/raid1/www/Hosts/bankrupt/TCREUR

/raid1/www/Hosts/bankrupt/TCREUR_Public/140103.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 Friday, January 3, 2014, Vol. 15, No. 2 Headlines A Z E R B A I J A N AZERBAIJAN: Endorses Licensing E-Forms for Brokers & Warehouses G E R M A N Y QIMONDA AG: Administrator Sues HP for Patent Infringement I R E L A N D * IRELAND: Won't Get Bank Repayments in June R U S S I A MECHEL OAO: Oleg Korzhov to Take Over as Chief Executive RASPADSKAYA OAO: Moody's Affirms 'B2' Corporate Family Rating SUDOSTROITELNY BANK: S&P Assigns 'B' Rating; Outlook Stable S P A I N NCG BANCO: Moody's Reviews 'Ba1' Bond Ratings for Downgrade NCG BANCO: Moody's Reviews 'B3' Debt Ratings for Downgrade U K R A I N E * S&P Affirms 'B-/C' Ratings on Three Ukrainian Banks U N I T E D K I N G D O M DEBENHAMS PLC: Finance Boss Steps Down After Major Profit Warning GERALD DAVID: Owes Farmer GBP11,000 HIGGS CAPITAL: Faces Closure Following Investor Redemptions OSBORNE STATIONERS: In Administration, Calls in FRP Advisory SKIPTON BUILDING: Moody's Changes Ratings Outlook to Stable SMARTOFFICE TECHNOLOGIES: Owes GBP533,000 to HMRC WASABI ENERGY: Goes Into Voluntary Administration ZLOMREX: Jan. 8 Meeting Set to Approve Scheme of Arrangement * UK: Number of Retail Sector Administrations Down 6% in 2013 * UK: Twenty Scottish Firms to Go Bust Every Week This Year * UK: Number of Zombie Companies Down in November, R3 Says X X X X X X X X * BOOK REVIEW: Creating Value through Corporate Restructuring ********* =================== A Z E R B A I J A N =================== AZERBAIJAN: Endorses Licensing E-Forms for Brokers & Warehouses --------------------------------------------------------------- abc.az reports that the Cabinet Ministers of Azerbaijan has approved the amendments to the Rules of Executive Power's E-services and the List of E-Services. Under the amendments, receipt of documents for a license for customs broker and customs carrier services as well as such license suspension and liquidation will be conducted in e-form, according to abc.az. The report notes that besides, applications for licensing of customs warehouses and temporary storage facilities, including the license suspension and liquidation, will also be accepted in e-form. ============= G E R M A N Y ============= QIMONDA AG: Administrator Sues HP for Patent Infringement --------------------------------------------------------- David Manners at ElectronicsWeekly.com reports that Qimonda AG's bankruptcy administrator, Dr. Michael Jaffe, is suing Hewlett- Packard for patent infringement. According to the report, the District Court of Dusseldorf has ruled that three of the five patents which had been asserted by Dr. Jaffe have been used by HP. In two cases, the computer manufacturer was served with an injunction and ordered to render account and pay damages for the established infringement, whereas proceedings in the other case were temporarily suspended in order to resolve open questions regarding patent exhaustion, ElectronicsWeekly.com relates. The remaining two cases were dismissed due to a lack of patent use. The rulings can be appealed, the report notes. In the two proceedings now ruled in favor of the insolvency administrator, Jaffe had asserted apparatus claims and method claims which relate to complex devices requiring not only the use of DRAM components but also units such as processors, says ElectronicsWeekly.com. Infringing products are computers which HP is selling in Germany, the report notes. According to ElectronicsWeekly.com, the District Court in Dusseldorf confirmed that license agreements of its suppliers which had been concluded prior to opening of the insolvency proceedings and upon which HP tried to rely, do not justify license rights with respect to the computers in dispute. The report says the court did not need to address the question as to whether non-exclusive licenses survive in case of insolvency. The enforceability of license agreements in light of the insolvency of Qimonda AG is the subject of separate court proceedings in Germany and the U.S., as among others with Infineon Technologies AG. ElectronicsWeekly.com adds that HP has filed nullity actions with the German Federal Patent Court for the patents in dispute. No rulings have as yet been issued. The Dusseldorf District Court did not see any cause to suspend the patent infringement proceedings in view of the validity proceedings, the report notes. About Qimonda AG Qimonda AG (NYSE: QI) -- http://www.qimonda.com/-- was a global memory supplier with a diversified DRAM product portfolio. The Company generated net sales of EUR1.79 billion in financial year 2008 and had -- prior to its announcement of a repositioning of its business -- roughly 12,200 employees worldwide, of which 1,400 were in Munich, 3,200 in Dresden and 2,800 in Richmond, Va. Qimonda AG commenced insolvency proceedings in a local court in Munich, Germany, on Jan. 23, 2009. On June 15, 2009, QAG filed a petition (Bankr. E.D. Va. Case No. 09-14766) for relief under Chapter 15 of the U.S. Bankruptcy Code. Qimonda North America Corp., an indirect and wholly owned subsidiary of QAG, is the North American sales and marketing subsidiary of QAG. QNA is also the parent company of Qimonda Richmond LLC. QNA and QR sought Chapter 11 protection (Bankr. D. Del. Case No. 09-10589) on Feb. 20, 2009. Mark D. Collins, Esq., Michael J. Merchant, Esq., and Lee E. Kaufman, Esq., at Richards Layton & Finger PA, in Wilmington Delaware; and Mark Thompson, Esq., Morris J. Massel, Esq., and Terry Sanders, Esq., at Simpson Thacher & Bartlett LLP, in New York City, represented the Debtors as counsel. Roberta A. DeAngelis, the United States Trustee for Region 3, appointed seven creditors to serve on an official committee of unsecured creditors. Jones Day and Ashby & Geddes represented the Committee. In its bankruptcy petition, Qimonda Richmond, LLC, estimated more than US$1 billion in assets and debts. The information, the Chapter 11 Debtors said, was based on QR's financial records which are maintained on a consolidated basis with QNA. In September 2011, the Chapter 11 Debtors won confirmation of their Chapter 11 liquidation plan which projects that unsecured creditors with claims between US$33 million and US$35 million would have a recovery between 6.1% and 11.1%. No secured claims of significance remained. ============= I R E L A N D ============= * IRELAND: Won't Get Bank Repayments in June -------------------------------------------- BreakingNews.ie reports that the Taoiseach Enda Kenny has admitted Ireland will miss the target of getting some of its banking costs back by June. According to BreakingNews.ie, Mr. Kenny says it will be at least November this year before other EU countries might be ready to approve a payment to Ireland. Ireland, BreakingNews.ie says, is hoping to recoup some of the billions it spent saving AIB and Bank of Ireland, under a system which has now been replaced for future bailouts. The Taoiseach says European talks are complicated, but he is still optimistic about Ireland's chances, BreakingNews.ie relates. =========== R U S S I A =========== MECHEL OAO: Oleg Korzhov to Take Over as Chief Executive -------------------------------------------------------- Tanya Powley at The Financial Times reports that Mechel OAO has replaced its chief executive as the heavily leveraged company looks to tackle its net debt of more than US$9 billion. According to the FT, Oleg Korzhov, the company's senior vice-president for economics and management, will take over from Evgeny Mikhel, who has been chief executive since 2010. Mr. Korzhov was set to start his new role on Jan. 1, the FT discloses. On Monday, Mechel revealed