/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/100324.mbx T R O U B L E D C O M P A N Y R E P O R T E R E U R O P E Wednesday, March 24, 2010, Vol. 11, No. 058 Headlines A U S T R I A WIENERBERGER AG: S&P Downgrades Corporate Credit Ratings to 'BB' G E R M A N Y DEUTSCHE LUFTHANSA: Pilots to Strike in April 13 After Talks Fail ESCADA AG: Admin. Claims Bar Date Set for March 31 ESCADA AG: Restated C. Marques Employment Pact Approved ESCADA AG: U.S. Trustee Wants EUSA Case Converted to Ch. 7 ESCADA AG: U.S. Unit's Motion to Enforce Sale Order on 717 GFC FLEETSTREET FINANCE: S&P Junks Rating on Class C Notes From BBB HEIDELBERGCEMENT AG: May Miss 2010 Investment-Grade Rating Goal I R E L A N D FERGUS HAYNES: BoSI Seeks EUR8.4 Mil. Summary Judgment v. Owner HOUSE OF EUROPE: Moody's Cuts Ratings on Class A1 Notes to 'B1' KEELAGH HOMES: EBS Sued By Businessman Over Loss of Investment L U X E M B O U R G LUXEMBOURG INVESTMENT: Liquidators Sue UBS and Ernst & Young N E T H E R L A N D S BETULA FUNDING: Fitch Affirms Rating on Class A Notes at 'B' N O R W A Y EITZEN MARITIME: Secures Covenant Waiver on NOK400 Mil. Loan R O M A N I A * ROMANIA: Suppliers Recover Less From Insolvent Companies * ROMANIA: Lawyers Feel Thawing of M&A Activity, DLA Piper Says R U S S I A * RUSSIAN REPUBLIC OF SAKHA: S&P Affirms BB- Rtng; Outlook Stable S P A I N BBVA LEASING: Moody's Junks Ratings on Two Classes of Notes S W E D E N FORD MOTOR: Deal to Sell Volvo to Geely May Be Signed on Sunday GENERAL MOTORS: Spyker Wins US$1.2MM tax Credit for Michigan HQ U K R A I N E KB IPOBANK: Faces Liquidation Following Temporary Administration U N I T E D K I N G D O M GAC ENGINEERING: Cash Flow Problems Prompt Administration GENERAL MOTORS: Nears Deal with Renault to Secure Luton Future HIT ENTERTAINMENT: Lenders Waive Covenant Test on US$579MM Debt ICAP PLC: To Shutter Unprofitable Equities Sales & Research Unit NEUROPHARM PLC: Mulls Liquidation on Lack of NPL-2008 Funding NORTEL NETWORKS: Court Won't Certify Stay Order on UK Proceeding PORTSMOUTH FOOTBALL: Chainrai to Waive Right to Advance TV Money * UK: Business Insolvencies Down 15% Year-On-Year in February X X X X X X X X * EUROPE: EU Should Consider "Burden Sharing" on Bank Failures ********* ============= A U S T R I A ============= WIENERBERGER AG: S&P Downgrades Corporate Credit Ratings to 'BB' ---------------------------------------------------------------- Standard & Poor's Ratings Services said it had lowered its long- term corporate credit ratings on Austria-based brick manufacturer Wienerberger AG to 'BB' from 'BB+'. The 'B' short-term ratings were affirmed, and the outlook remains negative. At the same time, S&P lowered its rating on Wienerberger's hybrid bond to 'B' from 'B+', and its rating on its unsecured bond to 'BB' from 'BB+'. The downgrade and negative outlook reflect S&P's revised forecasts for Wienerberger, which include its assumptions of below-par credit metrics in 2009, and risks to a timely recovery of credit metrics to levels S&P feels commensurate with the 'BB' rating, such as funds from operations to debt of about the high-teens to 20% range. Given weak fourth-quarter trading in many of Wienerberger's key markets, S&P anticipates that its funds from operations generation will be significantly more reduced than initially anticipated. This will likely result in the FFO-to-debt ratio dropping significantly below the low- to mid-teens range S&P envisaged previously at year-end 2009, despite a sizable reported net debt reduction of about EUR480 million to about EUR410 million. This is very weak for the 'BB' rating category and significantly below S&P's initial expectations. Nevertheless, S&P's rating assessment also takes into consideration its belief that Wienerberger's balance sheet should remain sound and that the FFO-to-debt ratio should improve in 2010. This is based on S&P's anticipation that Wienerberger's management will continue to focus on protecting cash flow generation and limiting spending in 2010. In addition, S&P thinks that the several measures taken to date, including cost cutting, covenant renegotiations, and debt maturity extensions, will continue to support liquidity and underpin cash flow ratios. The negative outlook reflects the potential for further ratings downside if Wienerberger's key cash flow metrics were to remain below the level S&P views as commensurate for the 'BB' rating for a prolonged period. This could happen in the event of broad price disruptions and/or if key Eastern European markets continue to fall rapidly this year. At this stage, S&P does not anticipate this worst-case scenario to occur, but difficult trading conditions in the first months of 2010 and an uncertain market outlook could continue to put pressure on the ratings which is also reflected in the negative outlook. S&P could revise the outlook to stable if S&P see evidence of Wienerberger's credit metrics rebounding in the short term to sustainable levels that are commensurate with the 'BB' rating category. This could include an improvement in the FFO-to-debt ratio to about 20%. While such a scenario could occur quickly if markets recover -- given the group's noticeable operating leverage -- S&P currently does not believe such a recovery is likely to be felt before the end of 2010 at the earliest. ============= G E R M A N Y ============= DEUTSCHE LUFTHANSA: Pilots to Strike in April 13 After Talks Fail ----------------------------------------------------------------- Ralph Atkins at The Financial Times reports that Deutsche Lufthansa AG faces a fresh four-day pilots strike in April. According to the FT, Vereinigung Cockpit, the German pilots' trade union, announced it would restart industrial action after the failure of talks on future job security. The FT relates the union said its action would start on April 13. The FT says a shutdown of the airline's services would cost at least EUR25 million a day. The FT recalls Cockpit, which started its action last month, argued that the pay and conditions of Lufthansa pilots were being undermined by the company's increasing reliance on foreign subsidiaries such as Austrian Airlines and British Midland, as well as its Lufthansa Italia operations. Loss Citing Bloomberg News, the Troubled Company Reporter-Europe reported on March 4, 2010, that Lufthansa posted a net loss of EUR112 million (US$152 million) for 2009 compared with restated net income of EUR542 million in 2008. Bloomberg disclosed the carrier said it won't pay a dividend on 2009 earnings because of the net loss, the first for a full year since 2003. Deutsche Lufthansa AG -- http://www.lufthansa.com/-- is an aviation company with operations worldwide. It operates in five business segments: Passenger Transportation, Logistics, Maintenance, Repair and Overhaul (MRO), Information Technology (IT) services and Catering. On January 22, 2008, it acquired 19% of the shares in JetBlue Airways. In October 2008, Lufthansa established an Italian company called Lufthansa Italia as it mulls to make Milan based Malpensa airport its third hub after Frankfurt and Munich. In September 2009, Austrian Airlines AG was taken over by Deutsche Lufthansa AG. Austrian Airlines will therefore become part of the Lufthansa Group as of September 2009. * * * As reported in the Troubled Company Reporter-Europe on Sept. 7, 2009, Moody's Investors Service lowered the long-term and short- term issuer ratings of Deutsche Lufthansa AG to Ba1/Not-prime from Baa3/Prime-3. At the same time Moody's withdrew the long- term issuer rating and assigned a Corporate Family Rating and Probability of Default Rating at Ba1. Moody's said the outlook is stable. ESCADA AG: Admin. Claims Bar Date Set for March 31 -------------------------------------------------- Bankruptcy Judge Stuart Bernstein established March 31, 2010, as the final date by which all parties, including governmental units, must file requests for allowance of administrative expense claims arising under Sections 503 and 507(a)(1) in the Chapter 11 case of Debtor EUSA Liquidation Inc., formerly known as Escada (USA), Inc. An Administrative Claim is any claim with respect to which a holder intends to seek payment pursuant to Sections 503 and 507(a)(1) of the Bankruptcy Code, incurred from or after August 14, 2009, through and including January 15, 2010, Judge Bernstein ruled. The Court also approved these procedures for filing of Administrative Claims: (1) The Administrative Claim must be in writing, must conform to the Bankruptcy Rules and the Local Rules and must be filed by either overnight mail, first class mail, or by hand delivery to: EUSA Liquidation Inc. (f/k/a Escada USA Inc.) Claims Processing Center c/o Kurtzman Carson Consultants, LLC 2335 Alaska Avenue El Segundo, CA 90245 (866) 967-0490 or by hand delivery to: United States Bankruptcy Court Southern District of New York 1 Bowling Green, Room 534 New York, NY 10004 (2) The Administrative Claim must: (i) state the name of the claimant and the nature of the claim or interest of the party; (ii) specify the name and case number of the Debtor's Chapter 11 case; (iii) set forth with specificity the grounds for the Claim; and (iv) include supporting documentation or an explanation as to why documentation is not available. An Administrative Claim will be deemed filed only if actually filed in conformity with the Procedures and when received by Kurtzman, as the Debtor's Claims and Noticing Agent, or the Court. Administrative Claims of professionals retained pursuant to Sections 327 and 328 of the Bankruptcy Code and all fees payable and unpaid under Section 1930 of the Judiciary and Judicial Procedures Code need not be filed, the Court clarified. All entities that are required, but fail, to file Administrative Claims on or before the Administrative Claims Bar Date will be forever barred, estopped, and enjoined from asserting those Claims against the Debtor. In such a case, the holder will not be permitted to participate in any distribution in the Debtor's Chapter 11 case on account of the Administrative Claim or to receive further notices, and the Debtor will be forever discharged from any and all indebtedness or liability with respect to that Administrative Claim. At the Court's directive, the Debtor published an Administrative Claims Bar Date Notice in Women's Wear Daily on March 1, 2010. Edward Jenner Jr., an authorized designee of Women's Wear Daily, submitted to the Court an affidavit confirming the publication. About Escada AG The ESCADA Group -- http://www.escada.com/-- is an international fashion group for women's apparel and accessories, which is active on the international luxury goods market. It has pursued a course of steady expansion since its founding in 1976 by Margaretha and Wolfgang Ley and today has 182 own shops and 225 