Bankruptcy Of The Week

From Reuters:

German real estate company IVG Immobilien (IVGG.DE), co-owner of the landmark 'Gherkin' office building in London's City financial district, said on Tuesday it was seeking protection from creditors after failing to reach an agreement over the restructuring of its debt.

IVG has about 4 billion euros (£3.38 billion) of debt after a rapid expansion spree and had sought for weeks to agree with creditors on swapping some of the debt for equity...

Shares in IVG, which have lost 96 percent of their value this year, extended losses to trade down 8 percent at 0.077 euros by 4.30 p.m. British time on Tuesday.

One way or another this will end up with a debt-for-equity swap, as the article explains. But it's nice to see land speculators fall on their faces every now and then instead of being bailed out by the government every time. The perils of speculating abroad, I guess. Always best to speculate on land in your own country.

H/t Alan at HPC.

"Westlife declared bankrupt"

From the BBC:

Westlife have been declared musically bankrupt in the UK.

The Irish band sold millions of records but fans suffered enormous financial losses as the CDs contained not a single note worth listening to. In a statement, the 32-year-old lead singer Shane Life said he had "worked long and hard" to try and come up with something original for over a decade and was devastated that fans have finally come to this conclusion.

The pop group filed for moral and intellectual bankruptcy in the UK which has a less onerous bankruptcy regime than the Islamic Republic of Afghanistan. In the UK the period of artistic bankruptcy typically lasts for the rest of an artist's life but in the Islamic Republic of Afghanistan it is punishable by death or more commonly 12 years in prison.

Mr Life also owns a second hand record shop with his brother Finbarr. It was established in 2004 and had been involved in accumulating 44 million discarded Westlife CDs, which have since remained in a warehouse in Counties Leitrim and Sligo in the west of Ireland. Last month, the company was placed in receivership.

The band also suffered a legal set-back when their appeal against refusal of their application for copyright in "stepping down off barstools shortly before the truck driver's gear change" was rejected.

Immigration Advisory Service Fun

From the BBC:

The Immigration Advisory Service (IAS) has gone into administration, BBC News has learnt. The IAS, which employs 200 people, has closed its branches across the UK. One employee told the BBC that staff had been told to clear their desks and that administrators were already in the central headquarters in London.

The free service is one of the leading charities giving legal advice and representation to immigrants and asylum seekers in the UK... The Legal Services Commission (LSC), which runs the legal aid scheme in England and Wales, said the IAS's decision to go into administration was "theirs alone".

A spokesman said: "During recent stewardship activities LSC raised concerns around financial management and claims irregularities which prompted IAS trustees' to conclude that the organisation was no longer financially viable. Our priority now is to work closely with IAS and the administrators to ensure clients of IAS continue to get the help they need, whilst safeguarding public money. We are now identifying alternative advice provision in the areas affected and arrangements for case transfer will follow as soon as possible."

From page 12 of their 2010 acounts

Total income declined by 7% from £17,278,000 to £16,093,000. This reduction was entirely due to a decline in income from the Legal Services Commission (LSC), our main funder; by 8%. It continues to account for 90% of total income.

And their page at The Charity Commission website says they have 381 employees, so there.

Er... which assets exactly?

From The Metro, 9 November 2010:

The Equality and Human Rights Commission asked Lord Justice Moore-Bick and Mr Justice Ramsey to find the trio guilty of contempt for failing to comply with a court judgment ordering the removal of potentially racist clauses from the BNP’s constitution... The watchdog asked the judges, sitting at London’s High Court, to fine the BNP leadership or seize party assets.

From The Daily Mirror, 3 November 2010:

BNP leader Nick Griffin faces being axed as a Euro MP as he fights to avoid bankruptcy over his party's soaring cash crisis. He is among top officials thought to be personally liable for the racist group's £700,000 debts - which it admits it cannot pay.

I have no idea whether that figure of £700,000 for the deficit (i.e. negative assets) is accurate, but the latest BNP accounts available from the Electoral Commission are those for 2008, which show a deficit of about £200,000. Those accounts are 'under enquiry', and heck knows what the BNP spent on the EU Parliament elections in 2009 or the General Election in 2010. Half a million quid would seem a fair guess.

A stitch in time would have saved nine €60 billion.

Debt-for-equity swaps only work if bond holders know that refusal to co-operate won't be rewarded with a taxpayer funded bail-out, and instead will end up with insolvency proceedings, which inevitably result in a debt-for-equity swap.

There's a lengthy article in The Irish Times* by Morgan Kelly, Professor of Economics at University College Dublin, who summarises thusly:

Until September, Ireland had the legal option of terminating the bank guarantee on the grounds that three of the guaranteed banks had withheld material information about their solvency, in direct breach of the 1971 Central Bank Act.

The way would then have been open to pass legislation along the lines of the UK’s Bank Resolution Regime, to turn the roughly €75 billion of outstanding bank debt into shares in those banks, and so end the banking crisis at a stroke.

With the €55 billion repaid, the possibility of resolving the bank crisis by sharing costs with the bondholders is now water under the bridge. Instead of the unpleasant showdown with the European Central Bank that a bank resolution would have entailed, everyone is a winner. Or everyone who matters, at least.

The German and French banks whose solvency is the overriding concern of the ECB get their money back. Senior Irish policymakers get to roll over and have their tummies tickled by their European overlords and be told what good sports they have been...

* Spotted by Drewster at HPC.

Oh, please let this be true...

From yesterday's Daily Mirror:

BNP leader Nick Griffin could lose Euro seat as party faces bankruptcy... He is among top officials thought to be personally liable for the racist group's £700,000 debts - which it admits it cannot pay.

The BNP's money woes were laid bare by ex-chief fundraiser James Dowson in a letter seen by the Mirror. Mr Dowson told North-East printers who produced its newsletter that the finances were like "a shipwreck.. Cash is in very short supply... [it is] impossible for the BNP and persons associated with it to pay outstanding bills in anything like a normal timescale, if indeed at all." The "very grave" crisis meant it could only pay 20% of what it owed, he added.

Its money problems have been made worse by having to settle a legal row after illegally using Marmite in an ad and the cost of fighting the Equality and Human Rights Commission over its whites-only admission rules. Meanwhile, electoral chiefs are still probing its 2008 accounts as they contain gaps that breach the law...

It's Nice When Someone Agrees with You...

In respect of my job as FS Minister in the Bloggers Government and my policy statement posted previously, it is nice to see that someone important agrees with me.

Lola

Arc Capital and Income Plc (in Administration)

Tee hee!

In a moment of weakness, I once emailed these people and have been bombarded with "Too good to be true" type investment opportunities ever since.

The company went into administration three days ago.

Rabbit, headlights, oncoming train.