Latest news with #creditors
Bloomberg
5 hours ago
- Business
- Bloomberg
Clearlake Overhauls Debt, Gets Fresh Capital for Quest Software
A deal to provide Clearlake Capital Group- backed Quest Software Inc. with $350 million of fresh capital to help fund its artificial intelligence and growth plans is coming at the expense of some lenders who will be pushed down the repayment line. Lenders who didn't participate in the transaction, along with other junior creditors, will be ranked lower, according to people with knowledge of the matter, who asked not to be identified discussing a private matter. That may impact what they can recoup from their investment, they added.
Russia Today
3 days ago
- Business
- Russia Today
Ukraine on brink of default
Ukraine will not pay $665 million it owes to international creditors, the country's Finance Ministry said in a statement on Friday. Kiev earlier failed to agree on restructuring terms with a group of debt holders led by hedge funds. The payment on the country's GDP-linked securities – debt with annual payouts tied to economic growth and amounting to $2.6 billion – is due on June 2. Ukraine was originally scheduled to make the payment a year ago, but a moratorium on bond settlements, approved by the authorities in Kiev, allowed the cash-strapped country to avoid default. The moratorium will remain in place until the debt is restructured, the statement says. The Finance Ministry noted that, under an agreement reached with international creditors in 2024, the so-called cross-default clause was removed from contracts. That clause had stipulated that failure to make payments on the GDP warrants could trigger a default on other debt obligations, such as the country's international bonds. The ministry emphasized that the removal of the clause means Ukraine does not need to declare a default on its international bonds. In April, Ukrainian authorities said they had failed to reach a deal to restructure part of the country's debt, with a nominal value of $3.2 billion. According to Bloomberg, Ukraine offered investors two options during the unsuccessful talks, including a full exchange for sovereign bonds by reopening existing notes. However, creditors reportedly agreed only to restructure the May payment and demanded over $400 million in cash, as well as the conversion of more than $200 million into new bonds – a condition Kiev rejected.
South China Morning Post
3 days ago
- Business
- South China Morning Post
How to save the world economy (and make Trump think it was his doing)
US President Donald Trump is an enigma. He has correctly identified the two most unsustainable elements of the global economic order, but his attempts to bring about their creative destruction threaten disaster. Has he perhaps revealed a paradoxical truth that such destruction is the only practical way to go? Advertisement It was never going to be possible for the United States to remain the 'consumer of last resort' indefinitely, thereby allowing other economies to pursue unsustainable export-led growth . It was also never going to be possible for the US to finance its level of consumption indefinitely by accumulating debt. The two matters are intimately connected. The ability of the US government to take on debt – now at a record US$36.2 trillion, according to US Treasury data – depended upon trust among creditors or bondholders, and Trump himself has largely destroyed that with his punitive tariffs. But it also depended upon the continuance of record low interest rates globally, a situation which has now ended . This means a potentially crippling debt service burden for the US government, whose interest payments account for 16 per cent of total federal spending and are rising. Whether consciously or not, Trump has uncovered these inconvenient truths which few, if any, in Washington were prepared to countenance, at least publicly. However, he has approached the issue with all the delicacy and finesse of the proverbial bull in a china shop , raising the question of whether he is an anarchist or the ultimate realist. Advertisement The Biden administration that predated Trump's second term could not have been unaware that the US debt situation was unsustainable in a changing, tightening international financial environment, and that it would soon create a crisis of debt service and impact America's ability to import both goods and capital.