it would discuss the early resignation of Mr. Mikhel at a board meeting that day, the FT relays. Lossmaking Mechel is one of several Russian miners struggling to pay down billions of dollars in pre-crisis debt after embarking on global buying sprees in the heady days of the commodities boom, the FT states. Last week, Mechel, which is owned by Russian billionaire Igor Zyuzin, reported a net loss of US$2.2 billion in the first nine months of 2013 because of a number of one-off write downs, the FT recounts. This was up from a net loss of US$550 million in the same period last year, the FT notes. In recent months, the company has focused on securing covenant holidays until the end of 2014 from its creditors, alleviating pressure on the coal miner, the FT relates. This has included arrangements with Sberbank and a deal with a syndicate of foreign banks, including ING, Societe Generale, UniCredit, Commerzbank, Raiffeisen and Russia's VTB, according to the FT. Mechel, the FT says, has been struggling with the effects of depressed global prices for coal, which accounted for around 30 per cent of its revenues but around four-fifths of earnings last year. It is among the world's six largest exporters of coking coal, a key ingredient in steelmaking, the FT notes. Mechel OAO is a Russian steel and coking coal producer. RASPADSKAYA OAO: Moody's Affirms 'B2' Corporate Family Rating ------------------------------------------------------------- Moody's Investors Service has affirmed Raspadskaya OAO's corporate family rating (CFR) and probability of default rating (PDR) at B2 and B2-PD, respectively, and changed the outlook from negative to stable. Concurrently, Moody's has affirmed the rating on the senior unsecured debt issued by Raspadskaya Securities Ltd., a limited liability company incorporated in Ireland, and its PDR at B2 and B2-PD (with a loss-given-default (LGD) assessment of LGD4, 50%), respectively. "The affirmation of the rating at B2 and stabilization of outlook follows EVRAZ plc (unrated) consolidation of 82% stake in the share capital of Raspadskaya OAO earlier in 2013 and a degree of potential support by Evraz evidenced by continuing integration of Raspadskaya OAO's operations (including treasury, reporting and budgeting functions) under EVRAZ plc and inter-group funding in the form of a US$100 million loan provided to Raspadskaya OAO by EVRAZ plc/Evraz Group S.A. (Ba3 stable), with which the company refinanced bilateral bank facility," says Denis Perevezentsev, a Moody's Vice President and lead analyst for Raspadskaya. "Production issues at the company's Raspadskaya mine following the temporary suspension of operations in May 2013, low coking coal prices, weak credit metrics and lack of formal guarantees from EVRAZ plc or Evraz Group S.A. limit the level of alignment between CFRs of Raspadskaya OAO and Evraz Group S.A." RATINGS RATIONALE The rating affirmation reflects Moody's view that demand in the metallurgical coal industry will remain weak in the near term following substantive deterioration in 2013. Benchmark pricing for low-volatility hard coking based on "Free on Board", or FOB Australia basis, has fallen dramatically, to US$145/tonne for third quarter deliveries (US$152/tonne for fourth quarter 2013) from US$172/tonne for second quarter 2013 deliveries. This should translate into a domestic price for Russian producers of around US$80/tonne of coal concentrate on a "Free carrier", or FCA (i.e., excluding transportation costs) basis, or even lower for export deliveries. Given such weak prices (benchmark prices for Q1 2014 deliveries are set at around US$143/tonne based on FOB Australia basis), the gap is narrowing between these and Raspadskaya's cash costs of coal concentrate (which the company nevertheless managed to reduce from around US$62/tonne in 2012 to US$54/tonne in 1H 2013), shrinking the company's operating margins and operating cash flows. While some international producers have announced production cuts, the net impact on the global market is modest and the anticipated supply/demand balance is unlikely to support meaningful near-term price improvement. Moody's adjusted LTM Debt/EBITDA of Raspadskaya OAO as of June 30, 2013 stands at about 8.3x and Moody's expects that the stabilisation of coking coal prices in Q3-Q4 2013 at lower levels compared to Q2 2013, coupled with operational issues at the Raspadskaya mine, will cause the company's financial results and leverage to deteriorate further in 2013. At the same time, Raspadskaya's liquidity position is fairly comfortable, given low debt service requirement and modest level of capex in the near term. The company's bilateral loan of US$150 million, with December 2015 maturity, was refinanced in September 2013 with a loan from EVRAZ plc related entities (US$100 million), maturing in 2016, with the balance of the loan being repaid out of Raspadskaya's cash balances. The company's Eurobonds of US$400 million matures in 2017. Raspadskaya's B2 CFR reflects (1) low coking coal prices, with a low probability of substantial recovery over the next 12 months; (2) recurring operational issues at the company's main production mine following the two-months suspension of operations in May 2013; (3) the company's fairly small size and narrow operating footprint; (4) Raspadskaya's lack of product, geographical or operational diversification; (5) its high leverage and modest cash flow metrics; (6) the company's heavy dependence on the steel sector, which is fairly volatile; (7) Raspadskaya's customer concentration; and (8) ownership concentration, which could lead to a shareholder-friendly financial policy (high dividends or share buybacks). However, these negative factors are partially offset by Raspadskaya's (1) extensive high-quality and fairly low-cost semi-hard and hard coking coal reserves, with an average cash cost of around US$54/tonne in 1H 2013, which compares favorably with the cash costs of many international coal producers and Russian vertically integrated steel producers; (2) strategic importance of the company to its controlling shareholder (Evraz plc); and (3) fairly comfortable liquidity profile, with no debt repayments until July 2016, and only interest and coupon of around US$40 million per year to be paid until then. The company has a fairly large liquidity cushion (cash and short-term deposits) of around US$100 million as at June 30, 2013. In addition the B2 rating factors in the potential support from Evraz in favor of Raspadskaya. RATIONALE FOR STABLE OUTLOOK The stable outlook on the rating reflects the stable outlook of Evraz, the increased level of integration of Raspadskaya OAO's operations under EVRAZ plc and Moody's view that market conditions, including coking coal prices are unlikely to worsen meaningfully in 2014. WHAT COULD CHANGE THE RATING DOWN/UP Negative rating pressure will develop if (1) Raspadskaya's financial metrics continue to deteriorate as a result of unfavourable market dynamics; (2) the company's refinancing risk increases; (3) operational issues at the Raspadskaya mine escalate in such a way that leads to a significant deterioration in unit cash costs, operating profits and cash flow generation capacity; (4) CFR of Evraz Group S.A. is downgraded or its outlook is changed to negative; or (5) there is a noticeable reduction in support provided by EVRAZ plc/Evraz Group S.A. to the company. Positive pressure on the rating might develop if coking coal prices on domestic and export deliveries improve sustainably and the company manages to successfully resolve operational issues at its main production mine improving coking coal production in 2014. A formal commitment of Evraz Group S.A./EVRAZ plc to support debt