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Daily Insolvency News Headlines

Mon., February 8, 2010

  • Insolvency Overhaul Will Help Australian Bond Sales, ANZ Says
    Mon., February 8, 2010

    Australian firms will find it easier to sell bonds in the U.S. after Prime Minister Kevin Rudd’s government said it would reverse a court decision that ranked shareholders equally with creditors, Australia & New Zealand Banking Group Ltd. said, BusinessWeek reported. Some U.S. private placement investors had put Australian bonds into the “too-hard basket” on concerns that the Sons of Gwalia ruling would lower their ranking in the event of a default, ANZ head of debt capital markets Brad Scott said in a Feb. 5 briefing to investors. In the case brought against mining company Sons of Gwalia Ltd. by shareholder Luka Margaretic, the High Court ruled in 2007 that when an insolvent business goes into external administration, certain compensation claims by shareholders had equal footing with those of unsecured creditors. The government said Jan. 19 it would reverse the decision. “Sons of Gwalia was really making U.S. investors nervous,” Scott said. “With that issue now being resolved by federal government, there has been a lot of positive noises from investors about increasing their buying of Australian deals.” Read more.
  • Kumho Asiana Averts Court Receivership
    Mon., February 8, 2010

    Kumho Asiana Group barely avoided court receivership, after group Honorary Chairman Park Sam-koo and other founding members agreed to offer their stakes in group units as collateral in return for fresh loans, the Korea Development Bank (KDB), the main creditor of the ill-fated group, said Monday, The Korea Times reported. It added that they also agreed to manage the group's units separately. Under the agreement, Park Chan-koo, former chief of the group's chemical division, will co-run Korea Kumho Petrochemical with his son, while Park Sam-koo will manage Kumho Tire and Kumho Industrial, the bank added. After family members failed to reach an agreement on how to put forward their properties to creditors by the Feb.7 deadline, the state-run KDB and other banks hinted at taking drastic steps, including putting Kumho Industrial under court receivership, to force the founding family to fulfill their promise. They even considered placing Kumho Petrochemical, the group's de facto holding firm, under a debt repayment program in a bid to take away management control from the family. But with Kumho owners pledging to fulfill their promise, KDB and nine other creditors decided Monday to proceed with the initial restructuring scheme of the nation's once-ninth largest conglomerate. Read more.
  • Subcontractors Unlikely To See Austrac Money
    Mon., February 8, 2010

    The collapse of a Pyrmont building company, leaving $27 million in unpaid debts, has left many small businesses facing ruin, The Sydney Morning Herald reported. Austruc Constructions entered voluntary administration last month after declaring itself unable to repay debts owed to more than 150 subcontractors it had engaged on construction projects across the state. The majority of the subcontractors are small family-owned businesses. Many are owed hundreds of thousands of dollars. Austruc, part of a group of companies owned by the businessman Sam Catalano, made unsecured loans to group companies totalling $19 million, which in turn borrowed money to finance property purchases and development projects. An insolvency consultant, Mark Franklin, of Condon Associates, said any liquidation proceeds were likely to be distributed against secured debts owed to banks. Austruc's creditors were likely to have little recourse, other than to extract payment from the third-party developers that had employed Austruc's services. The NSW secretary of the Construction Forestry Mining & Energy Union, Andrew Ferguson, said the state's security of payment legislation was inadequate to deal with protecting the interests of subcontractors when builders went bust. Read more.
  • Unions Threaten More Strikes Against Greek Government
    Mon., February 8, 2010

    Greek civil servants warned on Monday they could call more strikes if the Socialist government unveils tough austerity measures to cut its deficit and ballooning public debt, Reuters reported. The ADEDY public sector union already plans a 24-hour strike on Wednesday as Prime Minister George Papandreou puts the finishing touches to a deficit-cutting plan, endorsed by the European Commission to pull Greek finances back from the brink. His socialist government has promised to tighten one of Europe's leakiest tax systems and freeze public sector wages in a bid to slash Greece's deficit from 12.7 percent last year to below the EU's 3 percent ceiling by 2012. The government's emergency tax reform and wages bills are expected to be unveiled this week and become law by the end of the month, but details have angered Greece's powerful unions. Read more. >
  • G-7 Split on Finance Regulation
    Mon., February 8, 2010

    Group of Seven financial leaders agreed on the need to continue supporting their economies until financial recovery takes a firmer hold, but they have yet to reach a consensus on how to overhaul regulation of their financial sectors, The Wall Street Journal reported. French Finance Minister Christine Lagarde said leaders were unable to make collective decisions on a U.S. proposal to limit proprietary trading at commercial banks, partly because financial institutions in countries including France, Germany and Japan aren't plagued by the same issues as U.S. banks. She added that "it could be quite difficult to define actually what is proprietary trading as opposed to operating in the best interest of banks' clients, in relation to hedging for example." G-7 leaders said they would continue providing support to their economies until the financial recovery has taken firm hold. "We are committed to maintaining support to the economy," U.K. Chancellor of the Exchequer Alistair Darling said. "We are confident that we are going in the right direction, although we remain cautious." Read more. (Subscription required.)
  • Germany Tackles Tax Evasion
    Mon., February 8, 2010

