Daily Insolvency News Headlines

General Motors Europe head Carl-Peter Forster is quitting in disgust at GM's decision to hang on to its European unit Opel/Vauxhall, a well-informed source told Agence France-Presse on Friday. The source confirmed a report in the Spiegel magazine, saying: "I expect a withdrawal by Forster within a week." GM executive vice president David Reilly would replace Forster, as GM seeks to soothe anger over its decision to abandon this week a sale of Opel to Canadian group Magna and Russian partner Sberbank, Spiegel said. Forster was a keen supporter of Magna's bid. On Thursday, GM chief executive Frederick "Fritz" Hendersen told reporters in Detroit that he would pick a new management team for Opel and its British sister brand Vauxhall within "days or weeks." Read more.

U.K. carrier British Airways PLC Friday posted its worst first-half results in history and now is targeting almost 5,000 job cuts by the end of the fiscal year, The Wall Street Journal reported. The airline aims to ax 4,900 positions as it widens its savings plan beyond the U.K. It shed 1,900 workers in the first half and now intends to cut a further 3,000 personnel world-wide by March 31. Of that total, 3,700 job losses will be in the U.K. BA currently employs 38,704 workers. The move likely will increase union anger. Unite, which represents about 70% of BA's work force, Thursday failed to secure a high court injunction to prevent BA from making changes to cabin crew working practices. A strike ballot will now go ahead with results expected to be announced Dec. 14. Depending on the result, a strike could still hit BA as soon as Dec. 21. BA said its first-half net loss for the period ended Sept. 30 widened to £217 million (about $360 million) from £49 million a year ago. Read more. (Subscription required.)

Creditors of Saad Investments Company Ltd (SICL) held their first official meeting on Thursday, accountancy firm Grant Thornton said, taking a next step in the troubled firm's restructuring process, Reuters reported. Banks are seeking repayment of a loan of up to $2.8 billion taken out in 2007 by Cayman Islands-registered SICL, a unit of Saudi investment firm Saad Group. Regulators and bankers are grappling with up to $22 billion of debt restructurings at Saad and a second Saudi firm, Algosaibi, viewed by some as the biggest financial blow to the region since the global credit crisis began. The two groups are involved in a complex legal dispute, and Algosaibi has asked a New York court for a default judgement against the billionaire head of Saad, Maan al-Sanea, over allegations he defrauded the company out of $10 billion. Read more.

Former clients of Lehman Brothers' European arm were struck a further blow Friday when the U.K. Court of Appeal rejected an appeal from the bank's administrators to use a bespoke legal tool to expedite the return of $9 billion in client assets, The Wall Street Journal reported. PricewaterhouseCoopers, or PwC, had appealed to the court last month to be granted permission to use a legal tool called a "scheme of arrangement." The tool was designed to speed up the return of assets by dealing with Lehman's clients collectively, rather than negotiating bilateral agreements. Steven Pearson, joint administrator and partner at PwC, said he was disappointed by the ruling. "It restricts the options available to the Administrators for the return of client assets and, in particular, the degree of protection afforded to clients who receive assets back from the company," he said. However, PwC has been working on a "back-up" plan, in case the appeal failed, which Mr. Pearson said will now go ahead. The alternative plan, the full details of which haven't been released, is a contractual solution that has many of the same provisions as the scheme of arrangement, but doesn't require court approval. Read more. (Subscription required.)

KPMG, the administrators of First Quench Retailing, which owns British off-license chains Threshers and Wine Rack, said on Thursday that 373 stores within the group will close, leading to over 1,738 job losses, Reuters reported. First Quench Retailing, which went into administration last week, operates around 1,200 stores in Scotland, England and Wales and employs 6,300 people. Richard Fleming of KPMG said 247 of the stores will continue to operate until Nov. 25 and 126 until Dec. 2. He added liquidation sales will take place at the loss-making stores, which are to be announced on Friday. KPMG is confident it can sell the remaining stores, which also include The Local, Bottoms Up, Victoria Wine and Haddows brands, and a number of potential buyers are looking at the business. Fleming told Reuters indicative offers have been requested for Nov. 13 with a view to completing a transaction, or multiple transactions, by Nov. 26. Read more.