at Raspadskaya OAO -- provided no material deterioration in the credit strength of support providers - may also trigger an upgrade of the company's bond rating. The principal methodology used in this rating was the Global Mining Industry published in May 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Raspadskaya is one of Russia's largest coking coal producers, with a coal production volume of 7 million tonnes in 2012 (2011: 6.3 million tonnes) and sales of 5.0 million tonnes of coal concentrate and raw coal (2011: 4.7 million tonnes). The company's production assets consist of three underground mines, one open-pit mine, a coal preparation plant, as well as a coal transportation network and a number of integrated infrastructure companies. All these assets are located in the Kuzbass Basin (Kemerovo region, Russia). The company is controlled by Evraz plc. In 2012, Raspadskaya reported revenues of US$542 million (2011: US$726 million) and EBITDA of US$141 million (2011: US$321 million). SUDOSTROITELNY BANK: S&P Assigns 'B' Rating; Outlook Stable ----------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'B/B' long- and short-term counterparty credit ratings to Russia-based Commercial Bank Sudostroitelny Bank LLC (SB Bank). The outlook is stable. At the same time, S&P assigned its 'ruA-' Russia national scale rating to the bank. The ratings on SB Bank incorporate the structurally elevated economic and industry risks factored into S&P's 'bb' anchor, its starting point for assigning ratings to a domestic bank operating in Russia. They also reflect SB Bank's "weak" business position, "moderate" capital and earnings, "moderate" risk position, "average" funding, and "adequate" liquidity, as S&P's criteria define these terms. S&P assess the bank's stand-alone credit profile (SACP) as 'b'. S&P's assessment of SB Bank's business position as weak is based on its view of its limited market share and customer franchise, with quite significant concentrations in the loan book. SB Bank is a midsize credit institution that had assets of Russian ruble (RUB) 65.7 billion (US$2.0 billion) on Sept. 30, 2013, making it 78th in the Russian banking sector. SB Bank has changed its strategy to focus more on midsize enterprises and increase their share of the corporate loan book to 55% by the end of 2014 from 30% at the end of 2012. S&P recognizes that this strategic shift is designed to avoid further erosion of margins and profitability, which have been falling for the past three years because of tough pricing competition in Russia and SB Bank's modest commercial franchise and branch network, which makes it difficult to attract the most creditworthy borrowers. But S&P still sees the move as risky in the current operating environment in Russia, and SB Bank's management team has yet to prove its ability to manage possible risks arising from such a strategy. The bank's ownership is split among 12 individuals comprising the former and current management team. The two largest shareholders, Leonid Tyukhtyaev and Andrey Ivanchikhin, control 33.1% between them and provide support to the bank mostly in the form of subordinated loans. So far, this very diverse ownership structure has not complicated the decision-making process and has prevented the emergence of governance issues. S&P's assessment of SB Bank's capital and earnings as moderate reflects its view of the bank's gradually declining capital position, as its earnings capacity is lower than most peers', and prevents internal capital build up. This assessment is based primarily on S&P's expectations that the risk-adjusted capital (RAC) ratio before adjustments for concentration and diversification will remain in a range of 5.0%-5.5%, down from 7.0% at the end of 2012, due to S&P's projection of increasing risk-weighted assets and modest retained earnings. S&P's forecast is based on the assumption of relatively stable loan portfolio growth of 13%-15% over the next two years with a net interest margin of 2.8%-3.0%. In S&P's view, SB Bank's overall risk position is moderate. Concentrations on the balance sheet are comparable with local peers', although high compared with those of banks in other countries with similar economic and industry risks. The top 20 borrowers accounted for 33% of the loan book as of Sept. 30, 2013, 2.2x of adjusted total equity. Nonperforming loans (NPLs) have been consistently lower than the system average and should remain at or below 3% in 2013 and 2014. S&P also views positively the ample coverage of NPLs by reserves, which it expects to exceed 200% in 2013 and 2014. Still, S&P believes the bank's increasing exposure to the risky small and midsize enterprise (SME) segment and to the real estate sector (15% of the loan book) could impair the bank's credit risk profile, especially if economic slowdown intensifies in Russia. "We consider SB Bank's funding to be average and its liquidity adequate. The bank's funding base is quite diversified with bonds issued on the local market (17% of total liabilities as of Sept. 30, 2013), an outstanding amount at LORO accounts (accounts held by a second bank on behalf of a third party) from regional banks (13%), and clients' deposits (60%) almost equally split between corporate and individual clients. We note that reliance on short-term wholesale funding has substantially declined over the past years, in line with active deposit collection. We expect the bank's funding profile to be more balanced in the future, with a loan-to-deposit ratio of 110%-120% in 2013-2014 compared with 140% in 2010-2011. Concentrations are high in a global context, but in line with local peers'. The top 20 depositors accounted for 28% of total customer funds as of Sept. 30, 2013. We believe that SB Bank's liquidity cushion is adequate, with broad liquid assets constituting almost 30% of the balance sheet," S&P said. The outlook reflects S&P's expectation that the SB Bank will continue following its strategy to further develop as a universal commercial bank by focusing on the SME segment while keeping capitalization and loan portfolio quality at, or only marginally below, current levels. S&P could lower the ratings if SB Bank's NPLs increased significantly, leading to deterioration in earnings and capitalization and S&P's projected RAC ratio falling below 5%. S&P might also consider a negative rating action if the bank experienced a loss of counterparty confidence leading to deterioration in its liquidity. Although it is unlikely in the next 12 months, S&P would consider a positive rating action if the bank substantially strengthened its business position by developing its client franchise and significantly reducing concentrations on both the asset and liability side of the balance sheet. ========= S P A I N ========= NCG BANCO: Moody's Reviews 'Ba1' Bond Ratings for Downgrade ----------------------------------------------------------- Moody's Investors Service has placed on review for downgrade the Ba1 rating assigned to the covered bond program issued by NCG Banco S.A. (deposits B3 on review for downgrade; BFSR E/BCA caa2). Moody's review was initiated following the conditional sale of NCG Banco to Banco Etcheverria, part of the Venezuelan Banesco Group (both entities are unrated). Rating Rationale The rating action on the covered bonds is prompted by Moody's decision to place NCG Banco's B3 long-term deposit rating on review for downgrade; the bank's standalone E bank financial strength rating (BFSR) and baseline credit assessment (BCA) of caa2 are not subject to the review of the issuer ratings. The rating review follows the Spanish Fund for Orderly Bank Restructuring's (FROB) resolution to sell NCG Banco to a division of the Venezuelan