franchise shops/corners in more than 60 countries. As of August 10, 2009, the Escada Group operated 176 owned stores and so-called shop in shops, of which 26 owned stores are located in the United States and operated by Escada (USA) Inc. and 2 stores are planned to be opened in the United States before year end. Escada Group products are also sold in 163 stores worldwide which are operated by franchisees. Escada Group had total assets of EUR322.2 million against total liabilities of EUR338.9 million as of April 30, 2009. Wholly owned subsidiary Escada (USA) Inc. filed for Chapter 11 on August 14, 2009 (Bankr. S.D.N.Y. Case No. 09-15008). Judge Stuart M. Bernstein handles the case. O'Melveny & Myers LLP has been tapped as bankruptcy counsel. Kurtzman Carson Consultants serves as claims and notice agent. Escada US listed US$50 million to US$100 million in assets and US$100 million to US$500 million in debts in its petition. Bankruptcy Creditors' Service, Inc., publishes Escada USA Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Escada USA, and the insolvency proceedings of ESCADA AG and its units. (http://bankrupt.com/newsstand/or 215/945-7000) ESCADA AG: Restated C. Marques Employment Pact Approved ------------------------------------------------------- Judge Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York approved amended and restated versions of: (i) the Employment Agreement between Debtor EUSA Liquidation Inc., formerly known as Escada (USA), Inc., and Christian D. Marques, for the retention of Mr. Marquez as the Debtor's president and treasurer and for Mr. Marquez to provide assistance to the Debtor with its continuing obligations; and (ii) the Cost-Sharing Agreement, under which ESCADA Subco LLC has agreed to share the costs of Mr. Marques' retention. ESCADA Subco purchased substantially all of the Debtor's assets, and successfully closed the Sale transaction on January 15, 2010. Consequently, the Debtor terminated all of its employees on January 14, and Escada AG, the sole stockholder of the Debtor, removed members of the Debtor's board of directors from their positions and appointed Mr. Marques as sole director. ESCADA Subco subsequently hired substantially all of the Debtor's former employees, including its senior management team other than Mr. Marques, the Debtor's former executive vice president, chief financial officer and treasurer on January 15. In his capacity as sole director, Mr. Marques then appointed himself as President and Treasurer of the Debtor. The Debtor has indicated that the Amended and Restated Employment Agreement and the Amended and Restated Cost-Sharing Agreement reflect adjustments that addressed the U.S. Trustee's concerns. As previously reported, the U.S. Trustee argued that the severance payments contemplated by the Original Agreements were: (i) hinged on issues relating to payment to insiders, as that term is defined under Section 101(31) of the Bankruptcy Code; and (ii) "unclear" on whether severance payments were made during the first two weeks of 2010, prior to the closing of the Sale Transaction. The Amended and Restated Agreements will be deemed to amend, modify and supersede all prior agreements, Judge Bernstein ruled. Full-text copies of the Amended and Restated Agreements are available at no charge at: http://bankrupt.com/misc/Escada_Amended&RestatedCostSharing.pdf http://bankrupt.com/misc/Escada_Amended&RestatedEmployment.pdf About Escada AG The ESCADA Group -- http://www.escada.com/-- is an international fashion group for women's apparel and accessories, which is active on the international luxury goods market. It has pursued a course of steady expansion since its founding in 1976 by Margaretha and Wolfgang Ley and today has 182 own shops and 225 franchise shops/corners in more than 60 countries. As of August 10, 2009, the Escada Group operated 176 owned stores and so-called shop in shops, of which 26 owned stores are located in the United States and operated by Escada (USA) Inc. and 2 stores are planned to be opened in the United States before year end. Escada Group products are also sold in 163 stores worldwide which are operated by franchisees. Escada Group had total assets of EUR322.2 million against total liabilities of EUR338.9 million as of April 30, 2009. Wholly owned subsidiary Escada (USA) Inc. filed for Chapter 11 on August 14, 2009 (Bankr. S.D.N.Y. Case No. 09-15008). Judge Stuart M. Bernstein handles the case. O'Melveny & Myers LLP has been tapped as bankruptcy counsel. Kurtzman Carson Consultants serves as claims and notice agent. Escada US listed US$50 million to US$100 million in assets and US$100 million to US$500 million in debts in its petition. Bankruptcy Creditors' Service, Inc., publishes Escada USA Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Escada USA, and the insolvency proceedings of ESCADA AG and its units. (http://bankrupt.com/newsstand/or 215/945-7000) ESCADA AG: U.S. Trustee Wants EUSA Case Converted to Ch. 7 ---------------------------------------------------------- Diana G. Adams, the U.S. Trustee for Region 2, asks Judge Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York, to convert the Chapter 11 case of EUSA Liquidation Inc., formerly known as Escada (USA) Inc., into a proceeding under Chapter 7. Section 1112(b) of the Bankruptcy Code governs the conversion or dismissal of a Chapter 11 case and grants bankruptcy courts the power to promptly administer chapter 11 cases on their docket. Among other things, "cause" to convert a Chapter 11 case to Chapter 7 includes: -- "substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation; and -- "failure timely to provide information or attend meetings reasonably required by the United States Trustee." The U.S. Trustee filed her Chapter 7 Conversion Motion in light of the recently concluded sale of the Debtor's assets to ESCADA US Subco, LLC, pursuant to an Asset Purchase and Sale Agreement among the parties. Under the deal, ESCADA USA received US$6 million; had certain of its liabilities assumed by the Purchaser; and received reimbursement for new inventory it purchased from and after the execution of the Agreement. The Sale was approved by Bankruptcy Judge Gonzales on January 7, 2010, and the closing of the Sale subsequently occurred on January 15. On behalf of the U.S. Trustee, Elisabetta G. Gasparini, Esq., in New York, says that the Debtor's business is presently not operating and all that remains to be done in the case is possibly pursue some causes of action -- to the extent any claim exist -- and distribute the limited "pot" of funds to the various creditors. Ms. Gasparini tells the Court that the continuing loss to or diminution to the Debtor's estate cannot be disputed. "The last monthly operating report that was filed with the Court reflects that the overall value of the Debtor's assets has diminished by over US$15 million. Moreover . . . the Debtor has operated at a loss since the Petition Date, and the cumulative net losses in this case are amount to over US$22 million as of the end of 2009," she elaborates. Moreover, while the Official Committee of Unsecured Creditors has indicated that they are prepared to file a plan and disclosure statement, proceeding with the confirmation of a plan as opposed to a conversion to Chapter 7 does not appear to benefit the unsecured creditors, Ms. Gasparini reasons. In fact, since the Sale was consummated, the constituencies have retained or are seeking to retain additional professionals, she tells Judge Bernstein. Ms. Gasparini points out that under Chapter 11, quarterly fees owed to the U.S. Trustee would continue to accrue, and even after confirmation of a plan, professional fees would continue. There is also a possibility that the plan administrator would hire additional professionals -- all causing the administrative expenses related to the wind-down of the Debtor under Chapter 11 to be undoubtedly higher than those related to a Chapter 7. Ms. Gasparini further asserts that the Debtor's case does not have any prospect of successfully reorganizing its business. "This is a case where there is a finite 'pot' of funds for distribution to creditors, and all that is left to do is investigate and pursue any possible causes of action that would reduce claims asserted against the estate and possibly bring money into the estate, object to claims, and finally, distribute the remaining funds to the various creditors." "All this can be done by a Chapter 7 trustee without having to pay the related administrative costs of the Chapter 11 proceeding," Ms. Gasparini maintains. The Court is set to convene a hearing on April 29, 2010, to hear the U.S. Trustee's request. About Escada AG The ESCADA Group -- http://www.escada.com/-- is an international fashion group for women's apparel and accessories, which is active on the international luxury goods market. It has pursued a course of steady expansion since its founding in 1976 by Margaretha and Wolfgang Ley and today has 182 own shops and 225 franchise shops/corners in more than 60 countries. As of August 10, 2009, the Escada Group operated 176 owned stores and so-called shop in shops, of which 26 owned stores are located in the United States and operated by Escada (USA) Inc. and 2 stores are planned to be opened in the United States before year end. Escada Group products are also sold in 163 stores worldwide which are operated by franchisees. Escada Group had total assets of EUR322.2 million against total liabilities of EUR338.9 million as of April 30, 2009. Wholly owned subsidiary Escada (USA) Inc. filed for Chapter 11 on August 14, 2009 (Bankr. S.D.N.Y. Case No. 09-15008). Judge Stuart M. Bernstein handles the case. O'Melveny & Myers LLP has been tapped as bankruptcy counsel. Kurtzman Carson Consultants serves as claims and notice agent. Escada US listed US$50 million to US$100 million in assets and US$100 million to US$500 million in debts in its petition. Bankruptcy Creditors' Service, Inc., publishes Escada USA Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Escada USA, and the insolvency proceedings of ESCADA AG and its units. (http://bankrupt.com/newsstand/or 215/945-7000) ESCADA AG: U.S. Unit's Motion to Enforce Sale Order on 717 GFC -------------------------------------------------------------- ESCADA US Subco, LLC, formerly Escada (USA) Inc., asks Judge Stuart M. Bernstein of the U.S. Bankruptcy Court for the Southern District of New York to enjoin Landlord 717 GFC LLC from taking any action to terminate the lease related to Subco's flagship retail store located at 717 Fifth Avenue, in New York. ESCADA Subco is the purchaser of substantially all of the assets of Debtor ESCADA (USA) Inc., now known as EUSA Liquidation Inc., pursuant to an Asset Purchase and Sale Agreement among the parties dated December 21, 