Corliss Online Financial Mag

The slowdown in the economy after 2010-11 has had a ripple impact on the fortunes of India Inc. and lenders alike. With gross domestic product (GDP) growth decelerating from 8.4 per cent in 2010-11 to the sub-five per cent level in the first three quarters of the current financial year, the number of companies seeking succour from lenders under the aegis of the corporate debt restructuring (CDR) cell had almost doubled to 605 as of December 2013 against 305 as of March 2011.

Further, there has been a 194 per cent jump, from []1,38,604 crore at the end of March 2011 to []4,07,656 crore as of December 2013, in the amount of loans that came up for recast.

Therefore, it is not surprising that bank managements, in their internal meetings and conferences with the media and analysts, are devoting as much time fielding questions on the loans that had to be restructured in a quarter vis-à-vis loans that have gone sour.

Myriad problems

Many factors have forced companies to approach banks for a loan recast. These include the slowdown in domestic as well as global demand, volatility in input costs, adverse currency movements, and projects getting stalled for want of statutory approvals such as environment and forest clearance.

Other reasons include diversion of funds into real estate, diversification into unrelated businesses, and too much debt on their balance sheets.

Under CDR, lenders, among others, make concessions to corporates by reducing interest rates, extending the repayment schedule, providing additional funding, and converting debt into equity/preference shares (to a limited extent).

The CDR cell is the banking industry’s common platform for corporate debt restructuring. All references for corporate debt restructuring by lenders/borrowers are made to this cell.

The CDR mechanism covers only multiple banking accounts, syndication/consortium accounts, where all banks and institutions together have an outstanding aggregate exposure of []10 crore and above.

Industry-wise classification shows that the infrastructure sector topped the corporate debt restructuring list, accounting for 19.63 per cent of the total quantum of debt ([]2,07,635 crore) being handled by the CDR cell as of December 2013. The iron & steel sector was a close second with 17.92 percent.

Plugging loopholes

The economic downturn provided the perfect pretext for some unscrupulous company promoters to try and wangle concessions from banks.

There have been cases where the realization that a corporate is going down the chute prompted some bank chiefs, especially from the public sector, to push it to the corporate debt restructuring cell just so they could get a breather on the asset classification front and save on provisioning.

In such cases, company promoters have ‘gainfully’ utilized the time taken by the lead bank to conduct techno-economic viability studies and stock audit to take a call on accepting/rejecting the debt recast proposal to alienate (sell) the assets pledged to banks.

The RBI has seen through this game and prescribed tighter norms for reviving distressed assets. So has the CDR cell.

The lead bank in a consortium of lenders is now required to conduct an audit of how a company has utilized a loan before processing its request for a debt recast.

According to Raj Kumar Bansal, Chairman of the CDR cell, the lead bank in a consortium could also press for a special audit wherever diversion of funds and fraud are suspected.

To ensure company promoters’ commitment to the debt recast package, the lenders now compulsorily take a personal guarantee from promoters.

The CDR cell also requires minimum promoter equity contribution in all cases to be either 25 percent (against 20 percent prescribed by the RBI) of a lender’s sacrifice or 2 per cent of the restructured debt.

The time given to a company whose debt restructuring has been approved by the cell to turn around has been cut to eight years (from 10 years) in the case of infrastructure companies and five years (seven years) in the case of non-infrastructure companies.

Banking on a rising tide

The stiff norms seem to have slowed the flow of debt recast proposals. Overall, in the first 11 months of the current financial year, the CDR cell received debt recast references with respect to 91 companies (against 129 in the whole of the previous year), aggregating about []1,22,500 crore ([]91,497 crore in 2012-13).

With few days to go for the fiscal year to end, bankers expect the overall quantum references to the cell to touch about []1.30 lakh crore in 2013-14. Until the economy turns around, companies will keep knocking on the doors of the cell for succour.

As a rising tide lifts all boats, so, too, bankers hope an economic upturn will bring down the number of cases referred to the CDR cell.

The above article is a repost from TheHinduBusinessLine

Thai anti-government protests that have shut down parts of Bangkok may cost the nation’s tourism industry as Chinese visitors cancel trips during the lunar new year holiday that starts this week.

Arrivals will fall by half to 1 million this month, Minister of Tourism and Sports Somsak Phurisisak said Jan. 23, with some hotels in the capital and nearby Pattaya and Hua Hin 30 percent full. The revenue loss could amount to 22.5 billion baht ($685 million), the Tourism Council of Thailand said, with China last week warning its citizens to avoid protest sites and rethink non-essential travel.

“I first planned for a week-long trip to Bangkok to visit my friend there for Christmas, but I had to postpone because of the unrest,” said Jia Yanfen, 38, a Beijing-based Chinese language teacher who has never been to Thailand. “I waited and waited hoping to go for Chinese New Year,” Jia said. “I had to cancel the trip now. Of course I was a bit disappointed, but safety comes first.”

Prime Minister Yingluck Shinawatra imposed a state of emergency in Bangkok Jan. 22 as attacks on protesters escalated and demonstrators blockaded Bangkok’s busiest intersections. Concerns about a slump in tourism, which contributes about 10 percent to gross domestic product, sent the Stock Exchange of Thailand’s Tourism and Leisure Index down 3 percent last week, the worst performer among the bourse’s 27 industry groups, according to data compiled by Bloomberg.

