberty Steel Group said on Wednesday that it had appointed a committee to restructure and refinance the group after Greensill Capital, its biggest lender, filed for insolvency in March, Reuters reported. The move comes after Sanjeev Gupta’s family conglomerate GFG Alliance announced that its Australian unit had agreed terms to refinance its exposure to Greensill. Liberty Steel, which is also under the GFG umbrella, said in a statement that four new board directors would form a Restructuring and Transformation Committee (RTC) to focus on fixing or selling underperforming units.
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While the drama of Greensill’s collapse is unfolding in financial centers like London and Zurich, and has sparked a scandal at the top of British politics, blue-collar towns could face the worst consequences if GFG fails to refinance, the Wall Street Journal reported. GFG employs about 35,000 people, mainly in economically deprived parts of Europe, Australia and the U.S., with some sites at risk of closure if Sanjeev Gupta doesn’t secure new finance and governments don’t step in.
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Company insolvencies in England and Wales fell to their lowest level in more than thirty years during the first three months of this year, as government support measures helped businesses hit by the pandemic to ward off bankruptcy, the London Times reported. Britain suffered its sharpest fall in economic output in more than three centuries last year, but government-backed lending schemes enabled companies to borrow more than £75 billion to navigate cashflow problems.
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It was a flashpoint in the world of distressed investing: Sanjeev Gupta’s infamous metals empire was falling apart as Greensill Capital imploded, Bloomberg reported. As turnaround specialists sought to grab debt of one his key assets on the cheap, a single U.S. private-equity firm swooped in to buy up the lion’s share — at full price. While the supply-chain saga has sparked a lobbying scandal in the U.K. political establishment, for troubled credit creditors it shows the everyday challenges of deploying the $15 billion lying idle in distressed funds.
Shares rose in early European trading on Friday after retreating in Asia as the latest batch of economic data provided mixed signals about prospects for the recovery from the pandemic, the Associated Press reported. Two surveys showed Chinese manufacturing expanded in April but growth appeared to be slowing. Figures showed Europe’s economy contracted in the first three months of the year, while the U.S. economy steamed ahead, growing at a 6.4% annual pace.
Fewer people are defaulting on loans due to the pandemic than expected, two major banks have said and the BBC reported. NatWest Group, which owns RBS, was able to release £102m it had set aside for bad loans in the first quarter after "better than expected" repayments. Standard Chartered meanwhile took a $20 million hit from bad loans in the same period — down by $354 million from the previous quarter. Earlier this week, HSBC and Lloyds both reported a similar trend.
Ulster Bank swung into an operating profit of €13 million in the Republic in the first quarter of the year as it freed up money that was previously set aside to cover bad loans, while its U.K. parent said that plans to wind down the unit over the coming years remain “on track,” the Irish Times reported. The Dublin-based lender’s loan book dipped by €200 million to €19.8 billion during the first three months of the year, as loan repayment outpaced new lending, while deposits dipped by €100 million to €100 million to €21.7 billion, driven by a reduction in commercial balances.
U.K. Prime Minister Boris Johnson is being investigated by the country’s electoral watchdog following allegations that he failed to declare who funded an upgrade of his residence at 11 Downing Street, the Wall Street Journal reported. The Electoral Commission, which regulates political donations, said that it had been in contact with Johnson’s Conservative Party after concluding there “are reasonable grounds to suspect that an offense or offenses may have occurred,” amid allegations that undisclosed donors provide funds for a refit of his official residence.
World shares advanced Thursday ahead of the release of U.S. economic growth data and following a speech by President Joe Biden outlining ambitious plans for beefing up early education and other family oriented policies, the Associated Press reported. London’s FTSE 100 jumped 0.7% to 7,013.40. In Paris, the CAC40 climbed 0.6% to 6,344.17. Germany’s DAX slipped 0.2% to 15,262.39 as a report showed weakening consumer confidence. The future for the Dow industrials rose 0.4% and that for the S&P 500 surged 0.6%. U.S.