Creditors of MF Global UK arm ‘may get £2bn’

As much as $3.2 billion (£2 billion) could be returned to creditors of the British arm of failed broker MF Global, according to administrators at KPMG. Claims could reach $3.9 billion, and the administrator estimated a minimum of $2.8 billion is available to settle claims against MF’s estate. The US parent company filed for bankruptcy in October after being flooded with margin calls following a series of disastrous bets placed on eurozone government debt. The trustee handling the US bankruptcy is seeking funds from London, which may cut anything UK creditors receive.The failure to find a buyer for the business was humiliating for Jon Crozine, the former Goldman Sachs boss who saw MF as his Wall Street comeback. The firm quickly unravelled as its bonds were downgraded to junk and it admitted spiralling losses in its trading division. “In determining the claims, we are working to discount those we believe to be duplicative or spurious,” said KPMG partner Richard Heis. “There are still numerous work streams to be worked through but this estimated guide shows that there are circumstances where a full pay out is possible.” The company had assets of $41 billion and debt of almost $40 billion.

The Californian city of Stockton is set to become the largest US city to declare bankruptcy.

Mayor Ann Johnston told the city council which endorsed the move it was "the most difficult and heart-wrenching decision" they had ever faced.

But she said it had to be done to begin the recovery process.

The river port city of 290,000 - which lies 90 miles (144km) east of San Francisco - suffered badly during the US housing market crash.

Filing for Chapter 9 bankruptcy protection would allow the city to hold some of its creditors at bay while still paying for basic services like its police and fire department.

Drastic cuts

Continue reading the main story

“Start Quote

The fact is that the police department is shrunk and crime is crazy and there are no jobs”

Mike BrookingStockton coffee shop owner

The city is facing a projected $26m budget shortfall and a bankruptcy filing could come as early as Wednesday.

The housing boom was good to Stockton. Flush with property tax, the city developed its waterfront, with a new marina and sports complex, and negotiated generous pension and healthcare benefits for city employees.

But in the past three years, officials in the city have dealt with $90m (£57m) in deficits through a series of drastic cuts.

They eliminated one-fourth of the city's police officers, one-third of the fire staff, and 40% of all other employees. They also cut wages and medical benefits.

Stockton's unemployment and violent crime rates now rank among the top in the nation. One in every 195 Stockton homes filed for foreclosure in May, according to RealtyTrac.

More than 15% of the population of Stockton is unemployed - nearly double the national average.

City buildings have been repossessed and "Out of Business" signs are a common sight.

City Hall was due to move into a new building, but since Stockton has run out of money, the new building has been repossessed.

Leaving town

Mike Brooking, 50, a Stockton native and coffee shop owner, blames city officials. He says they paid people unreasonably generous pensions and medical benefits.

"They gave employees guaranteed healthcare when they're gone - and their families," Mr Brooking said.

"To people who worked there for one month! They couldn't afford it then. They can't afford it now. No-one else has those guarantees.

"The fact is that the police department is shrunk and crime is crazy and there are no jobs. I think this is going on throughout the whole Central Valley, in the whole country and Europe."

Gusto Gifts, just down the street from Mr Brooking's cafe, was shuttered last month.

The shop's main business was selling passport photos, according to George Estrada, a 35-year-old computer programmer who worked there part-time and helped sell off its assets on the Craigslist website.

Even City Hall buildings have been repossessed

"Wells Fargo Bank took over a few parking garages that the city owned," Mr Estrada says.

"Now they own the building City Hall is in. You might well call it Wells Fargo town."

He added that it is very difficult for young skilled workers to find jobs. "Everybody here wants to leave town," he said. "People want to move out and find jobs in San Francisco, or Sacramento."

Stockton lies in the heart of one of America's most productive agriculture regions.

Record homicides

The city is built on an inland waterway, navigable to the nearby San Joaquin River, where the produce of California's fields are transported from Stockton's port.

The city has always relied on agriculture - but Mr Estrada and other educated young people have no interest in working in California's blistering hot fields picking cherries, almonds or other crops.

And the canneries are largely gone while other agricultural jobs have become automated.

A Wal-Mart department store is due to open soon in Stockton, "but nobody wants to work there", says Mr Estrada.

During the housing boom, the city lavished money on its waterfront

Mr Estrada already has a job as a computer programmer, but wants to leave the city because he says his opportunities in Stockton are too limited.

He is looking for jobs all over the San Francisco Bay Area, but says that the older members of his family would never leave Stockton.

He says the increase in crime is the hardest part about living in Stockton and you just never know when something might happen. The police agree.

"We've seen a rise in violent crime here in Stockton," says police officer Joe Silva, a Stockton native and 16-year veteran of the force.

"Last year was a record setting 58 homicides and so far this year we've had 31. This time last year we had 17."

Many blame the surge in violence on Stockton's economic woes. In 2008, the city had a budget for 441 police officers.

Today they have 317, according to Officer Silva, who adds that there is some optimism within the force now because of new Police Chief Eric Jones.

Officer Silva said they would have a few more police officers sworn into the force on Thursday and new strategies for policing some of Stockton's most dangerous neighbourhoods.

The changes will hopefully keep Stockton off this year's Forbes list of "America's Most Miserable Cities".

Last year, the city was ranked the 11th most miserable. In 2010, Stockton was placed number one in terms of misery.

Cyprus bailout cost may be half its economy

Cyprus, which became the fifth euro zone country on Monday to seek emergency funding from Brussels, may require a bailout amount worth up to half the size of its economy, domestic media reported on Tuesday. The Mediterranean island, with a banking sector heavily exposed to debt-crippled Greece, said on Monday it was formally applying for aid from the European Union's rescue funds. Cyprus needs to plug a 1.8 billion euro - or 10 percent of its GDP - regulatory capital shortfall in its second largest lender by June 30. Potential aid could be more comprehensive to cover fiscal requirements, Finance Minister Vassos Shiarly told Reuters. Newspapers reported that aid could be anything between 6 and 10 billion euros. Cypriot newspaper Phileleftheros reported that required funds were expected to exceed six billion euros, while the Politis daily said some suggestions put the bailout amount at up to 10 billion euros. Either way, it would be a massive bill for Cyprus, whose 17.3 billion euro economy is the third smallest in the euro zone after Malta and Estonia. Cyprus is thought to have applied to the EU for aid after exhausting attempts to secure loans from either China or Russia. Those efforts, however, will be ongoing. "We will continue efforts to secure a bilateral loan, which can be used accordingly," government spokesman Stefanos Stefanou said. Cyprus has been shut out of international capital markets for more than a year, with yields on its 10 year benchmark bond over 16 percent on Tuesday. Sidestepping EU aid earlier, it secured a 2.5 billion euro loan from Russia in late 2011. The loan amount is expected to cover needs in 2012, but not in 2013, when Cyprus has 2.25 billion euros in refinancing, including a euro medium term note (EMTN) redemption. President Demetris Christofias, whose administration has been slammed by opposition for dragging its feet in both applying to the EU and taking measures earlier to shore up the island's flagging economy, was to brief politicians later on Tuesday. Christofias has been accused by the opposition of being out of touch with reality and ignoring warning signs that the economy was in trouble, suggestions the government strongly denies. The bailout request comes as Cyprus prepares to assume the rotating EU presidency on July 1. "It is a tragic coincidence," Cyprus Parliamentary speaker Yiannakis Omirou told state radio.