Flights Canceled

Bangkok attracted almost 4.2 million visitors from China, Hong Kong and Taiwan in 2013, a 46 percent jump from the year before, according to government data, and Somsak said about 300,000 Chinese tourists traditionally visit the country during the lunar new year holiday, which begins Jan. 31. “We expect to see more flight reductions by airlines, especially from China,” he told reporters in Bangkok.

Singapore Airlines Ltd. will cancel 43 flights between Singapore and Bangkok between Jan. 14 and Feb. 27, and Thai Airways International Pcl (THAI) plans to scrap 25 flights between Hong Kong and the capital, the carriers said last week.

Tourist arrivals will decline by 7.3 percent to 6.5 million in the first quarter compared with a year earlier, the Tourism Council said in a statement Jan. 23. Bangkok arrivals have fallen 5 percent in January from a year earlier, it said. Since the protests began in October more than 550 people have been wounded and nine killed.

Advance Bookings

Advance bookings have been crimped by travel warnings from countries such as China, Malaysia, Hong Kong, Australia, the Philippines and the U.S., whose authorities have warned citizens to avoid Bangkok’s protests hotspots. The Philippines said Jan. 23 its citizens in the capital should prepare to be evacuated if violence intensifies.

Tour guides from China are in close contact with counterparts in Thailand, Ying Chang Tian, a spokesman for Shanghai-based travel agency Ctrip.com International Ltd., said by phone. “Our local agency in Bangkok will report to our company if the situation affects our schedule.”

The tourism industry rebounded from protests that shut the main airport for almost two weeks in 2008 and turned inner Bangkok into a war zone in 2010, as well as from disasters such as the Indian Ocean tsunami that devastated beach resorts in 2004 and floods in 2011.

Formal Updating and Maintenance

Many people do not understand how an estate plan works and provides them value. Frequently we see customers who have had an estate plan done for them 20 or more years ago and it has sat on the shelf for all that time and never been touched or fully funded. Estate planning and the Estate Plan is a very dynamic process and it is an investment in your family’s future. Your Estate Plan can be impacted by many things:

• Change in your personal, family or financial situation
• Change in the tax or non-tax legal structure
• The development of new wealth preservation structures and strategies

Given this continuous process of change, your estate plan will not accomplish its purpose if it is never updated. The costs of failing to update are typically far greater than keeping your plan current. A good Estate Plan changes along with you and adapts to your changing circumstances; it meets your changing goals and keeps you in control of the process and the results.

It is not about documents — It's about results! The key to proper estate planning is clear, comprehensive, customized instructions for your own care and that of your loved ones. We find that most of our clients are served with a properly drafted estate plan backed up by our three step strategy:

• Work with counseling oriented advisors
• Establish and maintain a formal updating program
• Assure fully disclosed and controlled

To help you make sure your plan is always current, Corliss, A Law Corporation, offers The Family Estate Maintenance Program, our formal client updating process.

Source

Advanced Choice of Entity: Protecting Your Business and Your Real Estate  (2 Hours CPE/MCLE* Credit)

Wednesday, February 24, 2010, 3:00 p.m. - 5:00 p.m.

Selecting the right form of business entity is critical in protecting your personal and business assets. It is not something to take lightly and the consequences of the wrong choice can cost you everything you have accumulated personally and in your business.

Your first step in protecting your assets and wealth begins with the choice of the type of business entity you are going to use. The right choice can result in shielding your business, your real estate and your family from risk and unwanted creditors. Proper tax structure is also important in keeping more of what you have earned – a factor commonly overlooked in creating business entities.

Learn how to select the proper entity in order to shield your business, your real estate from creditors while keeping more of what you have earned through an efficient tax structure.

Learn the differences between the entity types, when to use a limited liability company over a corporation, what all the talk about different jurisdictions is about, and what a Delaware Series limited liability company is. Suitable for all professionals (especially doctors and dentists), business owners and their advisors.

*MCLE approval pending

Presenters:

Donald M. Corliss, Jr., JD, LLM (Taxation)

Jacob Stein, JD, LLM(Taxation)

Location: 19200 Von Karman Avenue, 5th Floor, Irvine, CA

To RSVP, please contact Sharla via e-mail Sharla@corliss-law.com

or call 877-958-4482

You can visit our website

Den store Reset: Fem år efter det økonomiske sammenbrud

Kilde

NEW YORK-Fem år efter amerikanske Investeringsbank Lehman Brothers kollapsede, udløse en global finansiel krise og rystende tilliden på verdensplan, familier i store lande rundt om i verden er stadig hunkered ned, for spooked og mistroisk til at tage chancer med deres penge.

En Associated Press analyse af husstande i de 10 største økonomier viser, at familier fortsat tilbringe forsigtigt og har trukket hundredvis af milliarder af dollars ud af lagrene, skære låntagning for første gang i årtier og hældte penge i besparelser og obligationer, der tilbyder sølle rentebetalinger, ofte for lavt til at holde trit med inflationen.