2010. Under the Asset Sale Agreement, ESCADA USA was contemplated to (i) receive US$6 million; (ii) have certain of its liabilities assumed by the Purchaser; and (iii) receive reimbursement for new inventory it purchased from and after the execution of the Agreement. The Sale was approved by Bankruptcy Judge Arthur J. Gonzales for the Southern District of New York on January 7, 2010. The closing of the Sale occurred on January 15. Among the Assets transferred to Purchaser under the Asset Sale Agreement was the Fifth Avenue Lease between a predecessor-in- interest to the Landlord and the Debtor dated as of September 29, 2000, as amended. The Landlord previously said it engaged in discussions with the Purchaser, which was expected to offer the Landlord a new guarantor with "over EUR30 million in cash" plus "other assets, given that the present guarantor, ESCADA AG, is bankrupt. The parties also discussed that the Purchaser, as the new tenant, would become subject, under the existing Lease, to a separate and ongoing duty to replace the guaranty. The Landlord later related that no agreement was ultimately reached. Instead, the Fifth Avenue Lease was not rejected, but was assumed and assigned the Purchaser as of the Sale Closing. Against this backdrop, ESCADA Subco asks the Bankruptcy Court to prevent the Landlord from: -- using any purported inadequacy of a replacement guaranty executed and delivered by ESCADA Luxembourg, S.a.r.l., the Purchaser's parent, in connection with the closing of the sale approved by the Sale Order; -- draw on the Irrevocable Standby Letter of Credit dated January 15, 2010, issued by Deutsche Bank in favor of the Landlord on behalf of the Purchaser; -- assert damages or other remedies under the Fifth Avenue Lease; or -- interfere with the Purchaser's use and enjoyment of the premises subject to the Fifth Avenue Lease. Meghan M. Sercombe, Esq., at Cleary Gottlieb Steen & Hamilton LLP, in New York, on behalf of ESCADA Subco, delivered to the Court exhibits relating to ESCADA Subco's request, including, copies of the Replacement Guaranty and the Letter of Credit. ESCADA Subco asserts that the Sale Order approved all purchase agreements related to the transfer of Assets and explicitly determined that all counterparties to assumed contracts had received adequate assurance of future performance within the meaning of Sections 365(b)(1)(C) and 365(f)(2)(B) of the Bankruptcy Code. Thus, Sean A. O'Neal, Esq., at Cleary Gottlieb Steen & Hamilton LLP, in New York, contends that contrary to the Landlord's assertion, the Court has already determined that the Purchaser has provided adequate assurance to the Landlord by, among other things, delivering the Replacement Guaranty executed by ESCADA Lux. The Landlord was given every opportunity to contest the adequacy of the Replacement Guaranty but chose to take no action, Mr. O'Neal laments. Instead, he notes, weeks after the Sale Closing, the Landlord is "threatening" to terminate the Fifth Avenue Lease. The Court should require the Landlord to comply with the terms of the Sale Order and cease its interference with the Purchaser's right to continue performance under the terms of the Fifth Avenue Lease, Mr. O'Neil remains. Echoing ESCADA Subco's arguments, the Official Committee of Unsecured Creditors reiterates that the Landlord had the opportunity to object to the Sale Motion, but did not. "At this point, in the absence of any appeal having been taken, the Sale Order is final," maintains Melanie L. Cyganowski, Esq., at Otterbour, Steindler, Houston & Rosen, P.C., in New York, on behalf of the Committee. Ms. Cyganowski elaborates that pursuant to the Sale Order, the Fifth Avenue Lease was assumed and assigned to ESCADA Subco, all without objection, and subject to the Replacement Guarantee. Thus, any termination of the Lease predicated on the insufficiency of the Guarantee violates the Sale Order, she says. Moreover, to the extent any violation gives rise to claims against the Debtor's estate, those claims only serve to prejudice the Debtor's creditors, she adds. Landlord Reacts "The problem here is that . . . [ESCADA Subco's] parent or principals have, in subsequent negotiations with Landlord . . . have refused to proffer a meaningful parent guaranty, by instead 'loading' the parent's balance sheet with a 'shareholder loan' that virtually erases all the assets, and leaves the parent as a shell with almost no net worth," Richard Claman, Esq., at Stempel Bennet Claman & Hochberg, P.C., in New York, argues. A "shell" guaranty is plainly inadequate in regard to a Lease whose term, at Landlord's option, can extend into 2026, where the total rent due, net of all concessions, is in excess of $55 million, Mr. Claman explains. Mr. Claman relates that as of January 15, 2010, ESCADA Subco has been occupying the Lease as assignee-tenant. As of January 27, however, ESCADA Subco had not proffered any current guaranty -- let alone a meaningful one. Accordingly, the Landlord served upon ESCADA Subco, as new tenant, on January 27, 2010, a 30-day notice to cure the Fifth Avenue Lease to "keep good" the Guaranty which ESCADA Subco promised as "security," says Mr. Claman. ESCADA Subco proffered the Replacement Guaranty, but "did not include any attempt to show that the 'guarantor' had any assets," Mr. Claman discloses. "It appeared that the [Replacement] Guaranty was just a piece of paper of no real meaning." Mr. Claman contends that ESCADA Subco has available -- if they want to so commit -- the financial resources to provide the Landlord with a proper current guaranty. There must be at least "an implicit commitment that it will further devote additional [and available] resources to make the new venture [with the Landlord] work," Mr. Claman asserts. * * * At ESCADA Subco's behest, Judge Bernstein will convene an expedited hearing on the ESCADA Subco's request, today, March 19, 2010. Mr. O'Neil related in a declaration filed with the Court that the Landlord has consented to the Debtor's request for an expedited hearing. About Escada AG The ESCADA Group -- http://www.escada.com/-- is an international fashion group for women's apparel and accessories, which is active on the international luxury goods market. It has pursued a course of steady expansion since its founding in 1976 by Margaretha and Wolfgang Ley and today has 182 own shops and 225 franchise shops/corners in more than 60 countries. As of August 10, 2009, the Escada Group operated 176 owned stores and so-called shop in shops, of which 26 owned stores are located in the United States and operated by Escada (USA) Inc. and 2 stores are planned to be opened in the United States before year end. Escada Group products are also sold in 163 stores worldwide which are operated by franchisees. Escada Group had total assets of EUR322.2 million against total liabilities of EUR338.9 million as of April 30, 2009. Wholly owned subsidiary Escada (USA) Inc. filed for Chapter 11 on August 14, 2009 (Bankr. S.D.N.Y. Case No. 09-15008). Judge Stuart M. Bernstein handles the case. O'Melveny & Myers LLP has been tapped as bankruptcy counsel. Kurtzman Carson Consultants serves as claims and notice agent. Escada US listed US$50 million to US$100 million in assets and US$100 million to US$500 million in debts in its petition. Bankruptcy Creditors' Service, Inc., publishes Escada USA Bankruptcy News. The newsletter tracks the Chapter 11 proceedings of Escada USA, and the insolvency proceedings of ESCADA AG and its units. (http://bankrupt.com/newsstand/or 215/945-7000) FLEETSTREET FINANCE: S&P Junks Rating on Class C Notes From BBB --------------------------------------------------------------- Standard & Poor's Ratings Services lowered and removed from CreditWatch negative its credit ratings on FleetStreet Finance Two PLC's class A to D notes. At closing in October 2006, Fleet Street Two acquired a EUR1,192 million loan secured on a KarstadtQuelle group sale- and lease-back portfolio comprising mostly department stores located across Germany. The outstanding loan balance subsequently reduced to EUR1,128 million as a result of prepayments (from property disposals) and quarterly scheduled amortizations. There are 96 properties remaining in the pool. Karstadt and Quelle both filed for insolvency in June 2009. The borrower has delivered an updated valuation of EUR713 million based on the assumption that the properties are fully vacant on sale. The property valuer, Cushman & Wakefield, prepared this valuation in December 2009. This updated valuation indicates that the securitized loan-to-vacant possession value has risen to 158%. S&P's ratings reflected its view of the likely level of recoveries following an insolvency of Karstadt and Quelle. In light of the lower-than-anticipated liquidation scenario valuation, S&P recently placed its ratings on CreditWatch negative pending review of its recovery analysis in light of the new information. Immediate disposals would, in S&P's view, be likely to result in higher proceeds than EUR713 million. S&P understands that the updated valuation includes some generic assumptions, such as stressed void periods, that may not, in its view, reflect the likely value achievable in a sale. S&P notes, however, that the updated vacant possession value -- which S&P considers as a distressed valuation -- may affect the marketability of the properties in a disposal scenario. S&P understands that the liquidity facility should be available to cover loan-level interest shortfalls, which could occur if there is insufficient rental income. S&P believes, however, that there are scenarios where, if no rental income is received, the liquidity facility may not be available to cover interest shortfalls to the class C and D notes as a result of the application of the appraisal reduction mechanism. These rating actions reflect S&P's opinion of the creditworthiness of the notes based on the original terms and conditions of the transaction. S&P understands the transaction is being restructured at the borrower's request but, as yet, this has not been completed. S&P is considering the proposed terms of the restructuring pending final confirmation of all the related documentation. Ratings List Fleet Street Finance Two PLC EUR1.192 Billion Commercial Mortgage-Backed Floating-Rate Notes Ratings Lowered and Removed From CreditWatch Negative Rating ------ Class To From ----- -- ---- A BBB AA/Watch Neg B BB A/Watch Neg C CCC BBB/Watch Neg D CCC- BB/Watch Neg HEIDELBERGCEMENT AG: May Miss 2010 Investment-Grade Rating Goal --------------------------------------------------------------- Richard Weiss at Bloomberg News reports that HeidelbergCement AG signaled it may miss this year's goal of getting finances in line with an investment-grade credit rating. According to Bloomberg, Ozan