Administrator to cut services after takeover of ailing NHS trust

An NHS hospital trust which is losing more than £1m a week is set to be taken over by a Government appointed administrator with the power to sack staff and cut services as part of a radical restructuring programme. In a controversial move, the Health Secretary Andrew Lansley has written to the board of the South London Healthcare Trust warning them he intends to trigger an "unsustainable providers regime". The move means the trust, which runs the Queen Mary Hospital in Sidcup, the Queen Elizabeth Hospital in Woolwich and the Princess Royal Hospital in Bromley will be taken over by a "special administrator" with wide ranging powers to cut costs. It is the first time that the powers have ever been used and are likely to result in significant reductions in staff and services which the Department of Health admits will be "unsettling". However sources said that debts at the trust had risen to "unsustainable" levels due in part to two large PFI deals which costs the trust £61m in interest payments a year. The move comes just a few days after the trust’s chief executive Dr Chris Streather announced he was stepping down. In his letter to the Trust, Mr Lansley said: "A central objective for all providers is to ensure they deliver high quality services to patients that are clinically and financially sustainable for the long term. "I recognise that South London Healthcare NHS Trust faces deep and longstanding challenges [but] there must be a point when these problems, however they have arisen, are tackled. "I appreciate that any decision to use these powers will be unsettling for staff, but I want to stress that the powers are being considered now so that patients in South-east London have hospital services that have a sustainable future." However, the move is likely to trigger anger from the hospital management who argue they have made significant progress in dealing with its problems. Earlier this year it was shortlisted for an award for its quality of care, management and innovation. It was the only trust in London to be named and the only one that isn’t a foundation trust. It was praised for its significant improvements to the quality of patient care and the management of complex service changes within the context of "very challenging circumstances" that it has been working in. However the trust had outstanding debts of £69m at the start of the financial year. A spokesman for South London Healthcare said it had entered into talks with the Department of Health and NHS London "on the best future for the trust". "Our priority, and that of others involved, is to make sure that our long-standing and well-known financial issues are resolved," he said. "Our staff have worked hard for patients and in spite of significant financial issues, we are extremely proud that we now have among the lowest mortality and infection rates in the country. "We expect these discussions to come to a conclusion in the second week in July, when a decision will be taken by the secretary of state. In the meantime, we can reassure local patients and the public that our staff will continue to provide services as normal." Professor Chris Ham, chief executive of the Kings Fund – a leading health think tank – said the move was a sign of things to come. He said a special administrator would look at a wider range of options, including splitting up the trust’s services and "disposing of them to other providers".

Moody's expected to downgrade UK banks tonight

The market has been awaiting the news of a review by Moody's ever since the agency first announced in February that it was looking at more than 100 financial institutions in Europe and a handful of US banks. Back in February, Moody's warned that Royal Bank of Scotland, 83% owned by the taxpayer, faced a one notch downgrade and Barclays and HSBC a downgrade of up to two notches. Lloyds Banking Group is also among those facing a downgrade. A downgrade can raise the borrowing costs of banks (as they may be deemed slightly less likely to pay back any loans) and also require them to post collateral against existing positions. RBS, for instance, has already warned that a one notch downgrade by a ratings agency could cost it £12.5bn in having to post extra collateral to some creditors although analysts reckon that markets had been well prepared for any downgrades to the UK major banks. The review took two formats. The one for investment banks - which covered Barclays, RBS and HSBC - looked at " structural vulnerabilities in the business models of global investment banks, which include the confidence-sensitivity of customers and funding ounterparties, risk-management and governance challenges, as well as a high degree of interconnectedness and opacity". There was also one for European banks which looked at a number of areas including the "very difficult" operating environment in Europe.

NatWest and RBS customers hit by technical problems

NatWest and RBS customers hit by technical problems NatWest said it was sorry for the inconvenience Continue reading the main story Related Stories ATMs to operate without a card Customers of NatWest have reported problems with their bank accounts, with balances not being updated and online services unavailable. The bank confirmed it was experiencing technical issues and that "a number of customers" were affected. NatWest said it would be keeping over 1,000 branches open until 19:00BST on Thursday to assist customers. It said it was working hard to fix the problem, which has also affected some RBS and Ulster Bank customers. One small business owner told the BBC that the electronic system to pay staff was not working. He said that while the bank's business service centre had put a note on his account to allow him access to emergency cash, there were no communications within the bank as staff in his branch had no record of it and the note was having to be faxed over. Many customers have taken to Twitter reporting that they have not been paid and expressing fears that the problem would not be fixed before the weekend. Continue reading the main story “ Start Quote This is an unacceptable inconvenience for our customers for which we apologise” NatWest NatWest has 7.5 million personal banking customers. The bank did not say how many people had been affected across the group, but Ulster Bank, which along with NatWest is also part of the RBS group, said 100,000 of its customers had been affected by "a major technical issue". "We are working hard to minimise the impact and will ensure that those who are affected do not suffer any financial loss," Ulster Bank said in a statement. Apology Bob Spearman from Petworth told the BBC his weekly tax credit payment had not been paid into his NatWest account. "We, like many other low-income families live from week to week and the Child Tax Credit weekly payment is a lifeline on which we rely," he said. Customers have also reported problems accessing their online accounts for the past 24 hours. A message posted from the NatWest Help Twitter account said: "This is an unacceptable inconvenience for our customers for which we apologise." A spokeswoman for UK Payments Council, which oversees payments strategy, said that the problem did not appear to have affected any other banks. However, people expecting payments from individuals or businesses which banked with NatWest could encounter problems. Last week, Royal Bank of Scotland and NatWest launched a mobile banking app to enable people to withdraw money from cash machines using their smartphone. This marked the latest development in a long-predicted move towards the smartphone becoming a digital wallet.

Bank of England Panic's, Funnels £140 Billion to Bankrupt Banks Ahead of Eurogeddon

Banking stocks soared today on news that the George Osbourne and Mervyn King policy for the Bank of England to give cheap money to the banks to enable them to provide credit to the wider economy. Off course the reason offered is just smoke and mirrors propaganda, the real reason why the Bank of England is yet again stuffing every orifice of the UK Banks with tax payer cash (where ultimate liability lies) is ahead of the high risk of Eurogeddon on Monday following outcome of Sundays Greek election. The propaganda has been swallowed by the mainstream press despite the fact that very similar propaganda has been repeatedly used by the Bank of England for the past 3 years to pump ever more cash into the Bankrupt Banks that to date collectively totals more than £600 billion when taking capital injections, and quantitative easing into account, and what has all that money done for credit to businesses ? Has it increased lending ? No So what will today's £140 billion do for lending? NOTHING! Because the money is not for the UK economy but for Britain's bankrupt zombie banks to be kept on life support as a consequence of the counter party losses they will face following a Grexit. At the end of the day the bankrupt banks NEVER pay for their loses, YOU the tax payers are expected to! Meanwhile Labours Ed Balls, came out with even more crackpot statements than usual such as that even more money should be loaned to the bankrupt banks and spent by the government, despite a £120 billion annual budget deficit that remains the last Labour governments lasting legacy.

