Sears Canada to refund, finish work after collapse of installation firm

TORONTO, March 21 Fri Mar 21, 2014 11:18am EDT

TORONTO, March 21 (Reuters) - Sears Canada Inc said on Friday it will refund payments or offer alternative services to customers affected by the collapse of SHS Services Management Inc, which provided home-improvement services on behalf of Sears Canada.

SHS, which did installations such as roofing and window replacement, ceased operations and went into receivership late last year.

It began operating Sears' home improvement business in March 2013. It is liquidating assets to repay creditors owed more than C$8.9 million ($7.91 million), according to the receiver, PricewaterhouseCoopers Inc.

Sears Canada, majority-owned by Sears Holdings Corp , apologized to customers and said it has been finding alternative contractors to finish work already paid for by customers. It said it will refund money paid for services that were not rendered.

Customers who have made deposits but did not get any work done from SHS are owed just over C$1.8 million, according to the receiver's report, Sears said.

Sears also said it would work with customers to remove liens placed on their properties by SHS creditors.

($1=$1.12 Canadian) (Reporting by Solarina Ho; Editing by Peter Galloway)

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UPDATE 1-Mt. Gox says it found 200,000 bitcoins in 'forgotten' wallet

Fri Mar 21, 2014 4:30pm EDT

(Adds class action lawyer disputing claim coins were 'forgotten')

By Sophie Knight

TOKYO (Reuters) - Mt. Gox said on Friday it found 200,000 "forgotten" bitcoins on March 7, a week after the Tokyo-based digital currency exchange filed for bankruptcy protection, saying it lost nearly all the 850,000 bitcoins it held, worth some $500 million at today's prices.

Mt. Gox made the announcement on its website. Online sleuths had noticed around 200,000 bitcoins moving through the crypto-currency exchange after the bankruptcy filing.

The exchange, headed by 28-year-old Frenchman Mark Karpeles, said the bitcoins were found in an old-format online wallet which it had thought no longer held any bitcoins, but which it checked again after its bankruptcy filing.

"On March 7, 2014, MtGox Co., Ltd. confirmed that an old format wallet which was used prior to June 2011 held a balance of approximately 200,000 BTC," the statement said.

It added that "for security reasons" it moved the 200,000 bitcoins from online to offline wallets on March 14-15.

"These bitcoin movements, including the change in the manner in which these coins were stored, had been reported to the court and the supervisor by counsels," Mt. Gox said.

A lawyer representing the plaintiffs in a class action suit against the shuttered exchange disputed the claim that the bitcoins had been "forgotten" in a dormant wallet.

Many of Mt. Gox's 127,000 creditors, who feared they had lost their investments when the exchange filed for bankruptcy, are skeptical about what the exchange has said happened to the bitcoins it had. In its bankruptcy filing, Mt. Gox also said $28 million was "missing" from its Japanese bank accounts.

BITCOIN TRACKING

On Thursday, a U.S. judge in Chicago overseeing a class action against Mt. Gox revised a previous order, allowing some of the exchange's bitcoin movements to be tracked.

"Today in court we got relief ... specifically to track the 180,000 bitcoins, which we've been monitoring. Hours later, Mt. Gox claimed it 'found' these bitcoins ... it appears Mt. Gox realized we were close and decided to acknowledge that it owned these 180,000-200,000 bitcoins," Steven L. Woodrow, a partner at law firm Edelson, told Reuters in emailed comments.

Edelson is representing Illinois resident Gregory Greene, who proposed the class action over what he claims is a massive fraud. Mt. Gox blamed the loss of 750,000 bitcoins belonging to its customers and 100,000 of its own on hackers who attacked its software.

Bitcoin is bought and sold on a peer-to-peer network independent of central control. Its value soared last year, and the total worth of bitcoins is now about $7 billion.

BLOCKCHAIN EVIDENCE

In an interview on Friday, Woodrow said the claim that the newly discovered bitcoins had been in a long-dormant wallet was false, citing publicly visible information about the contents of Mt. Gox's bitcoin wallets, which can be viewed on the internet.

"The idea that there were 200,000 or 180,000 bitcoins in a single wallet that they just discovered which had been dormant for years that contained 180,000 bitcoins is undercut by plain evidence on the blockchain," Woodrow said.

The blockchain is a public ledger recording every movement of each bitcoin in existence. Entries to the blockchain are made automatically, as part of Bitcoin's software.

"On March 7th there's a transaction where transferred batches of bitcoins containing 40,000 and 50,000 each into a single address holding the 180,000."

Karpeles' lawyers did not immediately respond to a request for comment.

Woodrow said the blockchain showed the 180,000 bitcoins were distributed in batches of 50 bitcoins each to separate wallets over a period of four days starting March 7.