Kacar, HeidelbergCement's investor relations manager, said operating profit of more than EUR3 billion (US$4 billion), and a debt-to-earnings ratio of below 2.8 are "mid-cycle" targets. "Whether we will be able to reach that this year, or 2011, or 2012 will depend on the global markets," Bloomberg quoted Mr. Kacar as saying. HeidelbergCement's long-term rating is BB- at Standard & Poor's and Ba3 at Moody's Investors Service, three levels below investment grade, Bloomberg notes. It was rated as low as B- until Oct. 15 at S&P, six levels below investment grade, after it inflated borrowings with its US$12 billion takeover of rival Hanson Plc, Bloomberg recalls. Credit-Default Swaps Credit-default swaps on HeidelbergCement rose 21 basis points to 310, Bloomberg says citing CMA DataVision prices at 11:30 a.m. on March 22 in London. An increase signals declining perceptions of credit quality, Bloomberg states. The company probably won't reach its targets "in the foreseeable future," Unicredit equity analyst Kerstin Vitvar wrote in a March 19 note, according to Bloomberg. About HeidelbergCement Based in Heidelberg, Germany, HeidelbergCement AG (FRA:HEI) -- http://www.heidelbergcement.com/-- is a global producer of cement, concrete and building materials. The Company's core activities include the production and distribution of cement and aggregates, the two raw materials for concrete. It is also engaged in the provision of such products as ready-mixed concrete, as well as concrete products and elements. It divides its activities into four group areas: Europe-Central Asia, North America, Asia-Australia-Africa-Mediterranean and Group Services. It divides its products into three lines: cement, aggregates and concrete and building products. Its products include sand, gravel, crushed stone, white cement, trass cement, masonry cement, aquament and portland cement for hydraulic engineering, as well as light, heavy and aerated concrete building blocks, pavers, prefabricated ceilings and walls, prefabricated cellar units and prefabricated sewage works units, among others. In 2007, the Company took over Hanson Group. ============= I R E L A N D ============= FERGUS HAYNES: BoSI Seeks EUR8.4 Mil. Summary Judgment v. Owner --------------------------------------------------------------- The Irish Times reports that Bank of Scotland (Ireland) Ltd. is seeking EUR8.4 million summary judgment orders against Charles Fergus, a Co Donegal businessman and property developer. According to the Irish Times, the bank's claim arises under personal guarantees which were allegedly executed by Mr. Fergus from 2004 to 2008 over liabilities to BoSI of Fergus Haynes Developments Ltd. The Irish Times relates the bank moved on foot of the guarantee in December 2009 after the company failed in September 2008 to repay EUR7.7 million then due and owing. The bank claims that EUR8.47 million was due and owing from Mr. Fergus as of March 15, the Irish Times notes. The action by BoSI against Mr. Fergus was admitted to the Commercial Court Monday by Ms. Justice Mary Finlay Geoghegan. Ms. Justice Finlay Geoghegan adjourned the proceedings to April 19, the Irish Times discloses. Citing Property Week, the Troubled Company Reporter-Europe reported on Sept. 24, 2008, that Fergus Haynes Developments went into receivership after racking up debts of more than EUR15 million (GBP11.9 million). Property Week disclosed Grant Thornton Ireland was appointed receivers to the company. Creditors of the company founded by Mr. Fergus included Bank of Scotland, Bank of Ireland and National Irish Bank, according to Property Week. The Sunday Business Post said Bank of Scotland took control of the company's sites in Co Donegal after the High Court rejected a petition by the firm's directors for it to be placed into examinership. HOUSE OF EUROPE: Moody's Cuts Ratings on Class A1 Notes to 'B1' --------------------------------------------------------------- Moody's Investors Service has downgraded the ratings of two classes of Notes issued by House of Europe Funding V PLC. The Notes affected by the rating actions are: -- EUR200,000,000 Class A1 House of Europe Funding V PLC Delayed Draw Note due 2090; Downgraded to B1; Previously on March 18, 2009 Downgraded to Ba2; -- EUR580,000,000 Class A1 House of Europe Funding V PLC Floating Rate Notes due 2090; Downgraded to B1; Previously on March 18, 2009 Downgraded to Ba2. House of Europe Funding V is a collateralized debt obligation backed primarily by a portfolio of Euro denominated Structured Finance securities, with approximately 30% of the portfolio consisting of RMBS and 40% CMBS. The rating downgrade actions reflect deterioration in the credit quality of the underlying portfolio as indicated by rating actions taken with respect to underlying assets. Credit deterioration of the collateral pool is observed through a decline in the average credit rating (as measured by an increase in the weighted average rating factor) and failure of the coverage tests, among other measures. The weighted average rating factor, as reported by the trustee, has increased from 128 in February 2009 to 474 in March 2010. During this same time, defaulted securities increased by ~EUR 9.8 million and the Class A/B Overcollateralization Ratio decreased from 97.04% to 89.32%. In excess of 11% of the ratings assigned to underlying portfolio securities are currently on review for downgrade and since last rating action more than 40% of the portfolio has experienced negative downgrade action. KEELAGH HOMES: EBS Sued By Businessman Over Loss of Investment -------------------------------------------------------------- Mary Carolan at The Irish Times reports that businessman Tommy Kelly has sued EBS Building Society, alleging its negligence and misrepresentation led to his investing and losing EUR6 million in a major property development in Co Louth financed by the EBS. According to the report, Mr. Kelly alleges EBS head of development finance Martha Widger had advised him about the development involving property company Keelagh Homes Ltd. (KHL), now insolvent, but never disclosed at meetings that her family had an interest in the Keelagh group "and therefore a vested interest" in its financial survival. At no stage had EBS disclosed Ms. Widger's personal involvement with the Keelagh group to Mr. Kelly, the report states. The report notes Mr. Kelly said had he been aware of "this conflict of interest", he would never have proceeded with the investment. According to the report, Mr. Kelly said it appeared the Widger family has an interest in the Keelagh group and a subsidiary, Keelagh Homes (South) Ltd. was formed to acquire and develop lands in Waterford, he said. He added KHL holds a 67% interest in KHSL and members of the Widger family hold the remaining 33% interest, the report notes. The report relates on the application of John Hennessy SC, who represents Mr. Kelly, the proceedings against the EBS were admitted to the Commercial Court Monday by Ms. Justice Mary Finlay Geoghegan. =================== L U X E M B O U R G =================== LUXEMBOURG INVESTMENT: Liquidators Sue UBS and Ernst & Young ------------------------------------------------------------ Stephanie Bodoni at Bloomberg News reports that liquidators for the Luxembourg Investment Fund, one of three local funds dissolved after investing with Bernard Madoff, are suing UBS, the fund's custodian bank, and Ernst & Young's local unit, which acted as auditor. Bloomberg recalls a Luxembourg court this month handed liquidators for local funds tied to Mr. Madoff the "exclusive" right to recover assets, potentially blocking hundreds of lawsuits by investors. "We filed the lawsuit [Mon]day seeking the return of some US$426 million," Bloomberg quoted Alain Rukavina, one of the liquidators for the fund, as saying. Luxembourg Investment Fund had US$419 million in net assets, according to Bloomberg data, before Mr. Madoff's investment firm collapsed following his December 2008 arrest. The fund was among 17 Luxembourg funds forced to suspend customer redemptions due to Madoff-related losses, Bloomberg notes. A Luxembourg court in April dissolved the fund and ordered its liquidation, Bloomberg recounts. UBS's Luxembourg unit served as the custodian for Luxembourg Investment Fund and LuxAlpha, Bloomberg notes. Custodians are responsible for oversight of funds and manage deposits and payments to investors, Bloomberg discloses. About Bernard L. Madoff Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff orchestrated the largest Ponzi scheme in history, with losses topping US$50 billion. On December 15, 2008, the Honorable Louis A. Stanton of the U.S. District Court for the Southern District of New York granted the application of the Securities Investor Protection Corporation for a decree adjudicating that the customers of BLMIS are in need of the protection afforded by the Securities Investor Protection Act of 1970. The District Court's Protective Order (i) appointed Irving H. Picard, Esq., as trustee for the liquidation of BLMIS, (ii) appointed Baker & Hostetler LLP as his counsel, and (iii) removed the SIPA Liquidation proceeding to the Bankruptcy Court (Bankr. S.D.N.Y. Adv. Pro. No. 08-01789) (Lifland, J.). On April 13, 2009, former BLMIS clients filed an involuntary Chapter 7 bankruptcy petition against Bernard Madoff (Bankr. S.D.N.Y. 09-11893). The case is before Hon. Burton Lifland. The petitioning creditors -- Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno, and Steven Morganstern -- assert $64 million in claims against Mr. Madoff based on the balances contained in the last statements they got from BLMIS. On April 14, 2009, Grant Thornton UK LLP as receiver placed Madoff Securities International Limited in London under bankruptcy protection pursuant to Chapter 15 of the U.S. Bankruptcy Code (Bankr. S.D. Fla. 09-16751). The Chapter 15 case was later transferred to Manhattan. In June 2009, Judge Lifland approved the consolidation of the Madoff SIPA proceedings and the bankruptcy case. Judge Denny Chin of the U.S. District Court for the Southern District of New York on June 29, 2009, sentenced Mr. Madoff to 150 years of life imprisonment for defrauding investors in United States v. Madoff, No. 09-CR-213 (S.D.N.Y.) ===================== N E T H E R L A N D S ===================== BETULA FUNDING: Fitch Affirms Rating on Class A Notes at 'B' ------------------------------------------------------------ Fitch Ratings has affirmed Betula Funding 1 BV.'s EUR673,878,092 class A notes at 'B' and removed them from Rating Watch Negative. A Stable Outlook and a Loss Severity Rating of 'LS-2' are assigned. Fitch placed the note on RWN in February 2009 because after the default of Landesbanki Islands hf. as swap counterparty there is no transaction party responsible for converting