Property con man Kevin O'Kane has been made bankrupt

A convicted international property fraudster has been declared bankrupt after civil action was brought by investors duped into paying out nearly £4m. Kevin O'Kane, from Portglenone, will now have his assets liquidated in an effort to pay back some of his debts. The action was brought by more than 40 victims of a Turkish holiday home scam. In February, the 52 year old was jailed for four and a half years for running the bogus operation. O'Kane, a one-time oil and coal merchant, was convicted of more than 150 offences of obtaining money or property by deception and fraud by false representation. He portrayed himself as the landowner, builder and developer of the Golden Beach villas development when, in reality, he owned nothing of the scheme. The legal bid by investors seeking their money back was put on hold until the criminal case was completed. With the prison term imposed, they returned to the High Court in an attempt to resolve the action. A bankruptcy order was made againt O'Kane following a brief hearing. It remains to be seen what cash is available for those who invested in the scam.

HAVING made millions of dollars from the gross overcharging of injured clients, the struck-off solicitor Russell Keddie has declared himself bankrupt

Wiston Gardens, Double Bay. The house is valued at $5 million. Mr Keddie's share was transferred to his wife for $1.

HAVING made millions of dollars from the gross overcharging of injured clients, the struck-off solicitor Russell Keddie has declared himself bankrupt, which means he does not have to comply with court orders to repay dozens of former clients.

Mr Keddie, who lives in a $5 million eastern suburbs house and has a $3.2 million beach house, filed for bankruptcy on Friday.

In July last year, for the sum of only $1, Mr Keddie transferred his half of his five-bedroom family home in Double Bay to his wife, back-pain specialist Sarah Key.

Read more: http://www.smh.com.au/nsw/bankruptcy-means-fleeced-keddie-clients-will-lose-money-20120617-20icu.html#ixzz1y5VL0fFr

Allders fails to weather the storm

Allders, the department store backed by fashion entrepreneur Harold Tillman, has become the latest retailer to collapse into administration. Duff & Phelps, the advisory group, was on Friday appointed as administrator to Allders, the UK’s third- biggest department store by retail space, putting 300 jobs at risk. More ON THIS STORY JD Sports reveals £10m Blacks loss Home furnishings sales boost Laura Ashley M&S to launch bank with HSBC IN RETAIL Carrefour and bank pull out of Greece An unhappy coincidence for Esprit Carphone Warehouse sales down 5.5% Tesco urged to shake up US business Mr Tillman owns 30 per cent of the store. He acquired Allders in 2005 out of administration. He sold 70 per cent last year to management and other investors after the riots in Croydon, South London, which took their toll on Allders’ trade. Mr Tillman said on Friday: “I am very sad about it, because I think I have done my bit and I just hope there is an opportunity that someone will come along and take it back on.” He voiced hope that a buyer could be found and praised Andrew MacKenzie, chief executive. Duff & Phelps said: “The board of Allders has today taken the decision to place the company into administration following a marked downturn in sales brought on by the well-publicised economic difficulties facing the UK.” The administration came after Allders had sought to renegotiate rents with its landlord Minerva, according to reports. Minerva said on Friday: “Since they approached us on 6 June, we have been engaged in a proactive dialogue with both the management and shareholders of Allders in a concerted effort to try and save the business. “We responded quickly and constructively to the concession requested. We are very disappointed that, even with our offer to assist, the board of Allders has been unable to conclude that the business is viable going forward and administrators have therefore been appointed.” The move also comes after Mr Tillman’s Aquascutum business was put into administration in April. Its brand was subsequently sold to YGM, Aquascutum’s licence holder in China. However, Mr Tillman said that despite the recent difficulties, he remained proud of his record, which had saved 4,000 jobs since 1999 through his investments. Duff & Phelps said Allders remained open for business and concession partners were continuing to support it during the administration. Outstanding customer orders also continued to be fulfilled. Allders’ problems underline the parlous state of UK retail. Many store groups face quarterly rental payments next week, when they must pay three months rent in advance. Trading will also have been poor because of the unseasonably bad weather.

The Most Important Question in Europe: To Bailout or Not to Bailout

I've got some shocking news for you. Things are going badly in Europe. The big story is Spain's borrowing costs. On Thursday yields on 10-year Spanish bonds touched the dreaded 7 percent level -- which they have continued to flirt with on Friday. What's so important about 7 percent? Two things. First, banks have to post more margin -- i.e., cash -- if yields cross that threshold when they use bonds as collateral. A downward spiral awaits. Banks might sell the bonds off because they aren't as useful -- leading to higher yields and worse margin requirements. And so on, and so on. But it doesn't even really matter. Borrowing costs of 7 percent are already ruinous for Spain. As Brad Plumer pointed out, inflation is so low in Spain that its economy would have to grow at a 4-5 percent clip to not fall into a debt trap with yields that high. But Spain isn't growing at 4 or 5 percent. Spain is in a recession. So yes, it's fair to call the week-old bailout of Spain's banks a failout. The putative bailout has 1)  Added to Spain's public debt, 2) Made that debt riskier, and 3) Likely made it harder for Spain to pay back its debt. The euro zone can hardly take any more such successes. But the financial apocalypse isn't here yet. Just close. Spain relies on a lot of shorter duration debt to fund itself too. The borrowing costs on those bonds are still semi-manageable -- for 2-year bonds, if not 5-year bonds. Still, Spain is far too close to insolvency for comfort. Unless the European Central Bank (ECB) pushes down yields, Spain will need another bailout. And soon. That brings us to the most interesting euro development of the past week. German bonds started to sell off -- before rallying recently. This was ... odd. German bonds never sell off when things look bad in euroland. The opposite. There's usually a flight to safety to them. If there's one euro zone country that won't go bankrupt, it's Germany. But things are getting so bad in Spain that Germany might have to cross the financial Rubicon it's so far been unwilling to countenance: joint debt. Spain is too big to save. But that's almost irrelevant. The bailout status quo is toxic. It hasn't solved anything for Greece, Portugal or Ireland. It won't for Spain either. Southern Europe needs to reduce its debt and reduce the interest it pays. Bailouts do the latter, but not the former. But mutual debt -- so-called "eurobonds" -- would work. There's a problem. Germany doesn't want to give southern Europe a credit card with no limit. Germany wants there to be a very specific limit. That's where the so-called "sinking fund" comes in. The idea here is that each country would dump all of its debt in excess of 60 percent of GDP into a single fund. Each country would have to pay its own portion back over 20 years, but Europe would issue debt jointly. This isn't a fiscal union. It's not an open-ended bailout of Spain by Germany. It's a one-time bailout of Spain by Germany. It's not perfect, but it could work. And it would cost Germany a good chunk of change. That's why Germany's borrowing costs surged at the beginning of the week. Of course, Angela Merkel gave her best Herman Cain impersonation later -- Nein, nein, nein! -- which is when German borrowing costs receded. Germany will have to make up its mind soon. Markets don't have much patience for its Hamlet act. Time to decide whether the euro will be or not be.