"At no point was the bankruptcy Court in Dallas notified of this at all, despite Mr. Karpeles supposedly informing his lawyers about it on March 8th and Mt. Gox seeking Chapter 15 protection on the 10th," Woodrow said. (Additional reporting by Tom Hals in Delaware and Emily Flitter in New York; Editing by Tom Brown)

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Brazil's OSX says has 60 days to present restructuring plan

SAO PAULO, March 21 Fri Mar 21, 2014 8:01pm EDT

SAO PAULO, March 21 (Reuters) - Brazilian shipbuilder OSX Brasil SA has 60 days to present its restructuring plan under bankruptcy legislation now that a new judge has been appointed to the case, the company said in a filing on Friday.

The Third Commercial Section of the Rio de Janeiro-State Justice Tribunal will hear the case and Deloitte Touche Tohmatsu will act as trustee responsible for conducting the judicial process, the filing said.

The deadline to file was suspended last month while another court reviewed a challenge to OSX's Nov. 11 bankruptcy protection filing. Spanish construction company Acciona asked a court to prevent OSX's bankruptcy from being handled by the same judge responsible for the bankruptcy of sister oil company Oleo e Gas Participações SA

Oleo e Gas, formerly known as OGX, filed Latin America's largest ever bankruptcy on Oct. 30. OSX gets nearly all of its revenue from Oleo e Gas and its a principal creditor of the company.

Both OSX and Oleo e Gas are controlled by Brazilian businessman Eike Batista.

Judges of the Rio de Janeiro State Justice Tribunal ruled last week in favor of Acciona and ordered the OSX filing to be reassigned to another judge. Until that ruling both cases were being handled by the Fourth Commercial Section of the Rio de Janeiro-State Justice Tribunal. (Reporting by Caroline Stauffer; Editing by Toni Reinhold)

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UPDATE 2-Mexico homebuilder Geo files for bankruptcy

Fri Mar 21, 2014 12:25am EDT

* Geo says majority of creditors support bankruptcy plan

* Plan will give bondholders 88 percent of company stock (Adds details on restructuring agreement)

MEXICO CITY, March 20 (Reuters) - Troubled Mexican homebuilder Geo said on Thursday it has filed for bankruptcy after gaining the support of the majority of its creditors in a deal that will replace most of its debt with stock.

Geo was once Mexico's biggest homebuilder with sales of 55,485 homes in 2012, but it has struggled with a heavy debt load and slumping home sales that pushed it to stop making debt repayments last year.

Creditors Banamex, HSBC, Banorte, Santander, Inbursa and BBVA Bancomer agreed to the bankruptcy plan, Geo said in a statement on Thursday. The deal is a so-called prepackaged bankruptcy that can shorten the duration of the legal process.

In a separate statement, the company said it reached a deal with holders of more than 50 percent of its debt, including a group of investors who hold just over 27 percent of bonds due on Sept. 25, 2014, June 30, 2020 and March 27, 2022.

Under the restructuring plan, bondholders will end up with 88 percent of the company in stock, current stockholders will be diluted to an 8 percent stake while management will hold 4 percent of stock.

The deal also includes a plan to issue 4.75 billion Mexican pesos ($358 million) in new stock in the company once the restructuring is complete.

Orlando Loera, one of Geo's advisers, said in a telephone interview that the proceedings could be finished within four to six months. He said most of the company's debt would be converted into stock with another part restructured into debt that will mature in between seven to 10 years.

The company had 13.81 billion pesos ($1.04 billion) in net debt at the end of the first quarter of 2013, with more than half in U.S. dollar bonds due in 2014, 2020 and 2022.

Geo has not reported financial statements to Mexico's stock exchange since the first quarter of 2013. Trading of its shares was suspended in July.

Geo blamed its problems on a shift in government policy over the last few years that prioritized subsidies for apartment purchases by new homebuyers, damping sales of cheap houses built by Geo and closest rivals Homex and Urbi.

Urbi shares were also suspended after the company failed to report second-quarter results.

Shares of Homex, formerly Mexico's No.2 homebuilder, were suspended after the company said it could not report fourth-quarter results by the end of February.

($1 = 13.2651 Mexican pesos) (Reporting by Gabriela Lopez and Elinor Comlay; Editing by Christopher Cushing and Matt Driskill)

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German solar group Sunways to file for insolvency

FRANKFURT, March 21 Fri Mar 21, 2014 2:02am EDT

FRANKFURT, March 21 (Reuters) - Ailing German solar group Sunways AG said it would file for insolvency on Friday, adding it was already in talks with potential investors.

The company, which is majority owned by Chinese solar company LDK Solar Co Ltd, said it was aiming for an insolvency plan "that allows the preservation of Sunways AG as an exchange-listed stock corporation".

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REFILE-UPDATE 1-Mt. Gox says it found 200,000 bitcoins in "forgotten" wallet

Fri Mar 21, 2014 4:48am EDT

(Fixes spelling error in paragraph 8)

By Sophie Knight

TOKYO, March 21 (Reuters) - Mt. Gox said on Friday it found 200,000 "forgotten" bitcoins on March 7, a week after the Tokyo-based digital currency exchange filed for bankruptcy protection, saying it lost nearly all the 850,000 bitcoins it held, worth some $500 million at today's prices.

Mt. Gox made the announcement on its website. Online sleuths had noticed around 200,000 bitcoins moving through the crypto-currency exchange after the bankruptcy filing.