banking group Banesco. The review also takes into account the risk that a lower probability of systemic support -- as a consequence of the exit of the FROB from the capital of NCG Banco -- will not be fully outweighed by the provision of support from its new parent company. KEY RATING ASSUMPTIONS/FACTORS Moody's determines covered bond ratings using a two-step process: an expected loss analysis and a timely payment indicator (TPI) framework analysis. EXPECTED LOSS: Moody's uses its Covered Bond Model (COBOL) to determine a rating based on the expected loss on the bond. COBOL determines expected loss as (1) a function of the issuer's probability of default (measured by the issuer's rating); and (2) the stressed losses on the cover pool assets following issuer default. The cover pool losses for NCG Banco's mortgage covered bonds are 36.3%; this metric is an estimate of the losses Moody's currently models if NCG Banco defaults. The rating agency splits cover pool losses between market risk of 20.8% and collateral risk of 15.5%. Market risk measures losses stemming from refinancing risk and risks related to interest-rate and currency mismatches (these losses may also include certain legal risks). Collateral risk measures losses resulting directly from the credit quality of cover pool assets. Moody's derives collateral risk from the collateral score, which for this program is currently 23.1%. The over-collateralization (OC) in the cover pool is 127.3%, of which NCG Banco provides 25% on a "committed" basis. The minimum OC level consistent with the current rating target is 7%, of which the issuer should provide 0% in a "committed" form. These figures show that Moody's is not relying on "uncommitted" OC in its expected loss analysis. All figures in this section are based on the most recent Performance Overview (based on data, as per end-September 2013). TPI FRAMEWORK: Moody's assigns a "timely payment indicator" (TPI), which indicates the likelihood that the issuer will make timely payments to covered bondholders if the issuer defaults. The TPI framework limits the covered bond rating to a certain number of notches above the issuer's long-term deposit rating. For NCG Banco's mortgage covered bonds, Moody's has assigned a TPI of 'Probable'. Factors that would lead to an upgrade or downgrade of the rating The issuer's credit strength is the main determinant of a covered bond rating's robustness. The TPI Leeway measures the number of notches by which Moody's might downgrade the issuer's rating before the rating agency downgrades the covered bonds because of TPI framework constraints. The TPI assigned to NCG Banco mortgage covered bonds is 'Probable'. The TPI Leeway for this program is limited, and thus any downgrade of the issuer ratings may lead to a downgrade of the covered bonds. A multiple-notch downgrade of the covered bonds might occur in certain limited circumstances, such as (1) a sovereign downgrade negatively affecting both the issuer's senior unsecured rating and the TPI; (2) a multiple-notch downgrade of the issuer; or (3) a material reduction of the value of the cover pool. The credit ratings of the covered bonds were assigned in line with Moody's existing credit rating methodology: "Moody's Approach to Rating Covered Bonds", published July 2012. On September 19, 2013, Moody's published a Request for Comment (RFC) in which the rating agency proposes an adjustment to the anchor point it uses in its covered bond analysis. If the revised credit rating methodology is implemented as proposed, the credit ratings of the covered bonds may be affected. The principal methodology used in this rating was "Moody's Approach to Rating Covered Bonds", published in July 2012. NCG BANCO: Moody's Reviews 'B3' Debt Ratings for Downgrade ---------------------------------------------------------- Moody's Investors Service has placed on review for downgrade the B3 long-term debt and deposit ratings of NCG Banco, S.A. The placement on review follows the Spanish Fund for Orderly Bank Restructuring's (FROB) recent decision to sell NCG Banco to Venezuela's Banesco Group. Moreover, it reflects Moody's concerns that the provision of support from the new parent company will not fully mitigate the reduction in the probability of systemic support following FROB's exit from NCG Banco's capital. NCG Banco's E standalone bank financial strength rating (BFSR; equivalent to a caa2 baseline credit assessment or BCA) is not affected by today's rating action. RATINGS RATIONALE The rating announcement follows the FROB's decision on December 18, 2013 to sell NCG Banco to Spain-based Banco Etcheverria, which is part of the Banesco Group (both entities are not rated). The sale is part of the NCG Banco auction process, which began on November 19, 2013. Upon completion of the sale, which remains subject to compliance with all legal requirements and the approval of national and international authorities, the Banesco Group will take possession of 88.33% of NCG Banco's capital. This capital is currently owned by the FROB and the Spanish Deposit Guarantee Fund. Moody's review will assess the implications, in terms of external support, of the exit of the FROB from the capital of the bank and its sale to a foreign banking group. Since NCG Banco was nationalized in September 2011, Moody's has assessed the bank's probability of systemic support as being high, resulting in a two-notch uplift from the caa2 BCA. However, the exit of the FROB from the capital of NCG Banco translates into downward rating pressure, which is consistent with the return to a standard assessment of systemic support. Moody's nevertheless acknowledges that a reduced likelihood of systemic support could to some extent be offset by the provision of parental support. The review process will focus on assessing both the willingness and capacity of the Banesco Group to support NCG Banco in case of need, and the challenges this support may face given that the group is a foreign-owned, non-European entity. At this stage, Moody's does not anticipate that the sale of NCG Banco will have any impact on the bank's standalone credit assessment, which is driven by the bank's very weak profitability and asset quality indicators as well as the challenges arising from the fulfilment of the restructuring plan approved by the European Commission. As such, the Dec. 30 rating action does not affect NCG Banco's BCA of caa2. WHAT COULD CHANGE THE RATING UP/DOWN Given the Dec. 30 placement of NCG Banco's ratings on review for downgrade, Moody's does not currently expect any upward rating pressure. Should Moody's assess that a lower probability of systemic support for NCG Banco will not be mitigated by the provision of support from the Banesco Group, this would translate into a downgrade of the bank's long-term debt and deposit ratings. The principal methodology used in this rating was Global Banks published in May 2013. Headquartered in La Coruna, Spain, NCG Banco reported total consolidated assets of EUR60 billion as of June 30, 2013. ============= U K R A I N E ============= * S&P Affirms 'B-/C' Ratings on Three Ukrainian Banks ----------------------------------------------------- Standard & Poor's Ratings Services said it had revised to stable from negative its outlooks on three Ukraine-based banks -- PrivatBank, Alfa-Bank Ukraine, and PJSC KREDOBANK. At the same time, S&P affirmed its 'B-/C' long- and short-term counterparty credit ratings on all three banks and its 'uaBBB-' national scale ratings on KREDOBANK and Alfa-Bank Ukraine. The revision of the outlooks on the three banks follows S&P's similar action on the sovereign. S&P views the sovereign's creditworthiness as a key risk factor for Ukrainian banks