Tom McFeely has British bankruptcy status rescinded

The Priory Hall developer was declared bankrupt in London's High Court in January, but today Justice Sandra Proudman "rescinded" the decision and ordered the bankruptcy proceedings to be re-heard. The bankruptcy status of the former IRA hunger striker now lies in a jurisdiction limbo between Ireland and the UK after bankruptcy proceedings were issued in Dublin last December. Lay litigant Theresa McGuinness appealed the UK bankruptcy arguing she had begun bankruptcy proceedings in Ireland before he filed papers with London's High Court. Ms McGuinness started proceedings in December 2011 after Mr McFeely failed to pay a court award of over € 100,000 made in 2009 against his company, Coalport Ltd. She was awarded damages against Coalport after it emerged that a house she had bought had serious structural defects. Her supporters claimed outside court with legal costs and interest she is now owed nearly €500,000. Mr McFeely has strongly argued against the bankruptcy proceeding in Ireland. It takes up to 12 years to be discharged as a bankrupt in Ireland opposed to one year in the UK. But Justice Proudman rescinded Mr McFeely's UK bankruptcy after it was discovered he failed to disclose the Irish bankruptcy proceedings when he filed papers with London's High Court. She said: "When asked on bankruptcy papers 'are you involved in legal action?' Mr McFeely simply ticked the no box. He said he read it as just relating to legal proceedings in the UK." Justice Proudman said the UK bankruptcy court registrar was not made aware of the possible "jurisdiction issues" and they should be argued in court. She said while she "understood" Mr McFeely would find it attractive to be declared a bankrupt in the UK she questioned why he should be allowed to "forum shop". Mr McFeely faces a bankruptcy hearing in Ireland on 23 July, where the court will have to deal with the "knotty issue" of if it has jurisdiction or if it still rests with the UK courts. A date for a UK bankruptcy re-hearing has not yet been set but would likely occur after the Irish hearing. The developer is believed to owe more than £200 million to various creditors, including up to £185 million to NAMA. Mr McFeely has claimed Ms McGuinness is acting "vindictively". The former provisional IRA member claims to have lived in London since 2008 and hold a British passport. In court document he said: "The appellant wants my bankruptcy conducted in the south of Ireland because she knows it will place me in greater difficulties securing a discharge. "I maintain this is a breach of my human rights and that it is objectionable to expose me as a British citizen to the punitive bankruptcy laws of another country."

Nokia cuts another 10,000 jobs as losses deepen

Nokia is cutting another 10,000 jobs globally and has warned that second-quarter losses from its mobile phone business will be larger than expected. The cuts bring total planned job cuts at the Finnish group since Stephen Elop took over as chief executive in September 2010 to more than 40,000. Nokia will also book additional restructuring charges of about 1bn euros (£811m; $1.3bn). Nokia's shares have slumped more than 70% since February 2011. "These planned reductions are a difficult consequence of the intended actions we believe we must take to ensure Nokia's long-term competitive strength," Mr Elop said in a statement. Last year, Nokia dropped its own Symbian smartphone operating software and switched to Microsoft's Windows Phone system.

The boyband star’s property empire in Ireland had collapsed, leaving the 32-year-old with debts of £18million

Collapse: Shane Filan's property empire has been hit hard

WireImage

Westlife singer Shane Filan yesterday spoke of his devastation after being declared bankrupt.

The boyband star’s property empire in Ireland had collapsed, leaving the 32-year-old with debts of £18million.

Despite employing an army of financial experts, a court ruled this week that the dad-of-three was bust.

Shane, set to play in Liverpool last night on Westlife’s final tour, said yesterday: “Together with a team of financial and legal experts I have spent months exploring all possible alternatives to bankruptcy but to no avail.

“I have worked long and hard to try to reduce my debts, and I am devastated that it came to this conclusion.

“I now intend to focus on the remaining dates of the Westlife tour and my commitments to the band before looking to rebuild a future for my wife, my three children and myself.”

During the economic boom, Shafin Developments, which Shane set up with his brother Finbarr, borrowed millions from Bank of Ireland and Ulster Bank.

The firm took out a series of loans to construct a 90-home estate in Dromahair, Co Leitrim. However, when the site was recently inspected, just 50 homes had been built and many sold for less than the cost of completion.

 

Fousome: Shane, second from left, with rest of the band

BigPictures

 

 

A series of other projects, including a supermarket in Leitrim and a nursing home in Sligo, have also come to a halt.

The star’s financial fall from grace is being dealt with in the UK after he relocated to Surrey with wife Gillian and their kids before Christmas.

His bankruptcy, announced at Kingston County Court, will last for a year, provided he complies fully with the courts, compared to 12 years in Ireland.

But Shane is expected to boost his bank balance by £4million at the end of Westlife’s farewell tour next week.

After their launch in 1998, the Irish boyband sold more than 45 million records worldwide and had 14 No1 singles in Britain alone.

Shane, who releases a solo album next year, currently has four major record labels fighting over him.

Pop mogul Louis Walsh, who will be managing the singer this summer, previously said he “doesn’t need to worry”.

He added: “Shane is going to have a massive career after Westlife. He’s going to have a great solo career and make millions. He’ll start all over again and remake the riches in no time at all.

“He had no money when he started off before Westlife, and now he’ll make it all back when he becomes a massive star.”

Saab sold to Chinese-Swedish investment group

Bankrupt carmaker Saab has been sold to a Chinese-Swedish investment group which aims to turn the company into a maker of electric vehicles. Saab's administrator said the buyer was National Electric Vehicle Sweden (Nevs). No sale price was given. Saab went bankrupt in December, two years after former owner General Motors sold it to Dutch group Spyker. Saab "will start a new operation" to develop and produce electric cars, the administrator said in a statement. The administrator said in April that Saab had assets to cover about a third of its debts of 13bn kronor (£1.2bn). The chief executive and main owner of Nevs is a Chinese businessman with Swedish citizenship, Kai Johan Jiang. The chairman of Nevs is Karl-Erling Trogen, a former head of the truck division of truck and construction equipment maker Volvo. "Nevs and the receivers of the Saab Automobile bankruptcy estate today signed a purchase agreement which covers the main assets of Saab Automobile AB, Saab Automobile Powertrain AB and Saab Automobile Tools AB," Nevs and the administrators said in a joint statement. Saab employs about 3,000 people, with its main base at Trollhattan, west Sweden, where investment in new electric car manufacturing will be made. GM bought a 50% stake and management control of Saab in 1989, and gained full ownership in 2000. The Swedish company's car sales peaked at 133,000 cars in 2006. After that, sales dwindled to 93,000 cars in 2008 and just 27,000 in 2009. GM itself sought bankruptcy protection as the global financial crisis unfolded, forcing the US company to dispose of assets. In 2010, Saab's larger rival, Volvo, was rescued by China's Geely Automobile Holdings.