    German officials said they were weighing fresh offers from informants after deciding last week to pay €2.5 million ($3.4 million) for the names of suspected tax evaders in what is rapidly evolving into a broad attack on Switzerland's system of banking secrecy, The Wall Street Journal reported. Over the past week, German officials have launched a tactical and rhetorical assault on Swiss banking, a strategy that appears to be aimed at undermining both Switzerland's tradition of secrecy and its pre-eminence as a tax refuge. In addition to agreeing to purchase the data, a move Switzerland vociferously protested, Germany signaled it would likely share whatever information it secures with other countries. "There's no future for bank secrecy," German Finance Minister Wolfgang Schäuble said in a Saturday interview with German newspaper Süddeutsche Zeitung. "It's finished. Its time has run out." Authorities from the German state of North Rhine-Westphalia, where the data had been offered, reached a deal in recent days with a confidential informant to acquire an initial trove of secret Swiss banking data, a German official familiar with the investigation said over the weekend. The records, which authorities said originated from a Swiss bank, include account details of some 1,500 Germans suspected of using the Swiss accounts to hide undeclared money. Read more. (Subscription required.)
  • Hydro Mobile Restructures, Launches New Products
    Mon., February 8, 2010

    Canadian mast climbing manufacturer Hydro Mobile has restructured under new owner, Quebec-based AGF Group. The company has come out of the Canadian Companies' Creditor's Arrangement Act, which is similar to Chapter 11 in the United States. Hydro Mobile will remain as the same brand with the same face and products, the company told American Lift & Handlers at the recently held World of Concrete. They will focus their energies toward new areas, such as industrial markets. AGF Group is a small scaffolding company specializing in rebar and installation. It is owned by a single person and does $270 million in business a year. Read more.
  • Kingfisher Air Hires Seabury To Advise On Recast
    Mon., February 8, 2010

    Kingfisher Airlines Ltd has roped in US firm Seabury Aviation and Aerospace to advise on restructuring its operations and help the airline boost performance on the back of a reviving domestic industry, the Economic Times of India reported. Prakash Mirpuri, Vice President, Corporate Communications, told Retuers on Monday that fleet optimisation would be one of the areas the consultancy would advise Kingfisher on. The airline has a fleet size of 66 aircraft. Mirpuri did not say how soon Seabury would come up with its recommendations. Seabury provides expertise to the aviation and aerospace industries in areas of strategy, business planning, network development and fleet optimisation. The decision to rope in Seabury comes after Kingfisher reported a net loss of Rs 4.2 billion for the quarter ended December. Its listed peers Jet Airways and SpiceJet posted net profits for the same period, helped by an upturn in domestic air traffic. Read more.
  • Dexia, EU Agree on Restructuring
    Mon., February 8, 2010

    Government-finance specialist Dexia SA agreed on a restructuring deal with European regulators Friday, ending months of indecision over its future, The Wall Street Journal reported. The lender, which was handed a €6.4 billion ($8.7 billion) lifeline when it became engulfed in debt during the credit crisis, promised to sell off about 35% of its balance sheet to offset the competitive advantages it gained from state subsidies and guarantees. Before the credit crisis, Dexia was a major lender to local governments. However, those long-term loans were often funded from short-term borrowing in the money markets. When these dried up during the crisis, the bank ran short of cash. At a news briefing in Paris on Sunday, Dexia Chief Executive Officer Pierre Mariani told reporters that the company's transformation over the next few years would see retail activities expand as a share of overall revenue. By 2014, Dexia expects 60% of overall revenue to come from retail and commercial banking; 20% from asset management, insurance and investor services; and 20% from the bank's business line that does financing work for governments, Mr. Mariani said. Read more. (Subscription required.)
  • Fifty Jobs Go As Salthouse Marine Closes
    Mon., February 8, 2010

    Salthouse Marine Ltd, a historic and respected New Zealand maker of motor yachts, is in the hands of a receiver and is closing with the loss of about 50 jobs, TVNZ reported. Receiver John Price of HPL Partners said he was called in last Thursday by a private investor. "I have closed the company and all of the staff have been laid off," Price said. Two boats near completion were being finished and a decision was yet to be made on a large project. He declined to put a figure on the size of the receivership. The company's boats are described as hand built with lavish interiors, while designed for rugged sport fishing. Read more.