Daily Insolvency News Headlines

Finance company Boston Finance, one of the many currently in a moratorium, has been finally put into receivership, The New Zealand Herald reported. Grant Graham and Brendon Gibson of KordaMentha have been appointed receivers, formally ending its moratorium arrangement which has been in place since March last year. Today's move was widely expected. A press release says it is "the view of both the trustee and directors of Boston Finance is that seeking an extension to the moratorium would have resulted in a costly process for investors, with little or no benefit to them." At the time of the moratorium in March 2008, 1,300 investors had approximately $38.5 million invested in Boston Finance. Since then, $14.24 million has been repaid to investors equating to a return of 37 cents in the dollar. This includes a distribution of $2.3 million to be made now. Read more.

The liquidator of failed telecommunications company One.Tel will consider legal action against former directors James Packer and Lachlan Murdoch after a NSW Supreme Court judge found the One.Tel founder and chief executive Jodee Rich did not mislead directors about the state of the company's finances three months before it collapsed. ASIC spent more than five years pursuing Rich, alleging Rich and finance director Mark Silbermann misled the board and the market about the company's true financial position and breached their director's duties by not ceasing trading three months before it finally collapsed into voluntary administration in May 2001. Packer and Murdoch have previously said they were "profoundly misled" about the state of the company's financial position, SmartCompany.au reported. Read more.

In a related story, The Australian reported that James Packer is in no mood for any settlement over the collapse of One.Tel, telling the liquidator pursuing him over a cancelled $132 million rights issue to, in effect, bring it on. Read more.

The U.K. government is likely to have to borrow even more than it planned this fiscal year, making the scale of the tax rises and spending cuts that will be needed to reduce its debt to manageable levels even greater, The Wall Street Journal reported. And in order to ensure that those efforts to hold onto the U.K.'s triple-A credit rating don't derail the hoped for economic recovery, the Bank of England is likely to keep its key interest rate at a record low for longer than other leading central banks. The Office for National Statistics reported Thursday that the public sector borrowed £11.4 billion ($19.08 billion) in October, the first deficit recorded for that month since records began in 1993. The figure was much larger than the £7 billion economists had expected. Government borrowing in the first seven months of the fiscal year ending March 2010 totaled £86.9 billion. That makes it very likely that the government will have to borrow more than the £175 billion it planned for in its March budget, with economists estimating the eventual figure would be between £195 billion and £215 billion. If it had been able to stick to its target, the government would have ended the year with a budget deficit equivalent to 12.4% of gross domestic product. Read more. (Subscription required.)

Troubled Canadian retailer Cotton Ginny Inc, with over 120 stores, has filed for bankruptcy, less than one year after it emerged from creditor protection, Fibre2fashion.com reported. The latest bankruptcy filing, dated Nov. 2, lists the company's total liabilities at $22.5 million. No assets are listed. Cotton Ginny is run by Tony Chahine, who also goes by the name Antoine Chahine Badr. The clothing firm again filed under the Companies' Creditors Arrangement Act, known as CCAA, in February 2008. Through the restructuring, which resulted in store closures and job cuts, the clothing maker began to focus on environmentally friendly clothing and plus sizes in a bid to turn its business around. A report by court-appointed monitor Mintz & Partners, dated Jan. 20, 2009, noted that "the company has not complied with all of its obligations set out" in amendments to the restructuring plan. Cotton Ginny closed a handful of stores in February 2009, including its flagship store at the Yorkdale Shopping Centre after a difficult Christmas season. The most recent bankruptcy filing was made in Mississauga, where it is headquartered. Read more.

A Halifax company that offered week-long sailing cruises in Nova Scotia, Newfoundland and Labrador, Quebec and the Caribbean has ceased operations due to a cash shortage. Canadian Sailing Expeditions, which has been under protection from its creditors since June 2008, stopped doing business on Friday, The Chronicle Herald reported. “We basically ran out of money to continue to operate Canadian Sailing Expeditions. We can’t really do anything about that," Doug Prothero, one of the principals of the company, said Tuesday during a phone interview. The startup company ran into financial difficulty during its multimillion-dollar reconstruction of the Caledonia, a 74-metre barquentine. The company will appear Friday in Nova Scotia Supreme Court to request an end to the court proceedings that have protected it from creditors under the Companies’ Creditors Arrangement Act, according to court-appointed monitor BDO Dunwoody Goodman Rosen Inc. Read more.