Spain's borrowing costs rise closer to levels considered unsustainable

A bailout of up to €100bn for Spain's ailing banks failed to calm nerves about the future of the euro on Monday amid confusion over the plan's details and worries that Greek voters might choose to abandon the single currency. The hurried bailout announcement after an emergency video conference of eurozone finance ministers at the weekend was meant to ease pressure on Spain and other troubled European economies ahead of Sunday's elections in Greece. But Spain's borrowing costs rose on Monday, nudging closer to levels that are considered unsustainable and dragging Italy towards the danger zone. Europe's stock markets fell slightly, despite an early bounce, the FTSE 100 in London finishing down 0.05%. Investors worried about uncertainty over the amount of bailout money Spain would take, the mechanism for providing it and the conditions attached to the deal. "The size of the deal is meant to show a real commitment on the part of the eurozone to stabilise the system," said Robert Pavlik, of Banyan Partners. "However, this just moves the problem down the road and shows how nervous the EU was going into the Greek election." Spanish prime minister Mariano Rajoy's triumphant approach to the bailout appeared to annoy Germany and other eurozone countries who must persuade sceptical voters that the money is well spent. As he tries to escape the devastating political price paid by other European leaders who have asked for bailouts, Rajoy has told Spaniards that the €100bn comes with no strings attached except for the banks receiving the money. He refuses to call it a bailout. But Germany's finance minister, Wolfgang Schäuble, warned that – as with Greece, Portugal and Ireland – Spain must answer to the feared "troika" that enforces the debt repayment terms imposed on other bailed out countries like Portugal, Greece and Ireland. The troika is made up of the European commission, the International Monetary Fund (IMF) and European Central Bank. "The Spanish state is taking the loans, Spain will be responsible for them," Schäuble said. "There will likewise be a troika. There will of course be supervision to ensure that the programme is being complied with, but this refers only to the restructuring of the banks." "Of course there will be conditions," EU competition commissioner Joaquín Almunia added in a radio interview. "Whoever gives money never gives it away for free." The eurozone ministers who approved the deal warned they would watch Spain's deficit-busting and reform programme carefully, but did not say whether loans would depend on Rajoy's government hitting targets. Rajoy's achievement in limiting the explicit conditions to Spain's banks has been broadly welcomed in a country that believes the rest of its economy needs no international oversight. But those countries already under troika control warned that they will demand a revision of their bailout terms if Spain receives special treatment. "We will be watching the process of the specific programme for Spain's banking system closely," Portugal's prime minister Pedro Passos Coelho said. "We cannot have first class and second class states," warned Portugal's opposition socialist leader Antonio José Seguro. Ireland's prime minister, Enda Kenny, has already said that if Spain wins soft terms, then these must be offered to others. Those terms will not be clear until Spain formally requests a sum of money. It is not clear whether this would be provided by the European Financial Stability Facility or the new arrangement which replaces it in July, the European Stability Mechanism. Other European leaders admitted that the bailout decision had been taken to avert yet another moment of panic in Europe's long-running debt crisis. "We have managed to avoid a major crisis but the problems are still there," Finland's prime minister Jyrki Katainen told Reuters. Investors worried that the bailout was a temporary solution to Spain's problems as it falls back into recession and suffers 24% unemployment. "Call it what you like, but this is a bailout, the first (and only for banks), but most likely not the last for Spain," said Oliver Burrows of Rabobank Credit Research, who pointed to the amount of government debt held by Spanish banks. "We suspect that inevitably the Spanish government will have to seek its own bailout." The IMF said on Friday that Spain's former savings banks and some of its medium-sized commercial banks would jointly need at least €40bn. The government has said it will wait for two independent auditors to produce valuations of Spain's total bank assets before deciding how much money to ask for. They will make their first reports by 21 June and government sources have already suggested they will be close to the IMF figures. Recently part-nationalised Bankia has asked for €19bn and officials have recognised that two other banks need a further €9bn. But Spain's government has twice underestimated the sums needed to rescue its banks this year, with two rounds of provisioning totalling €80bn, and investors remain wary.

Derelict homes in Liverpool: places such as these remind us that an entire model of economic development has collapsed.

Photograph: Jim Dyson/Getty Images

George Osborne gazes upon Madrid's meltdown and spies an excuse:the euro ate his recovery. The rest of us should look at how one of the biggest economies in Europe ended up in the sovereign-debt workhouse – and consider how closely Spain's catastrophe resembles our own.

Even while typing this, I know that the comparison sounds a stretch. The eurozone is a foreign country, after all: they do crises differently there. Here, ministers publicly congratulate themselves for still being able to borrow from financial markets, while the press rubbernecks at each new crash on the continent. After being bailed out by Gordon Brown, British banks are merely chronically weak, rather than flat-out with Spanish flu. But look past the financial details – the single-currency contagion, and all those acronyms beloved of Brussels – and the economic situations are more similar than we might like.

Just like Britain, Spain enjoyed an unprecedented era of low inflation and cheap money – and squandered it. Bankers in Madrid (and across the country) kept their excesses simple, shovelling cash into the pockets of semi-imperialistic property developers. Their counterparts in London did that too, but also found time to speculate in toxic assets with funny names. Just like Tony Blair, Spain's José Zapatero asked few questions during the boom, but concentrated on spending the bumper tax revenues on welfare and other well-meaning programmes to enhance social justice. The markets smiling upon them, neither New Labour nor Spain's socialists made serious attempts to reshape their economies or bring on new industries. Instead, an historic proportion of the young in both countries were sent off to university – coming out the other end overqualified for the jobs available to them. During the boom, the countries were considered such a success that they were given the ultimate benediction of a glossy American magazine cover. In 1997 Liam Gallagher and Patsy Kensit lounged in bed for Vanity Fair; in March 2004, Time declared: "Spain Rocks!"

In other words, both Britain and Spain spent years going full-speed down what appeared to be a highway to prosperity – only to discover too late that it was a dead-end street. After the crash, both have been left with broken economic models, while their governments haven't a clue how to fix them.

Nowadays, when smart economists discuss what's wrong in Spain, they point to places such as Andalusia. Poor and dependent on the north of the country for taxpayer handouts, it's proof of the lopsidedness of the country's boom, of a bubble that was always going to burst. Yet there were plenty of similar places in Britain, too, which went all but ignored by the Westminster classes.

To get an idea of the self-deceptions of Britain's boom, you could do worse than visit Kirkby in Merseyside. Built up during the 60s to accommodate the overspill of workers from nearby Liverpool, it enjoyed a short-lived boom during the 70s. The urban-regeneration specialist John Houghton, who grew up there, can reel off the factories that employed locals: Schweppes, Murray Mints, Delco the car-parts maker and Ford's Halewood plant. Most of those disappeared long ago, and the others have shrunk severely.

From its industrial heyday, Kirkby has become one of the most deprived parts of the country. More than 12% of the available workforce in the borough of Knowsley, which Kirkby is part of, are out of a job, as compared with 8% in the rest of the north-west. Of those in a job, about one in three work for the public sector. The other big local employers are call centres: typically neither as high-paying nor as secure as the old industrial employment. When the Halewood car factory advertised 1,000 new jobs earlier this year, it received 35,000 applications.