the non-euro proceeds to pay the euro-denominated debt. Deutsche Bank, the trustee, started to exchange the non-euro proceeds last year and has continued to do so. Although Deutsche Bank is under no commitment to continue in this role it is Fitch's opinion that it will, therefore Fitch has removed the transaction from RWN. The affirmation reflects Fitch's view that, despite significant levels of unhedged currency risk, the transaction will continue to generate sufficient proceeds to service the class A notes. The March 2010 trustee report shows assets of EUR957.7 million relative to the Class A note balance of EUR673.9 million -- which translates to a robust over-collateralization ratio of 142.1%. However, since approximately two-thirds of the portfolio balance comprises non-euro assets, the level of over-collateralization is likely subject to significant volatility. Fitch has applied 'B' currency stresses to the portfolio and estimates that euro appreciation against the USD and GBP would result in a 10% reduction of the current portfolio value. Currently approximately 36% of the portfolio is dominated in EUR, 31% in GBP, 20% in USD, with the remaining 13% in AUD, CHF, SEK, and NZD. In addition to over-collateralization, the transaction benefits from significant levels of excess spread. On the March 2010 payment, EUR4.1 million of excess interest proceeds were used to de-leverage the class A notes. Due to the unhedged FX risk, the level of excess spread is expected to be volatile; however, Fitch expects that excess spread will continue to support the credit profile of the class A notes. Regarding portfolio credit performance, the assets continue to perform within Fitch's expectations. According to the March report, there is one defaulted obligor and less than 1% exposure to 'CCC'-rated assets. The majority of the portfolio consists of senior secured loans with approximately 42% rated 'B' and 48% rated 'B-'. Fitch expects portfolio defaults to be limited and that, unless the euro significantly strengthens against the USD and GBP, the rating of the class A notes is likely to be stable. Betula is a cash flow collateralized debt obligation which closed on 16 June 2008. The transaction was initially placed on RWN on 10 October 2008, following the transfer of control of Landsbanki Islands hf to FME on October 7, 2008, and the subsequent downgrade of Landsbanki's Long-term Issuer Default Rating to 'D'. Following the default of Landsbanki Islands hf. on October 7, 2008, Fitch issued multiple rating action comments in 2008 highlighting the uncertainties regarding Betula 1 BV.'s ability to make interests payments on the class A notes. Although sufficient interest proceeds were available to pay the senior notes on the December payment date, this coupon was withheld following a written resolution signed by noteholders. The proceeds were retained by the account bank and were released on the March 16, 2009 payment date. The agency has assigned an Issuer Report Grade of "basic" (two stars) to Betula. Reporting characteristics that prevent the transaction from earning an IRG higher than "basic" include low reporting frequency of quarterly. The rating on the class A notes addresses the likelihood that investors will receive full and timely payments of interest, as per the governing documents, as well as the stated balance of principal by the maturity date. =========== N O R W A Y =========== EITZEN MARITIME: Secures Covenant Waiver on NOK400 Mil. Loan ------------------------------------------------------------ Lloyd's List reports that Eitzen Maritime Services has received a temporary waiver of financial covenants related to its NOK400 million (US$67 million) bond loans. According to Lloyd's List, the company issued the bonds in September to help refinance US$90 million debts. Lloyd's List relates the company reported a fourth-quarter net loss of US$18.3 million. Headquartered in Oslo, Norway, Eitzen Maritime Services ASA, formerly Stromme ASA, -- http://www.eitzen-maritime.com/-- is active in the shipping industry. The Company operates through its three principal divisions: EMS Ship Supply, which provides marine and offshore supplies, marine equipment, spare parts and services; EMS Insurance Brokers, which provide marine insurance programs to ship owners, charterers, cargo owners and other operators in the marine industry, and EMS Ship Management, which offers which offers ship management services, such as technical management and crew management services, as well as port agency services. The Company's subsidiaries include companies located in Singapore, Norway, Germany, the Netherlands, Spain, Denmark, Russia and India, among others. ============= R O M A N I A ============= * ROMANIA: Suppliers Recover Less From Insolvent Companies ---------------------------------------------------------- Izabela Badarau at Ziarul Financiar reports that Arin Stanescu, chairman of the National Association of Insolvency Practitioners in Romania, said suppliers are the last to be considered when assets of insolvent companies are divided, after the state, banks, and employees. "The degree of debt recovery from an insolvent company is a lot lower than 12% in Romania. World Bank data reveal that in the European Union this percentage is of around 20%. We are faring somewhat worse. The only ones who get their money back are state- owned creditors and those with guarantees, maybe the employees, as well, if they are insured by the Fund for guaranteeing salary debt," the report quoted Mr. Stanescu as saying at the International Conference dedicated to CFOs, organized by Forum Invest. "Unsecured creditors, mainly suppliers, manage to recover very little, if at all." Citing UNPIR data, the report discloses EUR150 million in debt were recovered in the first half of 2009 from insolvent companies, while only EUR50 million were recovered in the second half of the year. * ROMANIA: Lawyers Feel Thawing of M&A Activity, DLA Piper Says --------------------------------------------------------------- Cristi Moga at Ziarul Financiar reports that lawyers are starting to feel the thawing of the M&A field. According to the report, involved sums are no longer as high as they were from 2006 through 2008, with some investment targets being put out for sale with the very end of avoiding the start of insolvency procedures that can lead to bankruptcy. "We've been feeling a thawing of trading activity, so that we now have six contracts of real mergers and acquisitions underway. One of these contracts is rather a distressed M&A, with a business for which the alternative is insolvency," the report quoted Marian Dinu, country managing partner with DLA Piper law firm, as saying. "It is about a company with a turnover in the range of tens of millions of euros, in the case of which the shareholders have to admit they lost." According to the report, in the past 18 months, since the financial crisis has intensified domestically, the number of deals has been low and the more so in the case of deals with troubled firms. =========== R U S S I A =========== * RUSSIAN REPUBLIC OF SAKHA: S&P Affirms BB- Rtng; Outlook Stable ----------------------------------------------------------------- Standard & Poor's Ratings Services said that it had revised its outlook on the Russian Republic of Sakha (Yakutia) to stable from negative and affirmed the 'BB-' long-term issuer credit and 'ruAA-' Russian national scale ratings. At the same time, 'BB-' and 'ruAA-' senior unsecured debt ratings were assigned to the republic's planned three-and-one-half year amortizing Russian ruble 2 billion (US$69 million) bond, which the region intends to place on March 25, 2010. The bond will have 14 quarterly, fixed coupons and an amortizing repayment schedule. In 2012, 40% of the bond is scheduled to be redeemed, with the remaining 60% set to be repaid in 2013. "The outlook revision reflects the republic's expected stronger financial performance, supported by higher-than-forecast tax revenues, substantial transfers from the federal budget, and a proven ability to control expenditure growth," said Standard & Poor's credit analyst Alexandra Balod. The ratings on Sakha reflect its status as a vast, isolated region, with an economy highly concentrated on natural resources extraction and exposed to the volatility of commodity markets. The severe subarctic climate, a remote location, and the need for further development of transport infrastructure require high operating and capital spending, which is difficult to reduce. The republic also suffers from its low revenue-raising capacity and its dependence on federal decisions on intergovernmental relations and tax regimes. On the positive side, the republic demonstrates a commitment to tight fiscal discipline and a cautious debt policy, which have so far resulted in a low debt burden and consistent sound budgetary performance amidst economic difficulties. Sakha benefits from its wealthy economy and declining dependence on tax proceeds from a single taxpayer, as well as massive investment in local infrastructure. The stable outlook reflects S&P's expectation that Sakha's conservative financial planning and good cost-containment measures will allow the republic to achieve sound budgetary performance in 2010-2012, along with the general economic recovery. S&P also factors in the republic's continued prudent debt management, with debt service remaining relatively low due to its smooth debt amortizing profile. "S&P might lower the ratings if the republic is unable to adjust expenditure growth to volatile revenues and if there is a further economic downturn," said Ms. Balod. "Subsequent deteriorating operating balances and higher borrowing -- especially short-term debt accumulation -- which might expose Sakha to refinancing risks, could also result in S&P's lowering the ratings." Faster revival of revenues and additional transfers, resulting in better-than-forecast budgetary performance, and the implementation of a cautious liquidity policy could lead us to raise the ratings. ========= S P A I N ========= BBVA LEASING: Moody's Junks Ratings on Two Classes of Notes ----------------------------------------------------------- Moody's Investors Service has downgraded these classes of notes issued by BBVA Leasing 1, FTA: -- EUR379.8 million A1 Certificate, Downgraded to Baa3 from Aaa; previously on 9 December 2009 placed under review for possible downgrade -- EUR813.3 million A2 Certificate, Downgraded to Baa3 from Aaa; previously on 9 December 2009 placed under review for possible downgrade -- EUR82.5 million B Certificate, Downgraded to Ca from A3; previously on 9 December 2009 placed under review for possible downgrade -- EUR61.3 million C Certificate, Downgraded to C from Baa3; previously on 9 December 2009 placed