Irish Times
3 days ago
- Business
- Irish Times
Three times unlucky: Cityjet finds itself seeking protection from creditors again
Irish-based airline Cityjet is back under High Court protection from creditors, for the third time in its 33-year history. Mr Justice Michael Quinn confirmed the appointment of Kieran Wallace and Andrew O'Leary of specialist firm Interpath Advisory earlier this week as examiners to the carrier. They have up to 100 days to devise a rescue plan for the business, which has €7.7 million in cash and creditors who are seeking €13 million. An independent report on its finances by Damian Murran of Teneo Restructuring Ireland says its net liabilities were €38.5 million at the end of February. Much of that consists of payments due under aircraft leases, so does not fall due immediately. Mr Murran points out that net liabilities would increase to €66 million as a consequence of examinership, including €18.7 million due to unsecured creditors. However, he states that liquidation would increase the amounts owed to €177 million. READ MORE This is partly because liquidation would trigger big penalties under the airline's contracts with SAS and Lufthansa, adding significantly to the amounts due to its creditors. [ More turbulence at Cityjet as interim examiners called in Opens in new window ] While the company remains under the court's protection, creditors cannot enforce any debts. The 'examinership' process is designed to allow financially troubled companies with a reasonable chance of survival stay in business. Cityjet last went into examinership in April 2020, a month after Covid-19 curbs grounded global air travel. It emerged the following August. The first time it did so was in 1996. Run by chief executive and founder Pat Byrne, who is no longer a shareholder, Cityjet flies regional routes for Scandinavian airline SAS and Germany's Lufthansa. It uses its own aircraft and crews for this, a practice known in the industry as wet leasing. It began focusing solely on this business in 2018, deciding to no longer operate its own scheduled services in a move designed to cash in on opportunities it saw emerge as bigger carriers sought ways to maintain less lucrative regional routes while they concentrated on longer routes. [ Dublin-based CityJet reports loss of €16.8m in 2023 Opens in new window ] Cash flow forecasts in the report show that the company can trade through the 100-day examinership while paying its workers and suppliers critical to keeping the business going. Cityjet's current problems are rooted in the decision of key customer, SAS, to enter Chapter 11 bankruptcy in the United States in July 2022. Not unlike examinership, Chapter 11 is a federal court-supervised process that allows companies facing financial problems restructure their debts and capital so they can stay in business. Airlines based outside the US have used this process in the past. SAS originally expected Chapter 11 to take around nine to 12 months, but it ended up lasting two years. That limited SAS's scope to make longer-term commitments to Cityjet, leaving the Irish group with no certainty on its arrangement with the Scandinavian group beyond October 2023. During that period, SAS also contracted some routes to a Cityjet rival, Estonian carrier Xfly, aggravating the Irish group's problems. Consequently, Cityjet began to focus more on providing services to Lufthansa in 2023. Cityjet, which is based at Dublin Airport, employs more than 580 people in Ireland, Britain, Denmark and Sweden. It is unclear how many jobs would be lost in any restructuring. Photograph: Nick Bradshaw Those routes were seasonal. The cost of laying off crew and mothballing aircraft for the winter, and then returning them to service for the summer, was prohibitive. Instead, Cityjet kept planes and crews in service. That cost it €13 million, according to Mr Murran. Last year, the airline began talks with Lufthansa to establish a long-term commercial relationship, spending cash on boosting its workforce, compliance and maintenance in anticipation of a big contract extension. It even drew up plans to increase its fleet. The pair agreed initial terms late last year. However, in January, Lufthansa told Cityjet that its board had decided on a new strategy. Not only was the German group not going ahead with the extended wet-leasing deal, it said it was terminating its current contract in October. That removes around one-third of Cityjet's business. As this was going on, SAS finally emerged from Chapter 11 in August last year with $1.2 billion in fresh investment. However, the lack of a long-term deal with SAS prompted Export Development Canada (EDC) to sell 14 Bombardier planes, leased to the Irish group, to American Airlines, agreeing short-term lease extensions and a delivery schedule up to April next year for the aircraft. This will cost Cityjet €21.6 million up to that date, stemming from terms in the leases covering engine overhauls. That figure would have been higher but EDC agreed to amend those terms, cutting the liability by €20 million. However, Mr Murran points out that as Cityjet has not paid the Canadian company since February, it risks a breach of contract and a 'reversal' of the deal to cut the liability by €20 million. EDC is listed as a creditor, through CJF Aviation, for €1.9 million. EDC is one of the parties with which Mr Wallace and Mr O'Leary will be negotiating through the examinership. On Monday, the High Court heard it was not objecting to Cityjet's petition for protection from creditors. SAS will also loom large in the process. That group agreed a new four-year deal with Cityjet in October 2024. It is the largest user of wet leasing among European airlines. Lawyers said on Monday that it would continue doing business with Cityjet through the examinership. Any new business plan will focus on flying routes for SAS while potentially expanding the current agreement. There may be some headroom for this as Xfly, the Estonian carrier that took some of the Irish group's routes, has filed for bankruptcy. But Cityjet will be smaller. As things stand, it employs more than 580 people across the Republic, the UK, Denmark and Sweden. According to Mr Murran, 116 of those are based in Ireland, with eight in Luton, and 461 working for its Danish subsidiary, Cityjet AS. [ Investors circle troubled Cityjet Opens in new window ] Some of those jobs will be lost, but nobody knows where or how many at this point. New investment seems certain to play a part in any rescue. The examiners' lawyers told the High Court this week that some – as yet unnamed – potential backers have expressed interest since their interim appointment on May 8th. One possibility is that the larger of its current shareholders, Spanish group Air Investment Valencia, which is controlled by businessman Carlos Bertomeu, could reinvest in Cityjet. Air Investment Valencia owns 80 per cent of Cityjet as it is, through a holding company, Strategic Alliance of Regional Airlines, which owns Cityjet and Spanish carrier, Air Nostrum, along with aircraft maintenance and service companies. From left, Miguel Angel Falcon and Carlos Bertomeu of Air Nostrum, and Cityjet's Pat Byrne and Cathal O'Connell at the announcement in 2023 that the two regional airlines were joining forces Cityjet owes Air Nostrum's maintenance arm €2.3 million, making the Spanish business one of the biggest individual unsecured creditors. Irish company CF Miga owns the remaining 20 per cent. That business is also a secured creditor as Cityjet owes it €400,000 from a €1.9 million loan given in 2020. Creditors are likely to take a hit in any scheme of arrangement, as examiners' rescue plans are known. The law allows examiners a lot of scope to restructure debt. In addition, once the scheme is supported by any single group of creditors that loses out as a consequence, the court can approve it. Mr Justice Quinn acknowledged on Monday that this was the third time that Cityjet had sought the High Court's protection and gone into examinership. However, he argued that this was 'no bar' to the company availing of the process again, as it faced new difficulties and challenges.
Yahoo
3 days ago
- Business
- Yahoo
How to choose the right debt settlement company for you
Debt settlement requires you to pay a lump sum to creditors for less than you owe and have the remaining balance forgiven. To choose the right debt settlement company, compare the cost, eligibility requirements and reputation of each company. There may be other options for relief, including debt management or consolidation. You might have seen ads promising that you can settle your debt for much less than you owe. If you have a lot of debt with accompanying and persistent collection calls, you might wonder if these companies can provide the debt relief options they promise. To an extent, they can. Debt settlement companies can be a solution to freeing yourself from debt. But finding a reliable, trustworthy agency goes beyond calling the 800 number in the ads or even doing a quick internet search. Before you choose a debt relief company, you should determine if it's the right solution for your situation, then research legitimate companies with agreeable terms. What is debt settlement? Debt settlement is the act of negotiating with creditors and lenders to accept a lump sum payment lower than what is owed and forgive the rest. Debt settlement companies differ in their terms, plans, requirements and even their legitimacy. Consider these factors when choosing a company to work with. Debt-settlement companies earn revenue by charging fees equal to a percentage of the initial or settled debt — typically between 15 and 25 percent. Possible additional costs might include account setup fees and monthly service expenses. These costs could pose an additional burden if you're already struggling financially. A legitimate debt relief company can't legally ask for upfront payment, so any such request is a red flag. Ask for a breakdown of anticipated costs and fees before signing the dotted line. You might not owe enough to work with some debt relief companies. These firms obtain the majority of their revenues on a percentage of existing or settled debt, so you'll need to have a minimum amount to make it worth their while. The generally quoted debt requirement is at least $10,000, though some debt-relief companies can go as low as $7,500. Debt relief scams are prevalent in the finance industry, so it's important to be on guard. Sure signs of a scam are a company that: Contacts you first. Has repeated complaints of fraud, poor customer service or