The number of German companies filing for bankruptcy protection was up 12.3 percent on the year in August, even as the economy slowly emerged from recession, official data showed Friday, BusinessWeek reported on an Associated Press story. Courts registered 2,619 bankruptcy filings in August, the Federal Statistical Office said. Over the first eight months of the year, 21,807 bankruptcies were registered. Germany's export-fueled economy, Europe's biggest, returned to modest growth in the second quarter following a deep recession. Preliminary third-quarter figures are due next week and are expected to show further growth. However, the government and economists still are forecasting that gross domestic product will shrink by 5 percent this year as a whole compared with 2008. Also Friday, the statistical office said German production of pig iron was down 16.8 percent on the year in October and production of raw steel fell 11 percent. Read more.

Megha Mittal will buy insolvent German luxury fashion house Escada for an undisclosed price, the company said on Thursday. All key assets of Escada's operating business as well as shares in its subsidiaries will be transferred to Mittal's trust, excluding those that serve as guarantor for the Escada bond, Reuters reported Escada, once one of the world's top fashion labels, filed for insolvency in August after years of diminishing sales took their toll and a broad restructuring plan failed to win approval from bondholders. Mittal won the bidding war for Escada against Sven Ley, son of Escada founder Wolfgang Ley. He said on Tuesday he had teamed up with the former head of Gucci, Giacomo Santucci, and Italian investment group Borletti to mount a rescue bid. Read more.

A record number of people were declared insolvent in England and Wales in the third quarter of 2009, according to figures from the Insolvency Service, the BBC reported. There were 35,242 personal insolvencies, up 28% from the same period last year and an increase of 6.6% on the previous three months. This extended the record number which was reported earlier this year. The record numbers are due in part to the number of people who have found themselves out of a job during the recession, but with debts to pay off. This was coupled with the onset of the credit crunch, which drew back the amount of cheap credit available and meant some were unable to borrow their way out of immediate debt problems. The flat housing market also prevented them selling their homes, or drawing on equity. Read more.

The number of company liquidations in England and Wales in the third quarter of 2009 fell 4.7% on the previous quarter - the first time the rate has fallen this year and possibly a sign that the impact the economic crisis has had on U.K. companies is starting to abate, Dow Jones reported. However, the 4,716 compulsory company liquidations in the third quarter, adjusted on a seasonal basis, still represents an increase of 14.6% on the same period a year earlier, data from the government's Insolvency Service showed Friday. Liz Bingham, U.K. and Ireland head of restructuring at Ernst & Young, said low interest rates and a recuperating economy had helped to lower the rate of corporate insolvency in the third quarter of 2009. Other industry experts cautioned that the drop could be temporary. “Businesses that have teetered on the edge all year are in danger of toppling over," said Andrew MacCallum, managing director at restructuring and turnaround firm Alvarez & Marsal. "Many are still struggling to pay down debt and will not be granted extensions forever. Prematurely-confident companies will restock too quickly and will be left high and dry as demand fails to materialise.” Read more. (Subscription required.)

A sukuk default by Kuwait's Investment Dar and debt restructuring at Saudi conglomerates have shaken confidence in the $1 trillion Islamic finance industry, fanning debate about investors' protection and investors' rights, Reuters reported. Billed as safer than traditional banking due to requirements for assets to underpin deals, Islamic bond holders worry they may not have any more legal safeguards than conventional counterparts in case of default, or perhaps even less, partly due to the untested nature of the process. Debt restructurings at Saudi conglomerates Saad Group and Algosaibi have put about $9.6 billion of investments at risk at 30 Gulf banks alone, and the fate of Dubai government-owned property firm Nakheel's $3.5 billion Islamic bonds, which mature in December, is being closely watched. Read more.