"Det tager ikke meget at ødelægge tillid, men det tager en frygtelig masse at bygge det tilbage," siger Ian Bright, senior økonom på ING, en global bank er baseret i Amsterdam. "Holdningen til risiko er permanent nulstillet."

Følgerne er enorme: undgaae gæld og udgifter mindre kan være godt for én familie finanser. Når hundredvis af millioner gør det sammen, kan det sulte den globale økonomi.

Nogle af nedskæringer er ikke overraskende: høj arbejdsløshed i mange lande betyder færre mennesker med lønsedler til at bruge. Men selv folk med gode arbejdspladser og lille frygt for at miste dem fortsat forsigtige.

"Lehman ændrede alt," siger Arne Holzhausen, en senior økonom på globale forsikringsselskabet Allianz, baseret i München. "Det er sikkerhed, sikkerhed, sikkerhed."

AP analyseret data, der viser, hvad forbrugerne gjorde med deres penge i fem år før den store Recession begyndte i December 2007 og i de fem år, der fulgte, til slutningen af 2012. Fokus var på verdens 10 største økonomier, som har halvdelen af verdens befolkning og 65 procent af globale bruttonationalprodukt.

Vigtigste resultater:

Tilbagetog fra bestande: et ønske om sikkerhed kørte folk til dump bestande, selv som priser steget fra krise nedture i begyndelsen af 2009. Investorer i de øverste 10 lande trak 1.1 billioner dollar fra stock investeringsforeninger i fem år efter krisen, eller 10 procent af deres bedrifter ved starten af denne periode, ifølge Lipper Inc., der sporer midler.

De sætte mere selv penge i bond gensidige fonde — 1,3 billioner dollar — selv som rentebetalinger på obligationer kastet til rekordlave niveauer.

Undgaae gæld: I fem år før krisen, husholdningernes gæld i de 10 lande sprang 34 procent, ifølge Credit Suisse. Derefter den finansielle krise ramte, og folk smækkede bremserne på låntagning. Gæld pr. voksen i de 10 lande faldt 1 procent i 4½ år efter 2007.

Folk vælger at kaste gæld selv som långivere skåret satser på lån til at registrere nedture. I normale tider, der ville have udløst en lavine af låntagning.

Hamstring kontant: søger sikkerhed for deres penge, husstande i de seks største udviklede økonomier tilføjet 3.3 billioner dollar, eller 15 procent, at deres kontanter bedrifter i fem år efter krisen, lidt mere end de gjorde i fem år før, ifølge Organisationen for økonomisk samarbejde og udvikling.

Source: http://www.shelfari.com/groups/104454/discussions/496780/China-mall-developer-plans-%241-billion-Hong-Kong-IPO-by-The-Cor

(Reuters) - SZITIC Commercial Property Co Ltd, which sold a stake in two of its malls to U.S. private equity firm Carlyle Group LP (CG.O) in May, plans an up to $1 billion Hong Kong IPO as soon as the fourth quarter of 2013, the Wall Street Journal reported on Tuesday, citing people familiar with the matter.

The Shenzhen-based shopping mall developer hired JPMorgan (JPM.N) and China International Capital Corp (CICC) to handle the initial public offering, the paper said.

The deal could come by the end of the year or in the first quarter of 2014, it added.

SZITIC sold a 49 percent stake in the malls, located in second-tier cities of Hangzhou and Suzhou, to Carlyle for an undisclosed sum.

MADRID, SPAIN - CUATRO TORRES BUSINESS AREA

Everything indicated that after the fall of the Berlin Wall and the collapse of the Soviet Union, the world would enter a long period of stability, with order and security provided by the last remaining superpower –the ‘hyperpower’ in the words of Hubert Védrine–: the US. And that is how it worked out, although only for a few years, in the roaring 90s, as John Stiglitz called them –years in which to reap the peace dividend, years of democratisation and growth, the years of the dot.com boom–.

But we entered the 21st century through a ‘gate of fire’, in the epic phrase coined by the then UN Secretary General, Kofi Annan, in reference to September 11, 2001. The event brought onto the stage of world history what we still call the Third World, behind which is the biggest economic and social revolution the world has ever seen. And there we are, in the midst of an economic and social upheaval only comparable to the Industrial Revolution but which is far more extensive, as it affects the entire planet and not just the old G8 countries. It is also deeper, more intense and, especially, much faster moving. China now boasts the world’s second-largest economy, but it will soon be the largest, while India will soon be number three, and so on. What we are seeing is a global convergence which the current crisis is fostering and deepening by clearly accentuating the relative decline of Europe, and, who knows, perhaps of the West itself.

The underlying reason is simple and clear enough: huge but unevenly spread demographic growth. The result is that Europe now accounts for less than 10% of the world’s population, while Asia accounts for 60%. When the productivity of the masses of people in underdeveloped countries was low, their population weight did not translate into economic or political power. But that is no longer the case. There is now a tremendous transfer of technology (both hard and soft) underway, from West to East and from North to South. This brings countries’ per capita productivity levels closer together, turning demographic powers turn into economic powers, and the latter into political and military powers.Read More