under review for possible downgrade Moody's says that the downgrades were prompted by the worse than expected collateral performance and the weakening of macro- economic conditions in Spain during the past year, which prompted Moody's to revise its assumptions for the transaction. The magnitude of the downgrades reflects the current credit enhancement levels, which, combined with the revised assumptions, lead to a higher expected loss on the rated notes. The rapid deterioration in performance is evidenced by the sharp increase in the artificial write-offs from EUR5.5 million in February 2009 to EUR61.0 million in February 2010 or 0.15% and 1.64% of the total securitized pool respectively. The cumulative amount of loans in arrears exceeding 90 days increased from 2.2% in February 2009 to 4.1% in February 2010. The structure initially benefited from a fully funded reserve account of EUR41.25 million, which has been partially drawn to cover write- offs on the previous interest payments dates and was fully depleted on the interest payment date in February 2010. As of February 2010, the pool factor was 53% based on the notes' amount. During its analysis, Moody's assessed macro-economic indicators as well as information made available from the management company Europea de Titulizacion. Moody's assumptions for the cumulative mean default rate have been raised to 12% of current pool balance, which translates into 9% of the total securitized pool balance (vs. 2.0% initially). Moody's considers the debtors in this transaction to be SME and accordingly used its SME approach to determine the expected mean default rate. Moody's first revised its assumption for the default probability of the Spanish SME debtors to an equivalent rating in the single B-range for debtors operating in the building and real estate sector, and in the low Ba-range for non-real- estate debtors. In addition, Moody's made DP adjustments to reflect the size of the debtors' companies, notching down its rating proxy on a portion of the debtors to reflect additional default risk associated with micro-sized SMEs and self-employed borrowers. Moody's equivalent rating for loans in arrears for more than 30 days was also notched down depending on the length of time the loans had been in arrears, and it was notched up for those performing loans not in the building and real estate sector originated prior to 2006, depending on their actual seasoning. Following these adjustments, the portfolio's overall DP equivalent rating was assumed at B2, which, over a weighted average life of 2.8 years, results in a DP of 12% on current pool balance. This is also in line with levels observed using a roll rate analysis based on delinquent loans. The roll rate analysis was based on the level of 90+ delinquencies as well as doubtful loans. Based on recovery data received, the recovery rate was lowered to 30% (vs. 40% initially). Lastly, the coefficient of variation was reduced to 35% from 45% initially given the increased mean default, the relative uncertainty around this trend could be viewed lower than at closing. The combination of the revised assumptions with the current levels of credit enhancement led to the downgrade of all tranches. In particular, the credit enhancement below the pro-rata amortizing tranches A1 and A2 currently stands at 10.5%. This level of credit enhancement is considered to be only in line with a Baa3 rating, given the future expected losses of 8.4% calculated as the product of mean default on current balance and a recovery rate of 30%. BBVA Leasing 1, FTA closed in June 2007. The originator is Banco Bilbao Vizcaya Argentaria (rated Aa2/Prime-1). This transaction is backed by a portfolio of credit rights derived from real estate and equipment leasing of SMEs and self-employed individuals in Spain. Moody's sector outlook for Spanish SME ABS is negative. The ratings address the expected loss posed to investors by the legal final maturity date (May 2031). In Moody's opinion, the structure allows for timely payment of interest and ultimate payment of principal at par on or before the final legal maturity date. =========== S W E D E N =========== FORD MOTOR: Deal to Sell Volvo to Geely May Be Signed on Sunday --------------------------------------------------------------- Ford Motor Co. will sign a deal to sell its Volvo cars business to Zhejiang Geely Holding Group as soon as this Sunday, March 28, John Reed at The Financial Times reports, citing three people close to the transaction. Geely, the FT says, will pay US$1.8 billion for Volvo. Another US$750 million of working capital is being raised for the Swedish marque, the FT notes. According to the FT, one of the people who declined to be named because the announcement was pending, said about half of the financing for the overall deal is due to come from European banks and the other half from China. About US$500 million to US$800 million of the financing for the deal will come from the European Investment Bank, to be guaranteed by the governments of Sweden and Belgium, where Volvo has production plants, the FT discloses. Roughly US$500 million will come from Swedish banks, the FT states. The remainder will come from Chinese banks, local governments and Geely itself, the FT notes. The FT relates one of the people said the deal would probably be signed on Sunday or Monday. The deal is expected to include many long- and short-term supply agreements between Ford and Volvo, which supply each other with engines and parts, the FT states. About Ford Motor Headquartered in Dearborn, Michigan, Ford Motor Co. (NYSE: F) -- http://www.ford.com/-- manufactures or distributes automobiles across six continents. With about 200,000 employees and about 90 plants worldwide, the company's automotive brands include Ford, Lincoln, Mercury and Volvo. The Company provides financial services through Ford Motor Credit Company. At Sept. 30, 2009, the Company had US$203.106 billion in total assets against US$210.376 billion in total liabilities. On March 4, 2009, Ford deferred future interest payments on its 6.50% Junior Subordinated Convertible Debentures due January 15, 2032, beginning with the April 15, 2009 quarterly interest payment. As reported by the Troubled Company Reporter on March 18, 2010, Moody's Investors Service raised Ford's Corporate Family Rating (CFR) and Probability of Default Rating (PDR) to B2 from B3, secured credit facility to Ba2 from Ba3, senior unsecured debt to B3 from Caa1, trust preferred to Caa1 from Caa2, and Speculative Grade Liquidity rating to SGL-2 from SGL-3. Also raised is Ford Credit's senior debt rating to B1 from B2. On Nov. 3, 2009, S&P raised the corporate credit ratings on Ford Motor Co. and Ford Motor Credit Co. LLC to 'B-' from 'CCC+'. Ford Motor Co. carries a long-term issuer default rating of 'CCC', with a positive outlook, from Fitch Ratings. GENERAL MOTORS: Spyker Wins US$1.2MM tax Credit for Michigan HQ --------------------------------------------------------------- The Michigan Economic Growth Authority granted Spyker Cars N.V. US$1.2 million worth of tax credits on March 16, 2010, allowing the company to locate its Saab Cars North America headquarters in Detroit suburb. Spyker had asked for the financial support in exchange for moving Saab's headquarters to Royal Oak, reported The Wall Street Journal. According to Saab Chief Operating Officer Mike Colleran, the Company plans to move employees from Saab's current offices in downtown Detroit into the new site by the end of March 2010. Spyker also plans to initially employ about 60 people, with an average weekly wage of US$1,693, the Journal reported. Saab and Spyker will act as one company with Saab headquartered in the U.S. and Spyker retaining its current home in Zeewolde, the Netherlands, the report added. Spyker finalized on February 23, 2010, the deal with General Motors Company to purchase Saab. Going forward, Saab Automobile and Spyker Cars will operate as sister companies under the umbrella of the Amsterdam Euronext-listed parent company Spyker Cars N.V. About General Motors General Motors Company -- http://www.gm.com/-- is one of the world's largest automakers, tracing its roots back to 1908. With its global headquarters in Detroit, GM employs 209,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM acquired its operations from General Motors Company, n/k/a Motors Liquidation Company, on July 10, 2009, pursuant to a sale under Section 363 of the Bankruptcy Code. Motors Liquidation or Old GM is the subject of a pending Chapter 11 reorganization case before the U.S. Bankruptcy Court for the Southern District of New York. At September 30, 2009, GM had US$107.45 billion in total assets against US$135.60 billion in total liabilities. About Motors Liquidation General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) ============= U K R A I N E ============= KB IPOBANK: Faces Liquidation Following Temporary Administration ---------------------------------------------------------------- Daryna Krasnolutska at Bloomberg News reports that Ukraine's central bank said it will liquidate VAT KB Ipobank after imposing temporary administration in October and failing to find an investor for the bank. According to Bloomberg, the Kiev-based Natsionalnyi Bank Ukrainy said in a statement on its Web site it made the decision to end the bank's operations Monday. Andriy Kyyak was appointed to supervise the liquidation, Bloomberg says citing the statement. Headquartered in Kiev, Ukraine, KB Ipobank VAT (JSC Commercial Bank Hypobank) -- http://www.hypobank-ua.com/-- provides banking products and services, including current accounts and saving accounts, deposits, credit cards, non-trade transactions with currency values, organization of buying and selling securities on behalf of clients, individual safes and others. KB Ipobank VAT offers also internet banking, mobile banking and self-service terminals. The Bank has its branches in Kiev, Kharkov, Donetsk, Odessa, Zaporozhe and Dnepropetrovsk. =========================== U N I T E D K I N G D O M =========================== GAC ENGINEERING: Cash Flow Problems Prompt Administration --------------------------------------------------------- Farhana Haque and Luke Gray at Evening Courier Main report that GAC Engineering Group has gone into administration, putting some jobs at the company at risk. According to the report, the company is expected to close down in the next few weeks due to cash flow problems, after it has fulfilled some existing contracts. The report relates Hunter Kelly and Charles King, of Ernst & Young LLP in Leeds, were appointed joint administrators on March 18. "GAC Engineering has experienced losses on a number of new, large contracts that the company is unable to recover from, the report quoted Mr. King as saying. Burnley