Knocked about during the successive recessions of the 80s and 90s, Kirkby barely got a whiff of the boom. Mind you, it did get some of the worst bits of the property bubble. I used to associate property speculation with rows of new yuppie flats: I now know that it can come in far more prosaic forms. Houghton took me to see his childhood home: it's now derelict. Piecing together the story from neighbours and the council, it seems the landlord who bought it got in over his head and abandoned it a couple of years ago. On the plywood covering the windows is graffiti: "Tramp Town" and "Shameless". Next door, we found Jeanette and her giant dog, Blitz. Living on her own, she hears gangs moving about in the middle of the night. Just opposite, Houghton pointed out where he used to play football with his dad. The parks have now been covered with more terraced housing, all meant to be let out, but half of which stands untenanted. However low the rents in the area, they are evidently not as low as the average family income. On a weekly wage of £489, the typical household in Knowsley earns £100 a week less than the British average.

Discussions of the euro crisis usually treat it as though it's all happening Over There. But places such as Kirkby remind us that what's collapsed isn't a handful of countries, but an entire model of economic development: one driven by debt and speculation, and which ignored the need for productive industry. Think the Spanish crisis couldn't happen here? A visit to Kirkby suggests a version of it already has.

Rangers to re-form after creditors' deal is rejected

Rangers will re-form as a new company after a creditors' deal was rejected by Her Majesty's Revenue and Customs. It means clubs will have to vote on whether to re-admit Rangers to the Scottish Premier League. HMRC rejected prospective owner Charles Green's bid to exit administration via a company voluntary arrangement giving creditors nine pence in the pound. "The club will continue to operate as it has always done but in a new company structure," said the administrators. Green, who said he was "hugely disappointed" by HMRC's decision, will now seek to buy the club's assets for £5.5m and form a "newco", under the terms of the deal his consortium struck with administrators Duff & Phelps. "We will be liaising with the football authorities at the earliest opportunity to establish our position regarding the SPL," said Green, who will approach the Scottish Football Association and the SPL. Rangers' footballing fate will be decided by their 11 fellow SPL members. There is an SPL board meeting at Hampden on Monday to discuss the league's inquiry into alleged dual contracts at Rangers. What is a CVA? A CVA enables companies to reach an agreement with creditors about how debts could be repaid and provides for partial or full repayment depending on what the company can reasonably afford to pay. They could hold a vote then if a newco proposal can be put together in time. Perhaps more realistic is for the 11 clubs to vote at the AGM next month. In recent weeks clubs have expressed the dilemma they face: Rangers' presence in the SPL brings revenue through the turnstiles and from broadcast deals, but many fans have said they will not return if "sporting integrity" is not seen to be upheld. These supporters have been in contact with their clubs to demand that they vote against Rangers playing in the SPL next season. Their preference is for Rangers to apply to join the Scottish Football League and to start again in the Third Division. HMRC said that the sale of the club "is not being undermined, it simply takes a different route". In a statement it said: "Liquidation will enable a sale of the football assets to be made to a new company, thereby ensuring that football will continue at Ibrox. "It also means that the new company will be free from claims or litigation in a way which would not be achievable with a CVA. Rangers can make a fresh start." Green's consortium had hoped to have its CVA - offering nine pence in the pound at best - approved by creditors when they meet at Ibrox on Thursday so that the club could exit administration in mid-July. But Green needed major creditors HMRC and Ticketus, who had loaned money to owner Craig Whyte in exchange for future season ticket revenue, to vote in favour to avoid the assets being sold off. Rangers CVA key facts Rangers administrators' CVA offers 8-9p in the pound (best case scenario) Administrators fees: £5.5m Football debts: £3.5m HMRC owed: £21.5m Ticketus owed: £26.7m Total owed to unsecured creditors: £55m "The solemn promise I can make to Rangers fans today is that this club will continue as Rangers Football Club and will continue to play at Ibrox Stadium," said Yorkshireman Green. "I am hugely disappointed by the decision of HMRC not to support the CVA proposal and that disappointment will be felt acutely by Rangers fans across the world. "Frankly, I do not see what benefit will be achieved by this decision. My consortium's offer for a CVA amounted to a total of £8.5m. "Now that we will have to complete the purchase via the formation of a newco, the purchase price and therefore the amount available to creditors will be £5.5m. "I can understand HMRC deciding that football clubs which do not pay their taxes need to be punished, but by effectively banning Rangers from Europe for three years all that will happen is that there will be less revenue generated by the club and consequently less money paid over to the taxman." Rangers entered administration on 14 February and await the outcome of a First Tier Tax tribunal at the Court of Session in Edinburgh over unpaid taxes - the so-called "Big Tax Case". If that decision goes against the club, it would mean a further bill of anything from £35m to £70m. That would have reduced the pence-in-the-pound deal in the CVA to close to zero. The club's total debts to unsecured creditors listed in the CVA was £55m, with HMRC accounting for £21.5m of that sum. BBC Scotland has learned that Duff & Phelps held a meeting with HMRC on Monday and were told of their decision. Duff & Phelps say HMRC's decision was based on "its general policy of not agreeing to a CVA where there is strong evidence of non-compliance by a company with its tax liabilities". They said HMRC had agreed to consider the CVA proposal along with all other options but decided that the club's level of indebtedness made it unacceptable. The administrators say HMRC would also have rejected the other offers for the club that proposed a CVA. Administrator Paul Clark added: "HMRC has taken the view that the public interest will be better served with the liquidation of The Rangers Football Club plc as a corporate entity." The CVA required the approval of 75% or more in value of the creditors, and more than 50% in value of the members, voting on the resolution. it will now try to buy the business and assets of Rangers for £5.5m.

HMRC braced for possible strikes over job cuts

Small businesses operating in the UK are likely to be among those affected by planned industrial action at HM Revenue & Customs (HMRC). A recent ballot of Public and Commercial Services Union (PCS) members has shown that strikes at HMRC are increasingly likely as the union's concerns about planned job cuts and privatisation remain. The union's latest ballot saw a turnout of 33.3 per cent, of which 52.8 per cent were in favour of striking and 77.2 per cent voted for other forms of industrial action. It comes as the PCS stands firm against plans to axe a further 10,000 jobs from HMRC by 2014-15. The department, which was launched in 2005, has since seen 30,000 job cut. Mark Serwotka, the union's General Secretary, said it makes "absolutely no economic sense" to cut more staff from the department responsible for collecting taxes if the government is serous about reducing the UK's budget deficit. "The government should be investing to improve services, tackle the tax dodgers and get our economy back on its feet," he explained. "At the same time as cutting jobs and closing offices, we have real concerns about creeping privatisation in HMRC, with public money being handed to companies to make a profit."

