Bankruptcy

Breakdown: Why Steinhoff’s complexity may save it

24 Jan 2018

An accounting scandal has exposed the retailer’s warren-like structure. Creditors who are owed close to 11 billion euros face a fight for repayment. But the prospect of a messy restructuring may help keep Steinhoff afloat for now. Breakingviews offers a guide through the maze.

Elliott finds another target for its power play

23 Jan 2018

FirstEnergy shares spiked after a $2.5 bln capital injection from the activist hedge fund and others. Elliott is reprising a ploy that made NRG the best performer in the S&P 500 last year. That deal had hiccups though, and the latest one will too. Shareholders should buckle up.

Chancellor: Carillion’s flaws are common to many

22 Jan 2018

The collapsed UK construction firm’s problems may look idiosyncratic. But its problems with “onerous contracts” were exacerbated by a balance sheet stuffed with intangible assets and ultimately shaky assumptions. These issues are not peculiar to Carillion.

Carillion collapse exposes new bank folly

22 Jan 2018

The failed UK contractor used lenders to finance 412 mln pounds of payments to suppliers when cash was running low. The process, known as “reverse factoring”, seems a lucrative way for banks to provide short-term credit. But insolvency exposes the true extent of the risks.

UK poorly placed to fight Carillion domino effect

17 Jan 2018

Ministers are fretting about Interserve, after fellow contractor Carillion’s collapse. If this were the banking sector, the state could deploy familiar tools to contain contagion. But the government’s dual role as client and bailout-wary market promoter complicates matters.

Carillion pension hole is ominous for UK companies

16 Jan 2018

Before its collapse the construction firm estimated it owed 587 million pounds to retirees. Britain’s pension protection fund, however, reckons the shortfall is nearer 900 million pounds. That’s bad news for Carillion’s creditors – and for other groups with big liabilities.

Carillion collapse is UK outsourcing stress test

15 Jan 2018

The troubled construction firm has gone into liquidation after failing to secure fresh funds. The UK government was right not bail out one of its key suppliers. Nevertheless, a messy cleanup will raise questions about the risks in handing state work to private contractors.

ICO represents last-gasp hope for struggling Kodak

9 Jan 2018

The iconic company went bankrupt by fumbling the shift to digital images. Now it’s betting its future on an initial coin offering to help photographers sell their work. The crypto buzz more than doubled its stock, but is unlikely to revive falling sales and profit.

Ambani’s debt cure is no elixir for shareholders

28 Dec 2017

Anil Ambani says he has rescued his Reliance Communications with a $6 bln firesale. That’s a relief for lenders, assuming buyers turn up as promised. But it’s not the moral victory the tycoon claims. Even if creditors play ball, investors are left with a much diminished company.

Alitalia needs help to regain cruising altitude

1 Dec 2017

The insolvent airline has attracted bidders including Lufthansa and easyJet. Its 12,000 staff make it look bulky compared to budget carriers. Though the Italian government opposes drastic layoffs, further cost-cutting is necessary to return the carrier to financial health.

RCom sets up trial run for Indian bankruptcy rules

14 Nov 2017

Anil Ambani’s struggling telecom operator has missed a payment on a $300 mln U.S. dollar bond. Offshore creditors could claim a default, testing the regime India established last year. A credible, reasonably speedy process would further boost the country’s booming bond market.

Venezuela’s Maduro enters alternate reality

3 Nov 2017

The OPEC member's socialist leader wants to restructure the ailing country's foreign debt, putting an alleged drug trafficker in charge of working out how. U.S. sanctions make any refinancing virtually impossible. But even default might not drive the hapless president from power.

Monarch suffers very British failure

2 Oct 2017

The airline’s past reliance on tourism to Egypt and Tunisia, now danger areas, started the rot. But the Brexit-induced slump in sterling worsened things, and a laissez-faire resistance to government intervention – unlike the German help handed to Air Berlin – finished the job.

Viewsroom: German election all about runners-up

21 Sep 2017

Chancellor Angela Merkel and her Christian Democrats should win more votes than rivals. But they’ll need coalition partners to form a government. Choosing among them promises to be a nail-biter. Also: the Toys R Us bankruptcy won’t be a total loss for its private-equity owners.

Toys R Us equity owners aren’t exactly wiped out

19 Sep 2017

KKR, Bain and Vornado privatized the retailer for $6.6 bln more than 12 years ago. Now their stock is worthless. Even without dividends, though, they’ve collected some $600 mln in fees, interest and other payments. It shows how buyout firms play the game in multiple ways.

Etihad’s airlines fail, but odd CDO remains aloft

17 Aug 2017

Air Berlin and Alitalia are insolvent. Their debt is probably worthless, except for an unusual collateralised debt obligation that part-owner Etihad used to fund them. It is trading at a price that suggests Etihad might bail it out. Fuzzy guarantees often end badly.

Buffett may have to turn on charm for Oncor encore

7 Jul 2017

Berkshire Hathaway is taking a second stab at Texas utility Energy Future, six years after a $2 bln investment led to big losses. Two other suitors failed to agree with regulators. Buffett's structure sounds smarter, but sealing the $18 bln deal could yet require some sweet talk.

Takata’s failure remodels auto-safety industry

26 Jun 2017

The airbag-maker filed for Chapter 11 with $10bln-plus of liabilities. Like Toshiba, this scandal reflects badly on Japan Inc’s governance and technical competence. This is a big opportunity for smaller Chinese-backed rival KSS, which gets most of the business for $1.6 bln.

India unsheathes new weapon in bad debt fight

5 May 2017

The government has granted the Reserve Bank of India new powers to force lenders to push errant borrowers into bankruptcy. That puts extra pressure on state banks to finally clean up their soured loans. Given the failure of more refined methods, the bludgeon is welcome.

Puerto Rico restructuring will be no day at beach

3 May 2017

Congress gave the U.S. territory access to a form of bankruptcy. Now the board overseeing its finances, encompassing $70 bln of debt, has pressed the button. Creditors will get their day in court, and tidy plans in spreadsheets could end up as warped as in Detroit – or worse.