because of their high operational, funding, and asset exposure to the Ukrainian economy. In S&P's view, receding sovereign risk could help the banks stabilize their financial profiles. Still, the 'B-' ratings on the banks continue to reflect S&P's view that the country's economic prospects remain weak, despite the promised support package from Russia, and that operating conditions for the banks remain risky. Based on S&P's expectations with regard to support from Russia, it no longer expects a sharp devaluation of the Ukrainian hryvnia against the U.S. dollar, which should limit deterioration in the banks' asset quality, given their high percentage of loans in foreign currencies. Negatively, S&P expects weaker economic growth, which is likely to reduce the banks' real loan growth rates in the next 12-18 months. In addition, two of the banks, Alfa-Bank Ukraine and KREDOBANK, are subsidiaries of large groups, whose creditworthiness is substantially superior to that of Ukraine, and which in S&P's view would provide extraordinary support to their affiliates in Ukraine. KREDOBANK is a subsidiary of Poland-based Powszechna Kasa Oszczednosci Bank Polski S.A. and Alfa-Bank Ukraine is ultimately owned by Russian financial-industrial group Alfa Group Consortium, whose main banking arm is Alfa-Bank OJSC. S&P believes this foreign ownership provides benefits, notably in risk management and the sustainability of the commercial franchise. S&P views the two entities as subsidiaries with moderate strategic importance for their respective parents. As such, the 'B-' ratings on the two banks benefit from one notch of support above their 'ccc+' stand-alone credit profiles (SACPs) to reflect the likelihood of extraordinary support in case of need. "We view PrivatBank as having higher stand-alone creditworthiness that the other two banks. Its 'b+' SACP reflects its stronger franchise, competitiveness, and risk profile than Alfa-Bank Ukraine and KREDOBANK. Still, the ratings on PrivatBank are constrained by the sovereign foreign currency rating on Ukraine. According to our criteria "Ratings Above The Sovereign -- Corporate And Government Ratings: Methodology and Assumptions," published on Nov. 19, 2013, we consider it appropriate for the ratings on PrivatBank, which has around 80% exposure to Ukraine, not to exceed those on the sovereign. Although we acknowledge that PrivatBank has marginal exposure to local sovereign debt and state-related enterprises, we believe it is likely the bank would be severely impaired by a hypothetical sovereign default and its potential consequences for the economy. The stress is likely to include the National Bank of Ukraine being unable to provide local currency liquidity to the banking sector, deterioration of borrowers' creditworthiness due to hryvnia devaluation, potential deposit outflows, and closed access to capital markets," S&P said. The stable outlooks on the three banks reflect that on Ukraine. S&P believes that increased chances of the Ukrainian government meeting its external debt services over the coming 12-18 months are a stabilizing factor for the banks' financial profiles. Further rating actions on the banks could result from changes to S&P's foreign currency sovereign credit ratings on Ukraine. However, the ratings on Ukraine and the banks would not necessarily move in tandem. If S&P upgraded Ukraine or revised the outlook to positive, it would take a similar action on PrivatBank, whose SACP is currently two notches above the long-term sovereign rating. S&P might consider positive rating actions on KREDOBANK and Alfa-Bank Ukraine if the banks' stand-alone credit quality continued to improve, notably their capital and asset quality, and if S&P raised its ratings on Ukraine. A negative rating action on the sovereign would likely trigger similar rating actions on the three banks. Any failure by KREDOBANK or Alfa-Bank to maintain their risk-adjusted capital ratios above 3% in the next 12 months, as S&P currently expects, could also have negative rating implications. This could happen if capital support from their respective parents, or internal capital capabilities, were insufficient to offset growth in risk- weighted assets. =========================== U N I T E D K I N G D O M =========================== DEBENHAMS PLC: Finance Boss Steps Down After Major Profit Warning ----------------------------------------------------------------- Denise Roland at The Telegraph reports that Simon Herrick, Debenhams' finance boss, has announced his resignation just days after the troubled department store chain issued a major profits warning. Mr. Herrick will step down with immediate effect and leave the company on February 7 after just two years in the job, The Telegraph discloses. His resignation comes just two days after the chain disclosed that profits will now be far lower than expected because its margins were hit by the company offering heavy discounts on clothing in December, in a tumultuous trading period described as a "sea of red" by Michael Sharp, chief executive, The Telegraph relates. However, it is understood Mr. Herrick was already under pressure before the crucial Christmas trading period, after angering suppliers by asking for a discount in the days running up to Christmas, The Telegraph notes. According to The Telegraph, Debenhams on Tuesday said that pre-tax profits for the first half of its financial year are now likely to be around GBP85 million, almost 25% less than City forecasts of GBP110 million for the six months to the end of February. The profits warning sent Debenhams' shares down 12%, wiping GBP124 million off the value of the company, The Telegraph states. The profits warning was the second from Debenhams in less than a year, The Telegraph notes. However, Mr. Sharp on Tuesday insisted there was not a "fundamental flaw" in Debenhams strategy, The Telegraph relays. He blamed the profits warning on weak consumer confidence and heavy discounting among fashion retailers as they attempted to shift unsold winter clothing that had built-up because of the mild autumn, The Telegraph relates. Mr. Sharp also warned that a "final surge" in sales in the week before Christmas had not materialized, The Telegraph recounts. Debenhams' director of finance, Neil Kennedy, is to assume the role of chief financial officer while the company searches for a replacement, The Telegraph says. Debenhams plc is a multinational retail chain operating under a department store format in the United Kingdom and Ireland with franchise stores in other countries. GERALD DAVID: Owes Farmer GBP11,000 ----------------------------------- thisisthewestcountry.co.uk reports that farmer Stephen Crossman has spoken of his disappointment at losing GBP11,000 after butcher chain Gerald David went into administration. Stephen Crossman from Withycombe supplied pigs to Mr David's shops. It is reported that the firm, Gerald David and Family, had debts of more than GBP1.68 million when it went into administration in October, according to thisisthewestcountry.co.uk. The report notes that Mr. Crossman, who owns Court Place Farm, is one of more than 100 trade creditors, who are rumored to be owed at least GBP294,000 in total. "We're disappointed on many fronts really - firstly that we've lost the money and then also for his staff, who have been left high and dry by this," the report quoted Mr. Crossman as saying. The report notes that Mr. Crossman said that Mr. David had recently assured him that things were going better for the company and they had started to get things in order. The report relates that so far, administrators, Kirks of Exeter have only identified assets of around GBP68,000, meaning it is unlikely that trade