400 more jobs go at Clinton Cards

400 people have lost their jobs after another wave of stores was closed at collapsed retailer Clinton Cards. The group, the UK's biggest specialist cards retailer, fell into administration last month, although 397 of its stores were sold to Ohio-based American Greetings on Thursday, saving 4,500 jobs. Administrators at Zolfo Cooper closed 43 of the 330 stores not included in the deal, leading to 408 redundancies. They have already closed 44 sites last month but are looking for buyers for the remaining stores in a bid to save nearly 3,000 full and part-time jobs. The ailing high street retailer, which operated the Clintons and Birthdays brands, had nearly 800 stores and employed more than 8,000 staff in total. The chain collapsed into administration after its biggest supplier, American Greetings, called in a £35 million debt, putting it in pole position to buy the chain by making it a preferential creditor. The US company's UK Greetings operation, which is based in Dewsbury, West Yorkshire, has the brands Camden Graphics, Hanson White, Forget Me Not and Xpressions and supplies outlets including major supermarkets. Clinton Cards was founded by chairman Don Lewin in Epping, Essex, in 1968. Its collapse served as another blow to the high street after recent high-profile casualties including video games retailer Game Group, fashion chain Peacocks and outdoor specialist Blacks Leisure. Clinton Cards stores that have closed are: Ayr, The Kyle Centre; Basildon, Town Square; Blackpool, Upper Church Street; Brighton, Western Road; Bristol, The Galleries; Bromley, Upper Mall, The Glades; Cannock, Peel Centre; Chatham, High Street; Cheltenham, Regent Arcade; Chorley, Chapel Street; Corby, Willow Place; Crawley, 61 County Mall; Croydon, 31 Whitgift Centre (Lower); East Kilbride, The Olympia; Gainsborough; Glasgow, Braehead; Inverness, High Street; Ipswich, Cornhill; Leeds, Commercial Street; Milton Keynes, Silbury Arcade; Newbury, Kennett Centre; Northampton, Grosvenor Centre; Romford, Liberty II; Shrewsbury, Darwin Centre; Shrewsbury, Pride Hill Centre; Watford, Upper Mall Harlequin; and Wrexham, Regent Street. The Birthdays stores which closed are: Basingstoke, Mayfair House; Bracknell; Bromley, The Glades; Camberley, Cambridge Walk; Craigavon, Craigavon Centre; Derby, 145 South Mall; East Kilbride, West Mall; Liverpool, Lord Street; Norwich, Castle Mall; Nuneaton, Market Place; Redditch, Kingfisher Centre; Sheffield, 18 The Gallery; Southend, 82 High Street; Thurrock, 277 Lakeside; Uxbridge, Pavillions Centre; and Weston-super-Mare.

Kweku Adoboli, the former UBS trader accused of causing the largest unauthorised trading loss in British history, was on Friday granted bail

Kweku Adoboli, the former UBS trader accused of causing the largest unauthorised trading loss in British history, was on Friday granted bail after being held in custody since last September. Mr Justice Keith, sitting at Southwark Crown Court, in London, allowed Mr Adoboli bail following an application made in private on Friday by his defence team.  Mr Adoboli has pleaded not guilty to unauthorised trading following revelations of a $2.25bn loss at the Swiss bank last year. He has been in custody since charges were brought nine months ago and a provisional trial date has been set in early September. The 32-year-old faces two charges of fraud and two of false accounting which relate to periods between October 2008 and September 2011. After the hearing, Mr Adoboli’s lawyers, Bark & Co, said that as a condition of his bail Mr Adoboli would reside at a friend’s house. He would also be electronically tagged and would have to observe a curfew. A number of friends are understood to have pledged sureties as a condition of Mr Adoboli’s bail although the exact amount was not disclosed. His lawyer Tim Harris said that Mr Adoboli was “delighted and hugely grateful” to the judge, and his family and friends. Mr Adoboli, who is in London’s Wandsworth prison, is not likely to be released until after the weekend because of the time needed to process sureties with the court. In a pre-trial hearing, Mr Justice Keith granted an order drawn up for disclosure of material to be handed over by the prosecution to Mr Adoboli’s defence team. Mr Adoboli appeared in the dock to confirm his name dressed in a grey suit, white shirt and purple tie and carrying a number of notebooks. He appeared relaxed and smiled at a number of friends and family who were sitting in the court’s public gallery. The draft disclosure order means that data from Mr Adoboli’s personal computer and two mobile phones will be handed over to the defence team along with emails and chat logs in which Mr Adoboli participated. Data from Mr Adoboli’s personal trading account with IG Index, a spread betting firm, will also be disclosed along with Mr Adoboli’s personnel file with UBS and details of inquiries by the Financial Services Authority and accountants KPMG. Prosecutors must also disclose the Project Bronze report, which is an internal UBS investigation, as well as material relating to internal investigations into eight individuals at UBS, the court heard. Mr Adoboli worked for UBS’s global synthetic equities division, buying and selling exchange traded funds. His jury trial is scheduled to last for eight weeks.

38 Studios, the game developer behind Kingdoms of Amalur and the unfinished Project Copernicus MMO has filed for bankruptcy.

The company is seeking to liquidate its assets in order to pay its debts in what's known as a Chapter 7 filing. 38 Studios claims $21.7M in assets, mostly personal property, and $150.7 million in liabilities to 1000 different creditors, including $110 million owed to the state of Rhode Island. How bad does it look? Pretty bad. (PDF) Even if we ignore the $110M owed to Rhode Island over the estimated payback period of the loan, 38 Studios owed $300K to MoveTrek, the company that managed the employee relocation we've previously discussed, $116K to Atlas Van Lines, $715K to Blue Cross/Blue Shield, and $266K to a Citizen's Bank credit card. MoveTrek, the company that managed the properties 38 Studios left behind, has noted that there are "potential credit and title issues for the participating employees." Schilling, who is famous for his outspoken opinions and love of the Internet, has refused to comment Schilling himself never drew a salary at 38 Studios, but his corporate travel expenses topped $39,000, including $11,000 in April. His health care added another $16,000. The company's COO, Bill Thomas, was paid $421,000, which includes a $130,000 relocation package. Jennifer MacLean, the company's CEO, made $253,000 in the last year. All of this is consistent with our prediction a few weeks back: The company was badly mismanaged and overspent. This is not a moral question. We're not claiming that Thomas or MacLean didn't "deserve" their salaries, or that Schilling is somehow evil because he billed the company for $54,000 in travel and medical expenses over the course of the past year. There's been some attention paid to the fact that 38 Studios spent $8,000 on coffee between March 8 and May 1. When you consider the size of the company (300+ employees) and the length of time, $8K isn't actually that much money. The bigger issue is that these aren't expenses 38 Studios should've been paying in the first place. Startup game companies with no continuing sources of revenue can't afford it. Criminal Investigations This is where the story turns from sad to potentially sordid. Two months before the company failed, it paid Michael Corso, the lawyer whose connections to House Speaker Gordon Fox helped make the RI deal happen, $232,000. As part of the bankruptcy filing, the company has also disclosed the existence of an $8.5M loan from the Bank of Rhode Island; said loan was issued on the promise of tax credits that never materialized. The FBI has opened an investigation, as has the US Attorney's office. The politicans who approved the loan program expansion that got 38 Studios its $75M have repeatedly said they had no idea the funds were earmarked for a single company. The contractor who won the bid to decorate the office building had ties to Gordon Fox as well and won the contract despite having gone bankrupt within the past year. It's not clear if Schilling or any other employee of 38 Studios was a party to the backroom deals that pushed the loan program through and earmarked the company as sole recipient, but the FBI has pledged to take a serious look at how and why funds were spent as they were in the coming mo