failed results. Uses aggressive sales tactics or over-promises. Another way to determine if a debt relief company is legit is to check how long it has been in business. If that company has been in business for several years, chances are it isn't a 'fly-by-night' firm with dishonest aims. Along those lines, the Federal Trade Commission has a database of banned debt relief companies that are essentially prohibited from offering debt settlement services. Another way to determine reputability is with accreditation. Membership in and accreditation by the American Association for Debt Resolution — formerly the American Fair Credit Council — isn't essential for debt relief agencies. It does, however, lend a level of credibility to the company. AADR members are held to strict operating standards and are audited regularly to ensure they follow regulations. As an added protection, be sure you're working with an accredited debt settlement counselor rather than a salesperson. A counselor certified by the International Association of Professional Debt Arbitrators (IAPDA) can generate trust that the individual will support your best interests rather than doing it for the commission. Additionally, some states require that debt settlement counselors be IAPDA-certified. During the research process, be sure to explore the following with any company you consider: Length of time in business. How much debt the company helped settle. Whether commissions are involved — if the answer is 'yes,' you could be dealing with salespeople rather than accredited debt counselors. The debt settlement process and estimated time frame. While you're asking these questions, be wary if you run across these red flags: The company claims it can settle your entire debt for a promised percentage reduction. The company touts a 'new government program' to get rid of your credit card debt. The company issues an iron-clad guarantee that it can cancel your debt. The company claims it can stop all debt collection calls or lawsuits. The company says it can pay off your unsecured debts for pennies on the dollar. If any debt settlement company makes promises that seem too good to be true, they probably are. When to consider debt settlement Debt settlement may be a good option when: The debt is unsecured. You're already behind on payments. You've tried other methods, like debt management or consolidation. You're okay with settling between 10% and 50% of your debt. Your only other option is bankruptcy. You get a windfall that could pay a lot, but not all, of your debt in one lump sum. Debt settlement comes with risks. Because you're asked to stop making payments as part of the debt settlement plan, your credit score may drop significantly and you may continue to get debt collection calls and threats. According to Andy Manthei, Change Cultivator at GreenPath Financial Wellness, creditors may take legal action and the debt settlement may show up in your credit report. He also warns that the IRS may see the forgiven debt amount as income, which you'll be taxed on. If possible, consider these options first. Debt management programs help you lower your monthly payment through actions like interest rate reduction and debt consolidation, and are created and managed by credit counseling agencies or nonprofits. Instead of paying creditors, you pay the agency or organization and they make the payment on your behalf. According to Manthei, debt management can drop your monthly payment by hundreds of dollars, while also decreasing the payoff timeline, total interest paid and total cost. If the various debts, payments and interest rates are overwhelming, consider consolidating your debts into a 0 percent balance transfer card or debt consolidation loan. Doing so will create one debt with one interest rate and monthly payment, making it easier and potentially faster to pay down your debt. Use a debt consolidation calculator to see if this option makes sense for you and get an idea of what your payment would look like. Get in touch with creditors or lenders directly, explain your situation and ask if you can work out a plan that includes reasonable monthly payments. Creditors may already have a preset plan for when life happens, which may include certain hardship programs, late-fee pauses and rate reductions. 'Some creditors, depending on the level of hardship, may even go to 0% [interest],' Manthei says. Those late-night ads might paint debt settlement companies as the answer to your woes. But before you make the call, carefully examine the background of the advertised company. If you're having severe financial difficulty and can't pay what you owe, debt settlement companies can be a solution. The above tips for choosing a debt relief company can help you find one that's reputable and trustworthy. This, in turn, can help alleviate the stress connected to seemingly insurmountable debt so you can work toward a fresh financial start. Remember, too, that it isn't the only option. According to Manthei, borrowers should try to avoid tunnel vision, take a step back to see the broader picture and see that there are options. Do a little research to understand the differences and find the best route. Most importantly, says Manthei, 'know you are not alone and it's going to be ok.' Sign in to access your portfolio