creditors will see anything back. HIGGS CAPITAL: Faces Closure Following Investor Redemptions ----------------------------------------------------------- Gregory Meyer at The Financial Times reports that a wave of investor redemptions from commodities markets has claimed another casualty as Higgs Capital Management announced Monday it plans to close. According to the FT, people close to the fund said that staff of 12 managed about US$250 million in assets as of December 1, down from US$340 million at Higgs' peak. Higgs's performance was down about 0.5% in the 11 months to Dec. 1 after a positive debut in 2012, the FT discloses. Higgs joins several commodities funds in shutting their doors this year, including Clive Capital, managed by Chris Levett, and Arbalet Capital, launched in 2012 by Jennifer Fan, the FT relays. Many surviving funds have seen their assets dwindle, reducing management fees, the FT states. The FT relates that in a letter to investors, Higgs said: "We have taken this decision based on recent redemptions we have received and general headwinds we face in commodity capital raising. Our lack of capital stability meant that although we could have continued to manage capital into 2014 this would have required a significant reduction in expenses along with a restructuring of the fund." Returns from trading in energy, metals and grains have paled next to stock markets this year, while the wild commodity price swings of years past have abated, the FT says. The FT notes that people close to the fund said Higgs had been included in a fund of hedge funds, which farms out money to different managers and commodity trading advisers, and lost assets as investors pulled money from that vehicle. Higgs Capital Management is a London-based commodities fund, named after the "God particle" of physics, was founded in July 2012 by Neal Shear and Jean Bourlot, who long held senior positions at Wall Street banks. OSBORNE STATIONERS: In Administration, Calls in FRP Advisory ------------------------------------------------------------ Express & Star reports that Osborne Stationers has shut three stores and started closing down sales at 14 others after going into administration. Two others have been sold and discussions are ongoing over the sale of another, according to Express & Star. The report notes that employed 140 staff at the time directors called in administrators from restructuring firm FRP Advisory earlier this month. The report relates that the company has struggled to survive through tough trading conditions since the start of the downturn in 2008. Administrators said stores in Arnold and Sherwood, both in Nottinghamshire, and Solihull, in Warwickshire, had been closed before Christmas, the report notes. The report discloses that two others, at Oadby in Leicestershire and Newark in Nottinghamshire have been sold to Paperweights Ltd, a company controlled by John Waits, a former owner of Osbornes, saving ten jobs. "Unfortunately further closures are inevitable in the new year," the report quoted Steven Stokes -- steve.stokes@frpadvisory.com - - partner at FRP Advisory, as saying. The report discloses that the remaining outlets consist of seven in Birmingham, two in Warwickshire, two in Leicestershire and single shops in Bristol, Tewkesbury, Worcester and Daventry. Talks over one site may result in the sale of one of the stores in the Birmingham area, the report relays. The Birmingham-based Osborne Stationers is a high street chain founded nearly two centuries ago. The firm, whose stores are mostly in the Midlands, was founded as a printing business in Birmingham city centre in 1832 by Edward Corn Osborne. SKIPTON BUILDING: Moody's Changes Ratings Outlook to Stable ----------------------------------------------------------- Moody's Investors Service has changed the outlook to stable from negative on Skipton Building Society's ratings. At the same time the society's ba1 standalone assessment, Ba1/Not-Prime deposit and senior debt ratings, Ba2 subordinated and B1(hyb) junior subordinated debt ratings have been affirmed. RATINGS RATIONALE The change in outlook of Skipton's ratings to stable from negative reflects the society's recovering performance as shown by 1) its stabilizing asset quality which, however, is still considered weaker than some peers', 2) the increasing profitability both in the consolidated business and in the core Mortgages & Savings (M&S) business, and 3) the ongoing reduction in organizational complexity. We view positively the progress that Skipton has made in the last 1.5 years in improving performance and divesting of certain loss-making subsidiaries and/or businesses that didn't fit its strategic direction. The affirmation of the ratings also reflects Skipton's historically robust operating income, driven by the solid performance of its estate agency business, its conservative liquidity position and reliance on member deposits. Moody's expects Skipton to deliver sustainable profitability in the core M&S business supported by its disciplined underwriting standards and stable margins. Despite recent improvements, efficiency is still low and is heavily influenced by the managerial and fixed costs associated with some of the principal subsidiaries resulting in a weak cost-income ratio of 80.5% in the first six months of 2013. Although most of the subsidiaries are related to the core retail business, Moody's believes that the strategy of holding numerous separate businesses increases Skipton's operational complexity and consequently its overall risk profile, putting greater stretch on management. This operational complexity exposes the society to risks beyond credit risk such as conduct-related risks. These factors remain constraints on Skipton's rating levels. We note, however that management has established a division ("Investment Portfolio") which includes subsidiaries that do not fall into the society's core operations and has disposed of subsidiaries which had not been profitable or were not sufficiently aligned to its core businesses. WHAT COULD CHANGE THE RATINGS DOWN/UP Difficulties at one of Skipton's major subsidiaries, leading to a drain on resources (either financial or managerial) away from the core lending franchise might exert downward pressure on the standalone assessment. Any material deterioration in asset quality and profitability would have the same impact. Skipton will be challenged to obtain a higher standalone assessment given its high reliance on non-lending subsidiaries. Upward ratings pressure could come from a track record of sustainable profitability at both the lending and non-lending subsidiaries. However, in the near term this might be constrained by the current low interest-rate environment and the weak albeit stabilizing economic growth in the UK. The principal methodology used in these ratings was Global Banks published in May 2013. SMARTOFFICE TECHNOLOGIES: Owes GBP533,000 to HMRC ------------------------------------------------- Herald Scotland reports that SmartOffice Technologies, a software company once considered to be one of Scotland's brightest technology prospects, went in to insolvency owing almost GBP533,000 to the tax authorities. Documents filed by administrators of Paisley-based SmartOffice Technologies, which uses technology developed by Picsel, show Her Majesty's Revenue and Customs was its largest creditor when it went into administration in September, Herald Scotland relates. The statement of affairs and administrator's proposals were prepared by Brian Milne and Linda Barr from French Duncan and have been filed at Companies House, according to Herald Scotland. The documents outline the dozens of other businesses which were owed money by