Sweden set to run Saab parts unit after bankruptcy

Sweden is likely to take over bankrupt carmaker Saab's spare parts unit, the country's Debt Office said on Friday, a potential embarrassment for a centre-right government focused on privatising state assets. The carmaker was declared insolvent at the end of 2011 with debts of around 13 billion Swedish crowns ($1.8 billion), around 2.2 billion of which is owed to the Debt Office itself. Although receivers have been trying to sell Saab's assets, it looks like a buyer can't be found who is willing to pay enough to cover the company's debt to the Debt Office, which holds shares in Saab units Saab Automobile Parts and Saab Automobile Tools. Debt Office head Bo Lundgren said a sale of Saab as a whole was still the best solution and that Saab Tools was likely to be part of any deal. But he said the government is ready to run Saab Automobile Parts to ensure taxpayers recoup their money if the unit can't be sold at the right price. "If there isn't a sale of the whole concern ... we are going to take over Saab Parts," Lundgren said. The Debt Office took shares in Saab Automobile Parts - a daughter company to Saab Automobile - and Saab Tools as collateral for guaranteeing a loan from the European Investment Bank to Saab Automobile. Early this year, the Debt Office paid off the EIB saying the collateral was worth more than the loan. Lundgren said the Debt Office now reckoned it could get taxpayers' money back from the sale of shares in Saab Tools and from profits from Saab Parts over the coming seven or eight years. "Hopefully, we can sell (Saab Parts) after a couple of years to someone who understands the future value," he said. Taking over Saab Parts would be an about-face for the government, which said when Saab got into trouble that it did not want to run a car company. Furthermore, the centre-right government has been busy selling off state assets, disposing of Absolut Vodka maker Vin & Sprit and reducing stakes in banking group Nordea and telecom operator TeliaSonera. The four party alliance had plans to further cut state ownership, but lost its majority in an election in 2010. The economic downturn has also made it difficult to get a good price for assets. The Debt Office issued loan guarantee in February 2010 to help Saab restructure. The original guarantee was for loans up to 400 million euros ($502.5 million), but this was later reduced to 280 million of which Saab used 217 million.

Wife of bankrupt developer given 7 weeks to quit home

NINA McFeely, the wife of bankrupt developer Tom McFeely, was given seven weeks by a judge today to find alternative accommodation, following possession of their Ailsbury Road, Dublin, home being granted to Nama. Judge Jacqueline Linnane in the Circuit Civil Court refused a longer stay which would have allowed Mrs McFeely and her two teenage sons remain in the €10m property while one of them completed his education over the next year. Judge Linnane said that taking into account the substantial amount outstanding to Nama and the circumstances of the family she would grant a stay on the order for possession, which she granted on Wednesday last, until August 1. She told barrister Martin Canny, counsel for the McFeelys, that as far as the court was aware Mr McFeely already had accommodation in London. Michael McDowell, S.C., counsel for Nama, said Mrs McFeely, a joint defendant in the proceedings with her husband, had stated in an affidavit that it was her intention to appeal the possession order to the High Court. He said it was an extraordinary situation where she had stated in the affidavit “I have some defence but I will not tell you what it is,” adding that she would have it ready for the High Court proceedings. Mr McDowell, who appeared with Robert Fitzpatrick BL, said appealing to the High Court on undisclosed grounds was clearly a time wasting stratagem. Mr McDowell said Nama had expressed its concern on Wednesday last about the fact the property, which constituted security for the former Irish Nationwide mortgage, was no longer insured. He said Mrs McFeeley had merely informed the court that an independent financial consultant, an insurance broker, had been contacted by Mr and Mrs McFeely and the broker had started the process of sourcing quotes from the market. Mr Canny said a letter from an insurance broker stated that steps were now being taken to ensure that a policy of insurance on the property, at No 2 Ailsbury Road, Dublin 4, would be put in place. Judge Linnane said security on the mortgage was at risk when there was no insurance in place. She awarded costs against the McFeelys. Mr McFeely, a former Maze hunger striker, was declared a bankrupt in London in January last.

Bank of England meets amid talk of £50bn stimulus

Bank of England policymakers meet today to decide whether to change interest rates or to pump in more money into the ailing economy, with leading economist saying they may opt to inject a further £50bn of stimulus.

Europe is on the verge of financial chaos.

Global capital markets, now the most powerful force on earth, are rapidly losing confidence in the financial coherence of the 17-nation euro zone. A market implosion there, like that triggered by Lehman Brothers collapse in 2008, may not be far off. Not only would that dismantle the euro zone, but it could also usher in another global economic slump: in effect, a second leg of the Great Recession, analogous to that of 1937. This risk is evident in the structure of global interest rates. At one level, U.S. Treasury bonds are now carrying the lowest yields in history, as gigantic sums of money seek a safe haven from this crisis. At another level, the weaker euro-zone countries, such as Spain and Italy, are paying stratospheric rates because investors are increasingly questioning their solvency. And there’s Greece, whose even higher rates signify its bankrupt condition. In addition, larger businesses and wealthy individuals are moving all of their cash and securities out of banks in these weakening countries. This undermines their financial systems. 423 Comments Weigh InCorrections? Personal Post The reason markets are battering the euro zone is that its hesitant leaders have not developed the tools for countering such pressures. The U.S. response to the 2008 credit market collapse is instructive. The Federal Reserve and Treasury took a series of huge and swift steps to avert a systemic meltdown. The Fed provided an astonishing $13 trillion of support for the credit system, including special facilities for money market funds, consumer finance, commercial paper and other sectors. Treasury implemented the $700 billion Troubled Assets Relief Program, which infused equity into countless banks to stabilize them. The euro-zone leaders have discussed implementing comparable rescue capabilities. But, as yet, they have not fully designed or structured them. Why they haven’t done this is mystifying. They’d better go on with it right now. Europe has entered this danger zone because monetary union — covering 17 very different nations with a single currency — works only if fiscal union, banking union and economic policy union accompany it. Otherwise, differences among the member-states in competitiveness, budget deficits, national debt and banking soundness can cause severe financial imbalances. This was widely discussed when the monetary treaty was forged in 1992, but such further integration has not occurred. How can Europe pull back from this brink? It needs to immediately install a series of emergency financial tools to prevent an implosion; and put forward a detailed, public plan to achieve full integration within six to 12 months. The required crisis tools are three: ●First, a larger and instantly available sovereign rescue fund that could temporarily finance Spain, Italy or others if those nations lose access to financing markets. Right now, the proposed European Stability Mechanism is too small and not ready for deployment. ●Second, a central mechanism to insure all deposits in euro-zone banks. National governments should provide such insurance to their own depositors first. But backup insurance is necessary to prevent a disastrous bank run, which is a serious risk today. ●Third, a unit like TARP, capable of injecting equity into shaky banks and forcing them to recapitalize. These are the equivalent of bridge financing to buy time for reform. Permanent stability will come only from full union across the board. And markets will support the simple currency structure only if they see a true plan for promptly achieving this. The 17 member-states must jointly put one forward. Both the rescue tools and the full integration plan require Germany, Europe’s strongest country, to put its balance sheet squarely behind the euro zone. That is an unpopular idea in Germany today, which is why Chancellor Angela Merkel has been dragging her feet. But Germany will suffer a severe economic blow if this single-currency experiment fails. A restored German mark would soar in value, like the Swiss franc, and damage German exports and employment. The time for Germany and all euro-zone members to get the emergency measures in place and commit to full integration is now. Global capital markets may not give them another month. The world needs these leaders to step up.