Road, Sowerby Bridge-based GAC Engineering Group manufactures and repairs machine tools. The company employs 34 people. It has worked with customers across the globe in a number of sectors, including steel, defence, oil, rail, shipbuilding, automotive and paper, according to Evening Courier Main. GENERAL MOTORS: Nears Deal with Renault to Secure Luton Future -------------------------------------------------------------- Graham Ruddick at The Daily Telegraph reports that General Motors Co. is close to reaching a joint-venture agreement that will keep its van plant at Luton open beyond 2013. According to the report, Luton is operated through a partnership between GM Europe and Renault until 2013, but its future beyond that has looked bleak since GM crashed into Chapter 11 bankruptcy protection in the U.S. last year and began a major restructuring of its European operations. The report relates Nick Reilly, chief executive of GM Europe, said in an interview on Monday that he was "pretty near the end" of discussions with Renault about extending their deal. The report notes Mr. Reilly also disclosed that the UK Government only provided loan guarantees of EUR300 million (GBP270 million) to safeguard the future of GM-owned Vauxhall, which employs 5,000 people in the UK, after asking the American parent company to commit an extra EUR400 million to the business. The Government also asked for other terms, which Mr. Reilly would not disclose, and reassurances about the future of Vauxhall's plants, the report states. The report says Luton, which employs 1,500 staff, has faced serious doubts about its future because sales of vans slumped in the recession and it was not clear whether Renault wanted to extend the venture. More than 350 jobs will go at the plant in GM's European restructuring, the report discloses. About General Motors General Motors Company -- http://www.gm.com/-- is one of the world's largest automakers, tracing its roots back to 1908. With its global headquarters in Detroit, GM employs 209,000 people in every major region of the world and does business in some 140 countries. GM and its strategic partners produce cars and trucks in 34 countries, and sell and service these vehicles through these brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, Opel, Vauxhall and Wuling. GM's largest national market is the United States, followed by China, Brazil, the United Kingdom, Canada, Russia and Germany. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. GM acquired its operations from General Motors Company, n/k/a Motors Liquidation Company, on July 10, 2009, pursuant to a sale under Section 363 of the Bankruptcy Code. Motors Liquidation or Old GM is the subject of a pending Chapter 11 reorganization case before the U.S. Bankruptcy Court for the Southern District of New York. At September 30, 2009, GM had US$107.45 billion in total assets against US$135.60 billion in total liabilities. About Motors Liquidation General Motors Corporation and three of its affiliates filed for Chapter 11 protection on June 1, 2009 (Bankr. S.D.N.Y. Lead Case No. 09-50026). General Motors changed its name to Motors Liquidation Co. following the sale of its key assets to a company 60.8% owned by the U.S. Government. The Honorable Robert E. Gerber presides over the Chapter 11 cases. Harvey R. Miller, Esq., Stephen Karotkin, Esq., and Joseph H. Smolinsky, Esq., at Weil, Gotshal & Manges LLP, assist the Debtors in their restructuring efforts. Al Koch at AP Services, LLC, an affiliate of AlixPartners, LLP, serves as the Chief Executive Officer for Motors Liquidation Company. GM is also represented by Jenner & Block LLP and Honigman Miller Schwartz and Cohn LLP as counsel. Cravath, Swaine, & Moore LLP is providing legal advice to the GM Board of Directors. GM's financial advisors are Morgan Stanley, Evercore Partners and the Blackstone Group LLP. Bankruptcy Creditors' Service, Inc., publishes General Motors Bankruptcy News. The newsletter tracks the Chapter 11 proceeding undertaken by General Motors Corp. and its various affiliates. (http://bankrupt.com/newsstand/or 215/945-7000) HIT ENTERTAINMENT: Lenders Waive Covenant Test on US$579MM Debt --------------------------------------------------------------- HIT Entertainment has reached a forbearance agreement with lenders that waives a covenant test on its US$579 million debt, Ainsley Thomson at Dow Jones Newswires, citing a person familiar with the matter. According to Dow Jones, the person said the debt negotiations will continue, with the preferred option being for HIT Entertainment to reach an amend-and-extend arrangement with lenders. The company's debt consists of a US$327 million term loan, a US$175 million second lien facility and a US$77 million revolving credit facility, Dow Jones says, citing a report from ratings agency Standard & Poor's Corp. in January. Headquartered in London, United Kingdom, HIT Entertainment -- http://www.hitentertainment.com/-- is a producer of children's TV programming, including such shows as Barney & Friends, Bob the Builder, and Thomas & Friends. The company's vault features more than 1,500 hours of programming that its distributes to more than 240 countries; it also distributes content for the home entertainment market and licenses its characters for use in books and other consumer products. In addition to children's programming, HIT Entertainment owns the Guinness World Records publishing and television property. Private equity firm Apax Partners owns the company. * * * As reported by the Troubled Company Reporter-Europe on Jan. 7, 2010, Standard & Poor's Ratings Services said that it lowered its long-term corporate credit ratings on U.K.-headquartered HIT Entertainment Ltd. and related entities to 'CC' from 'CCC+'. S&P said the outlook is negative. At the same time, S&P lowered the issue-level ratings on related entity HIT Entertainment Inc.'s US$404 million first-lien debt facilities (US$77 million revolving credit facility -- RCF -- and US$327 million term loan B) to 'CCC', one notch higher than the corporate credit rating. ICAP PLC: To Shutter Unprofitable Equities Sales & Research Unit ---------------------------------------------------------------- Bryan Keogh and Alexis Xydias at Bloomberg News report that ICAP Plc is shuttering its unprofitable equities sales and research unit after failing to find a buyer or partner for the operation. According to Bloomberg, ICAP will report operating losses of about GBP25 million for the discontinued operation in the year ended March 31 as a separate item. ICAP tried to find a partner or buyer for the unit, which employs 114 people, and held talks with State Street Corp. about cooperating in recent months, Bloomberg discloses, citing five people close to the matter who declined to be identified because the talks were private. Bloomberg says the collapse in credit markets in 2008 spurred ICAP's customers to increase trading, boosting the amount of business it handles. As markets calmed last year amid unprecedented government efforts, trading in some of ICAP's markets slowed, Bloomberg notes. "While a number of our cash equities businesses are performing well, the expansion into full service agency cash equities in Europe and Asia has failed to match up to our expectations," Bloomberg quoted ICAP Chief Executive Officer and founder Michael Spencer as saying in Monday's statement. "After a thorough review we have therefore decided to withdraw from the full service offering." ICAP plc -- http://www.icap.com/-- is a voice and electronic interdealer broker, delivering specialist intermediary broking services to trading professionals in the wholesale financial markets. The Company covers a range of over-the-counter financial products and services in commodities, foreign exchange, interest rates, credit and equity markets, as well as data, commentary and indices. It is active in both established and emerging markets. Its electronic networks deliver global connectivity to customers seeking unparalleled liquidity and flow in an orderly marketplace. ICAP provides a specialist service by matching up buyers and sellers in the wholesale financial markets. Its customers include investment and commercial banks and they pay a commission to use them to complete a transaction. On April 7, 2008, the Company acquired Link. On April 1, 2008, the Company acquired a 78% of ICAP Equities Limited. In August 2008, it acquired Escorfin SA. In July 2008, it acquired Moving Pictures and Television LLC. NEUROPHARM PLC: Mulls Liquidation on Lack of NPL-2008 Funding ------------------------------------------------------------- Phil Serafino at Bloomberg News reports that Neuropharm Plc said in a Regulatory News Service statement that it is considering liquidation because it lacks funding for further studies of its NPL-2008 compound. The company has given notice to all employees, Bloomberg notes. According to Bloomberg, talks over a sale of Neuropharm or its assets are ongoing, but are at an early stage. Neuropharm Group plc -- http://www.neuropharm.co.uk/-- is a United Kingdom-based specialty pharmaceutical company. The Company is focused on the discovery, development and commercialization of products for the treatment and management of neurodevelopmental disorders. Neuropharm's wholly owned subsidiaries include Neuropharm Limited and Neuropharm Inc. NORTEL NETWORKS: Court Won't Certify Stay Order on UK Proceeding ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware denied certification for its prior order that blocked the U.K. pension authorities from participating in an administrative proceeding to recover claims from Nortel Networks Inc. Nortel Networks UK Pension Trust Ltd. and the Board of the Pension Protection Fund earlier filed a motion, asking the Bankruptcy Court to certify its February 26 order for immediate appeal to the U.S. Court of Appeals. The U.K. pension authorities want the Court of Appeals to determine whether the Bankruptcy Court erred in its decision to bar them from participating in the administrative case on grounds that the case would prejudice NNI. The administrative proceeding seeks to recover as much as GBP2.1 billion in connection with Nortel Networks UK Ltd.'s pension plan that was allegedly left underfunded following NNUK's bankruptcy filing. In a March 18, 2010 order, Bankruptcy Judge Kevin Gross did not agree with the U.K. pension authorities that the appeal would advance the bankruptcy cases of NNI and its affiliated debtors. "The logical and certain way to advance the bankruptcy case is to permit the allocation process to proceed," Judge Gross said, referring to the process of allocating proceeds from the sale of Nortel's assets that would determine the amount available for distribution to creditors. Judge Gross earlier issued a memorandum