SmartOffice, the report relays. Herald Scotland relates that among the creditors, financial adviser Trident (Scotland) was due more than GBP31,000, accountant Hardie Caldwell GBP13,250, recruitment firm Eden Scott more than GBP8,000, telecoms supplier Abica in excess of GBP13,000 and accountancy firm Haines Watts around GBP6,300. The Redundancy Payments Office, which is part of The Insolvency Service, was owed more than GBP158,000. Former employees were also named with Imran Khand, who resigned as a director in August this year, owed around GBP89,000 in expenses, director Majid Anwar due GBP21,000 and Elaine McLardy listed as having GBP8,138 of outstanding expenses, Herald Scotland relays. The unsecured creditors' bill was just short of GBP1 million, the report discloses. As reported in the Troubled Company Reporter-Europe on Sept. 25, 2013, Business7 said SmartOffice Technologies has entered into administration. Provisional liquidators Brian Milne and Linda Barr of French Duncan, have been appointed to parent company Picsel International Ltd., based in Malta, Business7 related. Messrs. Milne and Barr have also been appointed as joint administrators to subsidiary SmartOffice Technologies, which employs 31 staff in Paisley and six in Asia, Business7 disclosed. Paisley-based SmartOffice Technologies develops document viewing and editing solutions for mobile devices. WASABI ENERGY: Goes Into Voluntary Administration ------------------------------------------------- Alliance News reports that Wasabi Energy Ltd said the company has been put into voluntary administration following a review of its financial position. The company appointed John Lindholm -- john.lindholm@fh.com.au -- and Stewart McCallum -- stewart.mccallum@fh.com.au -- of Ferrier Hodgson as administrators of Wasabi. The report notes that Wasabi's shares were suspended on Dec. 23 after it failed to raise enough funds to pay off AU$8 million of outstanding loan notes, or to fund its purchase of the Tuzla Geothermal Power Project in Turkey. On November 27, Wasabi said it wanted to raise up to US$14.8 million through a rights issue to complete the purchase of the Tuzla Project, as well as pay off its debt and provide working capital, the report discloses. The report relays that Wasabi said on December 24, that the shortfall on its rights issue totaled AU$13.8 million, managing to raise only AUD1.0 million, or 6.5% of the company's shares on offer, and that it was holding discussions with note holders about how to repay the notes. The company has now voluntarily gone into administration and said it is committed to working with the administrators in order to determine the future of Wasabi and will provide a further update to shareholders shortly, the report adds. Wasabi Energy Ltd is a renewable and clean-energy technology company. ZLOMREX: Jan. 8 Meeting Set to Approve Scheme of Arrangement ------------------------------------------------------------ IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION COMPANIES COURT IN THE MATTER OF ZLOMREX INTERNATIONAL FINANCE S.A. AND IN THE MATTER OF THE COMPANIES ACT 2006 Notice is hereby given that by order made on November 26, 2013, Zlomrex International Finance S.A. (ZIF) was granted permission by the High Court of Justice of England and Wales, under Part 26 of the Companies Act 2006, to convene a meeting of "Note Creditors", being those persons with a beneficial interest in the notes issued under the indenture dated January 29, 2007 (as amended) in order for those Note Creditors to consider, and if thought fit, approve a scheme of arrangement proposed by ZIF. The Court granted ZIF permission to convene a single meeting of the Note Creditors for the purposes of voting in favor or against the Scheme. In order to become effective, the Scheme must be approved by a majority in number representing not less than 75% by value of those Note Creditors who vote at the Scheme Meeting. By the said Order, the Court has appointed Krzysztof Zola of ZIF or failing him, David Manson of White & Case LLP, to act as chairman of the Scheme Meeting and has directed the chairman to report the result of the Scheme Meeting to the Court. The Court will be subject to the subsequent approval of the Court. Each Note Creditor is entitled to attend and vote for or against the Scheme at the Scheme Meeting, either in person or by proxy. Details on how to vote or appoint a proxy are also set out in the Scheme Documents referred to below. If you are unsure whether you are a Note Creditor please contact Lucid Issuer Services Limited acting as "Information Agent" on behalf of ZIF whose details are set out below. Note Creditors should immediately contact their "Account Holder" (through an intermediary, if appropriate) to ensure that a valid "Account Holder Letter" is submitted in respect of their interests. Each Note Creditor will need to give its Account Holder instructions as to voting. Note Creditors should note, however, unless a valid Account Holder Letter is delivered on or before 5:00 p.m. (London time) on January 7, 2014, the voting instructions contained in the Account Holder Letter will be disregarded for the purposes of voting at the Scheme Meeting and the Note Creditor will not be able to vote at the Scheme Meeting. The Scheme Meeting will be held on January 8, 2014 at the offices of White & Case LLP at 5 Old Broad Street, London EC2N 1DW at 11:00 a.m. (London time). Copies of the documents related to the Scheme of Arrangement, including the explanatory statement required by section 897 of the Companies Act 2006 and the Account Holder Letter are available to be downloaded at www.lucid-is.com/zlomrex. The Scheme Documents will also be made available to the Note Creditors by the Information Agent. Note Creditors who have questions regarding the proposed Scheme Documents or who require any further information regarding the proposed Scheme may contact the Information Agent at Lucid Issuer Services Limited, Leroy House, 436 Essex Road, London, N1 3QP; (Attention: David Shilson/Paul Kamminga). Telephone: +44 (0)20 7704 0880 Fax: +44(0)20 7067 9098 E-mail: zlomrex@lucid-is.com White Case LLP, 5 Old Broad Street, London EC2N 1DW Solicitors to Zlomrex International Finance S.A. * UK: Number of Retail Sector Administrations Down 6% in 2013 ------------------------------------------------------------- BreakingNews.ie reports that the number of retailers going into administration during 2013 fell by 6% overall compared to the year before though there was a marked upturn during the final quarter of the year. Research from business advisory firm Deloitte found 183 retailers entered administration over the last 12 months compared with 194 in 2012, BreakingNews.ie discloses. High street firms were thought to be benefiting from being left standing after the collapse of rivals, BreakingNews.ie notes. But the last three months of the year saw an increase of 11% compared to the previous fourth quarter -- from 37 to 41, BreakingNews.ie relays. Lee Manning, restructuring services partner at Deloitte, as cited by BreakingNews.ie, said: "The high street has undergone a re- balancing, and this is what is being reflected by these figures. "A year ago we were about to see HMV, Blockbuster and Jessops enter administration, but I would not expect as many high-profile retail casualties this time round. "This does not mean demand is increasing, more that the clear-out will benefit those still standing in 2014." In total, 1,629 businesses went into administration in 2013, 11% down from the figure of 1,833 seen the previous year, BreakingNews.ie discloses. Almost all sectors tracked in the analysis saw a decline in the number of business failures -- including a 