Cell phone handset maker Sony Ericsson will move its North American headquarters from North Carolina to Atlanta and close a half-dozen sites worldwide as it retrenches against what it expects will be a tighter market and cuts about 1,600 jobs globally, The Associated Press reported. The joint venture between Sweden's LM Ericsson and Japan's Sony Corp. will consolidate product development operations by closing sites in Research Triangle Park; Seattle; Miami; San Diego; Kista, Sweden; and Chennai, India, spokeswoman Stacy Doster said. The site closures are new elements of a plan announced in April to cut a worldwide staff of 10,000 by 20 percent, Doster said. About 400 jobs have been cut since then and about 1,600 remain to meet that goal by the middle of next year, she said. The cost-cutting follows the loss of 2,000 jobs last year. Read more.

Shares in Japan Airlines slid to a record low after the transport minister rattled investors by saying bankruptcy was still a possibility, even as U.S. carriers lined up with offers of financial support, Reuters reported. Delta Air Lines said it and partners in the SkyTeam alliance were ready to offer $1 billion, including a $500 million equity investment, in return for JAL defecting from the Oneworld alliance and its partnership with American Airlines. The offer follows news last week that private equity firm TPG was considering partnering with American Airlines on an investment in JAL. The Nikkei newspaper said on Wednesday that investment could be as big 100 billion yen ($1.1 billion). Delta and American have been courting JAL for the past few months, eager to gain access to its network to fast-growing Asian markets and a stronger foothold in Japan. But the talks have been overshadowed by much larger problems facing Asia's largest airline by revenue. JAL is seeking a state bailout and, by a previous government task force estimate, needs 300 billion yen in capital, or six times the offer from SkyTeam. Read more.

European bankers on Tuesday warned that excessive regulation in response to the global financial crisis would endanger growth in the real economy, although some international officials insisted tougher rules and an end to taxpayer-funded bank bail-outs remained essential for recovery, the Financial Times reported. Stephen Green, chairman of HSBC, Europe’s biggest bank, said there was a “real danger” that doctrinaire policy and demands that banks hold more capital could have perverse effects on the economy and society. “Cumulative enhancement of capital ratios at the wrong stage of the economic cycle could easily withdraw credit from the economy and cause a new credit crunch,” he told a conference in London. “This is turn would interrupt and delay a fragile economic recovery.” Emilio Botín, chairman of Spain’s Santander, the biggest bank in the eurozone by market capitalisation, defended the role of large international banks and warned that “indiscriminate tightening” of rules would be counterproductive. Read more. (Subscription required.)

A pioneering biotechnology company that spearheaded genetic research on common diseases and offered personalised medical tests has filed for bankruptcy, The Guardian reported. The Icelandic firm, deCODE Genetics, was one of the first in the world to market DNA tests for disease risk directly to the public, and had invested heavily in basic research to uncover the genetic origins of conditions such as breast and prostate cancer, heart disease and diabetes. It has been in serious financial trouble since autumn last year when it informed investors it had insufficient funds to carry on trading without selling off parts of its business. In a statement today the company said it would now sell "substantially all of its assets", including its huge DNA biobank, which contains genetic information on 140,000 Icelanders. The 13-year-old firm had already explored options to sell or license some of its operations, including its drug discovery wing, after failing to restructure its debts or obtain more funding. Read more.

The European Commission on Wednesday approved a restructuring plan and a state-guaranteed illiquid asset back-up facility provided by the Dutch government to ING banking and financial services group, Reuters reported. The Commission, competition watchdog of the 27-nation European Union, said in a statement it had approved the plan following an additional agreement between ING and the Dutch government. "ING will pay a significant proportion of the restructuring costs, ING's long term commercial viability will be restored, and the aid will not lead to undue distortions of competition," the EU's executive arm said. The restructuring plan will see ING reduce its risk profile and the complexity of its operations. It will also sell its insurance activities and its Westland Utrecht Hypotheekbank business unit, the Commission said.Read more.