opinion, explaining his basis for barring the U.K. pension authorities from participating in the administrative case. He said the case is premature and will prejudice the resolution of the Debtors' bankruptcy cases. Judge Gross' stance echoes the position of NNI and the Official Committee of Unsecured Creditors, both of which opposed the U.K. pension authorities' move to seek certification of the February 26 order. NNI and the Creditors Committee argued that no basis exists to support that the authorities' immediate direct appeal would materially advance the progress of the bankruptcy cases. About Nortel Networks Nortel Networks (OTCBB:NRTLQ) -- http://www.nortel.com/-- delivers communications capabilities that make the promise of Business Made Simple a reality for the Company's customers. The Company's next-generation technologies, for both service provider and enterprise networks, support multimedia and business-critical applications. Nortel's technologies are designed to help eliminate the barriers to efficiency, speed and performance by simplifying networks and connecting people to the information they need, when they need it. Nortel Networks Corp., Nortel Networks Inc., and other affiliated corporations in Canada sought insolvency protection under the Companies' Creditors Arrangement Act in the Ontario Superior Court of Justice (Commercial List). Ernst & Young was appointed to serve as monitor and foreign representative of the Canadian Nortel Group. The Monitor sought recognition of the CCAA Proceedings in the U.S. by filing a bankruptcy petition under Chapter 15 of the U.S. Bankruptcy Code (Bankr. D. Del. Case No. 09-10164). Mary Caloway, Esq., and Peter James Duhig, Esq., at Buchanan Ingersoll & Rooney PC, in Wilmington, Delaware, serves as the Chapter 15 petitioner's counsel. Nortel Networks Inc. and 14 affiliates filed separate Chapter 11 petitions on January 14, 2009 (Bankr. D. Del. Case No. 09-10138). Judge Kevin Gross presides over the case. James L. Bromley, Esq., at Cleary Gottlieb Steen & Hamilton, LLP, in New York, serves as general bankruptcy counsel; Derek C. Abbott, Esq., at Morris Nichols Arsht & Tunnell LLP, in Wilmington, serves as Delaware counsel. The Chapter 11 Debtors' other professionals are Lazard Freres & Co. LLC as financial advisors; and Epiq Bankruptcy Solutions LLC as claims and notice agent. Certain of Nortel's European subsidiaries also made consequential filings for creditor protection. The Nortel Companies related in a press release that Nortel Networks UK Limited and certain subsidiaries of the Nortel group incorporated in the EMEA region have each obtained an administration order from the English High Court of Justice under the Insolvency Act 1986. The applications were made by the EMEA Subsidiaries under the provisions of the European Union's Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings and on the basis that each EMEA Subsidiary's centre of main interests is in England. Under the terms of the orders, representatives of Ernst & Young LLP have been appointed as administrators of each of the EMEA Companies and will continue to manage the EMEA Companies and operate their businesses under the jurisdiction of the English Court and in accordance with the applicable provisions of the Insolvency Act. Several entities, particularly, Nortel Government Solutions Incorporated have material operations and are not part of the bankruptcy proceedings. As of September 30, 2008, Nortel Networks Corp. reported consolidated assets of US$11.6 billion and consolidated liabilities of US$11.8 billion. The Nortel Companies' U.S. businesses are primarily conducted through Nortel Networks Inc., which is the parent of majority of the U.S. Nortel Companies. As of September 30, 2008, NNI had assets of about US$9 billion and liabilities of US$3.2 billion, which do not include NNI's guarantee of some or all of the Nortel Companies' about US$4.2 billion of unsecured public debt. Bankruptcy Creditors' Service, Inc., publishes Nortel Networks Bankruptcy News. The newsletter tracks the Chapter 11 proceeding and ancillary foreign proceedings undertaken by Nortel Networks Corp. and its various affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000) PORTSMOUTH FOOTBALL: Chainrai to Waive Right to Advance TV Money ---------------------------------------------------------------- Owen Gibson at The Guardian reports that Portsmouth Football Club owner Balram Chainrai will assure the Premier League he is prepared to waive his right to advance TV money. According to the report, it is believed that the Premier League had been told that the GBP6 million Portsmouth's administrator is seeking in advance television money would be paid directly to Mr. Chainrai's Portpin Ltd. in part repayment of a GBP13.5 million loan that he made to the club last year. The report says Mr. Chainrai had partly secured the loan on future television revenues. The Premier League will not hand over any advance until it is sure it will be used to pay football creditors and keep Portsmouth running, the report notes. The report relates a spokesman for Mr. Chainrai, who has extended a GBP15 million overdraft to the administrator to help see Portsmouth through to the end of the season, confirmed that he had agreed to waive his claim on the cash. He also insisted that the club's fourth owner of the season had no desire to buy Pompey out of administration after persistent rumors that he was putting together a bid with Terry Brady, father of West Ham United's vice- chairman Karren, resurfaced, the report states. As reported by the Troubled Company Reporter-Europe, Bloomberg News said Portsmouth on Feb. 26 became the first team in England's Premier League to go into administration after U.K. authorities tried to force its closure over unpaid tax of GBP12.1 million. Portsmouth Football Club Ltd. -- http://www.portsmouthfc.co.uk/-- operates Portsmouth FC, a professional soccer team that plays in the English Premier League. Established in 1898, the club boasts two FA Cups, its last in 2008, and two first division championships. Portsmouth FC's home ground is at Fratton Park; the football team is known to supporters as Pompey. Dubai businessman Sulaiman Al-Fahim purchased the club from Alexandre Gaydamak in 2009. A French businessman of Russian decent, Gaydamak had controlled Portsmouth Football Club since 2006. * UK: Business Insolvencies Down 15% Year-On-Year in February ------------------------------------------------------------- The latest Insolvency Index from Experian(R), the global information services company, has revealed a year-on-year fall in business insolvencies during February. The total number of insolvencies fell by 15.1% during February compared to the same month last year -- from 2,160 in February 2009 to 1,834 in February 2010 bringing the rate of insolvencies down from 0.11% to 0.10%. In comparison to the insolvency rate recorded in January (0.08%), it was an increase. However, January has in previous years been a quiet month for insolvencies and despite the January to February increase, it still follows an overall downward trend. The overall financial strength score[1] of UK businesses continued to improve, from 79.76 in February 2009 to 81.18 in February this year. The score also saw a small month-on-month improvement from 81.16 in January. Rolf Hickmann, Managing Director of pH, an Experian company, said: "Small businesses have far more flexibility than any other business type. It is easier for smaller businesses, with just one or two employees, to easily make adjustments to their operations and pull in the reins when times are difficult. For larger business, there is the security that comes with size and a well established structure, so insolvency rates among these business types are also low. "However, mid sized businesses, which are seeing the highest rates of insolvencies, are too large to be flexible and too small to rely on a strong and established structure." Other key highlights include: * Although the North East region saw the highest rate of insolvencies, it was also one of two regions to see the highest improvement, from an insolvency rate of 0.20% in February 2009 to 0.15% in February 2010. The other region to see the biggest year-on-year improvement was Wales (from 0.14% to 0.08%). * The Greater London region continued to be the region where businesses had the lowest financial strength score compared to other regions. However, it was also the region to see the biggest year-on-year improvement from 78.11 in February 2009 to 79.99 in February 2010. * The largest companies, those with 501 or more employees, saw the greatest improvement year-on-year in the insolvency rate (from 0.20 % in February 2009 to 0.10 %). * The smallest businesses (with 1 to 2 employees) saw the most improvement in their financial strength scores from 80.50 in February 2009 to 82.48 February 2010. * The financial strength of businesses in the IT industry rose from 80.61 in February 2009 to 83.60 the biggest improvement compared to other sectors. * Businesses in the oil industry held the highest financial strength score during February 86.31. [1]The financial strength score predicts the likelihood of a business failing in the next 12 months, with 100 being the least likely to default and 1 being the most likely. =============== X X X X X X X X =============== * EUROPE: EU Should Consider "Burden Sharing" on Bank Failures -------------------------------------------------------------- Joseph Heaven and Ben Moshinsky at Bloomberg News report that Michel Barnier, the European Union's financial services commissioner, said EU member states should consider "burden sharing" on bank failures through a European resolution fund. Bloomberg relates Mr. Barnier said at a Brussels conference that financial institutions should be called on to contribute to the fund, citing the example of the "polluter pays" principle in other industries. "We have to ensure that those involved assume their responsibility," Bloomberg quoted Mr. Barnier as saying. "Why should the taxpayer foot the bill?" ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than US$3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Thursday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/booksto order any title today. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter -- Europe is a daily newsletter co- published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Valerie C. Udtuhan, Marites O. Claro, Rousel Elaine C. Tumanda-Fernandez, Joy A. Agravante and Peter A. Chapman, Editors. Copyright 2010. All rights reserved. ISSN 1529-2754. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR Europe subscription rate is US$625 per half-year, delivered via e-mail. 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