24% fall in property and construction, and a 4% decrease among manufacturing firms, BreakingNews.ie states. * UK: Twenty Scottish Firms to Go Bust Every Week This Year ----------------------------------------------------------- Peter Ranscombe at The Scotsman reports that twenty Scottish businesses are forecast to go bust each week this year as the nation continues to struggle under a mountain of historic debt. Many companies are only managing to service the interest on their debts rather than paying off the money they owe, The Scotsman discloses. This leaves firms in a precarious situation if interest rates begin to rise, as they will be unable to meet their repayments, The Scotsman notes. According to The Scotsman, Bryan Jackson, a partner at accountancy firm BDO, which made the predictions, said: "Worryingly, many businesses are simply paying interest on debts that are never reduced. "A rise in interest rates, reduced income, or a change in the marketplace and these businesses will collapse. "About 20 businesses a week will have gone bust during 2013 and I would expect a similar figure or perhaps even higher for the coming year." * UK: Number of Zombie Companies Down in November, R3 Says ---------------------------------------------------------- Kate Burgess at The Financial Times reports that the battalions of corporate walking dead are disappearing, say insolvency practitioners, with some being restored to health but others moving closer to insolvency. According to the FT, R3, the insolvency trade body, said that the so-called zombie companies that can do little more than pay the interest on their loans have sunk to new lows. It classed 103,000 UK businesses as zombies in November, about 6% of companies with a turnover of at least GBP50,000, down by more than a third from the peak of 160,000 in November 2012, the FT discloses. R3 says its figures suggest that some companies may have been able to work their way out of their difficulties and back to health, the FT relays. About 96,000 companies told the insolvency body that they would not be able to repay debts if interest rates rose, according to the FT. That is slightly up on November 2012 but well off their peak of 145,000 in June last year, the FT notes. The number of companies that say they are struggling to repay debts when they fall due has also halved in the past year to about 56,000, the FT states. At the same time, says R3, there has also been a sharp rise in the number of companies having to negotiate payment terms with their creditors, the FT discloses. The FT relates that Ric Traynor, chairman of Begbies Traynor, last month said he had seen an increase in informal discussions between banks and borrowers. R3 calculates that, in November, 166,000 companies were negotiating terms with their lenders, against 75,000 the year before, the FT relays. That may mean that a number of companies have moved a step further towards insolvency, the FT notes. The rise of zombie companies, which would have failed in previous recessions, has been a mark of the recent downturn, the FT states. According to the FT, these are the companies that have been kept going by ultra-low interest rates and the forbearance of creditors. The rate of corporate liquidations, both compulsory and voluntary, is far lower than levels reached in earlier recessions, the FT says. According to the FT, while some insolvency practitioners say the survival of zombies has helped to protect jobs, it has also held back recovery by hampering the expansion of healthier companies. =============== X X X X X X X X =============== * BOOK REVIEW: Creating Value through Corporate Restructuring ------------------------------------------------------------- Author: Stuart C. Gilson Publisher: Wiley Hardcover: 516 pages List Price: $79.95 Review by David M. Henderson Most business books fall into two categories. The first is very important. It is like that stuff you have to drink before you have a colonoscopy. You keep telling yourself, this is very good for me, while you would rather be at the beach reading Liar's Poker or Barbarians at the Gate. Stuart Gilson, of the Harvard Business School, has managed to write a book important to everybody in the distressed market that is also quite enjoyable. His prose is fluid and succinct and a pleasure to read. But don't take my word for it. The dust jacket endorsements come from Jay Alix, Martin Fridson, Harvey Miller, Arthur Newman, and Sanford Sigoloff. At a collective gazillion dollars a billing hour, that's a lot of endorsement. Be advised that this is designed as a text book. The case study format might be off-putting to some. The effect can be jarring as you read the narrative history of the case and suddenly confront the financial statements without any further clue as to what to do, but this must be what it is like for the turnaround manager. Even after reading several of the cases, when I got to the financials I had that sinking feeling of, what do I do now? If you read carefully, clues to the solutions are in the introductions. The book is divided into three "modules", bizspeek for sections: Restructuring Creditors' Claims,. Restructuring Shareholders' Claims, and Restructuring Employees' Claims. The text covers 13 corporate restructurings focusing on debt workouts, vulture investing, equity spinoffs, tracking stock, assete divestitures, employee layoffs, corporate downsizing, M & A, HLTs, wage givebacks, employee stock buyouts, and the restructuring of employee benefit plans. That's a pretty comprehensive survey, wouldn't you say? Dr. Gilson's chapter on "Investing in Distressed Situations" is an excellent summary of the distressed market and a good touchstone even for seasoned vultures. Even in the two appendices on technical analysis, this book is marvelously free of those charts and graphs that purport to show some general ROI of distressed investing. Those are cute, aren't they? As Judy Mencher has famously said, "You can buy the paper at 50 thinking it's going to 70, but it can just as easily go to 30 if you are not willing to act on it." Therein lies the rub and the weakness, if inevitable, of this or any book on corporate restructurings. As Dr. Gilson notes, no two are alike, and the outcome is highly subjective, in our out of Court, but especially in Chapter 11. Is the Judge enthralled by Jack Butler as Debtor's Counsel or intimidated by Harvey Miller as Debtor's Counsel? Are you holding "secured" paper only to discover that when it was issued the bond counsel forgot to notify the Indenture Trustee of the most Senior debt? Is somebody holding Junior paper that you think is out of the money only to have Hugh Ray read the fine print and discover that the "Junior" paper is secured? This is the stuff of corporate reorganizations that is virtually impossible to codify into a textbook. That said, this is an especially valuable text for anybody working in the distressed market. As a Duke grad, I tend to be disdainful of all things Harvard, but having read Dr. Gilson's book, I am enticed to encamp by the dirty waters of the Charles long enough to take his course, appropriately entitled, "Creating Value Through Corporate Restructuring." ********* 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., Washington, D.C., USA. Valerie U. Pascual, Marites O. Claro, Rousel Elaine T. Fernandez, Joy A. Agravante, Ivy B. Magdadaro, and Peter A. Chapman, Editors. Copyright 2014. 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$775 per half-year, delivered via e-mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are US$25 each. For subscription information, contact Peter Chapman at 215-945-7000 or Nina Novak at 202-241-8200. * * * End of Transmission * * *