The exchange, headed by 28-year-old Frenchman Mark Karpeles, said the bitcoins were found in an old-format online wallet which it had thought no longer held any bitcoins, but which it checked again after its bankruptcy filing.

"On March 7, 2014, MtGox Co., Ltd. confirmed that an old format wallet which was used prior to June 2011 held a balance of approximately 200,000 BTC," the statement said.

It added that it moved the 200,000 bitcoins from online to offline wallets on March 14-15 "for security reasons." "These bitcoin movements, including the change in the manner in which these coins were stored, had been reported to the court and the supervisor by counsels," it noted.

Many of Mt. Gox's 127,000 creditors, who feared they had lost their investments when the exchange filed for bankruptcy, are skeptical about what the exchange has said happened to the bitcoins it had. In its bankruptcy filing, Mt. Gox also said $28 million was "missing" from its Japanese bank accounts.

BITCOIN TRACKING

On Thursday, a U.S. judge in Chicago overseeing a class action against Mt. Gox revised a previous order, allowing some of the exchange's bitcoin movements to be tracked.

"Today in court we got relief ... specifically to track the 180,000 bitcoins, which we've been monitoring. Hours later, Mt. Gox claimed it "found" these bitcoins ... it appears Mt. Gox realized we were close and decided to acknowledge that it owned these 180,000-200,000 bitcoins," Steven L. Woodrow, a partner at law firm Edelson, told Reuters in emailed comments.

Edelson is representing Illinois resident Gregory Greene, who proposed the class action over what he claims is a massive fraud. Mt. Gox blamed the loss of 750,000 bitcoins belonging to its customers and 100,000 of its own on hackers who attacked its software.

Bitcoin is bought and sold on a peer-to-peer network independent of central control. Its value soared last year, and the total worth of bitcoins is now about $7 billion. (Additional reporting by Tom Hals in DELAWARE; Editing by Ian Geoghegan and Miral Fahmy)

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UPDATE 2-Property firm's default risk exposes China fault lines

Tue Mar 18, 2014 4:46am EDT

* State media report Zhejiang Xingrun owes 3.5 bln yuan

* Owner, son under arrest for illegal fundraising - official

* Report comes as Chinese property market softens, diversifies

* Housing prices falling in Wenzhou, Ningbo (Updates with housing market performance, background)

By Umesh Desai and Clare Jim

HONG KONG, March 18 (Reuters) - The looming bankruptcy of a Chinese developer owing billions of yuan to domestic banks has raised worries that a softening property market is heightening risks for the financial system.

But the localised focus of the firm, and the nuanced reaction of investors, shows that financial markets are not pricing in the bursting of a real-estate bubble just yet.

Government officials told Reuters on Tuesday that Zhejiang Xingrun Real Estate Co, based in the coastal city of Ningbo in Zhejiang province, is on the brink of bankruptcy. State media have estimated the company owes 15 domestic banks 2.4 billion yuan ($389 million) and individual investors another 1.1 billion, with only 3 billion yuan of assets on hand.

By raising that money from individual investors, Zhejiang Xingrun's owner also broke Chinese law, and local officials told Reuters that the company's owner and his son are in custody, accused of illegal fundraising.

Calls to Zhejiang Xingrun seeking comment were not answered.

The news of the expected bankruptcy came amid growing concerns about debt in China following the country's first domestic bond default earlier this month.

Yet analysts said they did not expect a domino effect following Tuesday's news, given that investors are aware of the distinctions in quality between different bond issuers, while Xingrun's property portfolio is highly localised.

"The offshore names are the higher quality names, so there isn't much panic reflected in bond prices," said Manjesh Verma, head of credit research and strategy at Credit Agricole in Hong Kong, referring to Chinese property bonds traded in the offshore market.

"But if (a company) is not localised in one city and the defaulter has a multiple province/city presence, it will be a big red flag," he added.

Property bonds in offshore markets underperformed on the day, but losses were contained.

Share price declines were more pronounced. The Shanghai property index was down 0.9 percent in afternoon trade, dragged lower by Beijing Capital Development Co Ltd, down 3.9 percent, Xingye Resources, down 3.2 percent, and Poly Real Estate, down 2.8 percent.

"While this news will definitely impact some property stocks, I don't think a domino effect is likely," said Du Changchun, an analyst at Northeast Securities in Shanghai.

HOME PRICES

China's government has been trying for years to tame surging home prices on concerns they were stoking an asset bubble.

But they worry that too sharp a fall could drag further on the world's second-largest economy, which slowed markedly in the first two months of the year.

Data released on Tuesday showed that Chinese home inflation slowed for a second straight month in February, due to government policy curbs and declining domestic demand. Some markets saw outright price declines, in particular the Zhejiang cities of Wenzhou and Ningbo, where Zhejiang Xingrun is based.

Some industry observers noted growing instability among a group of Chinese property developers, in particular those that overindulged in speculation financed by money borrowed at high rates in the shadow banking market.

"Underground private banks are very active in the Zhejiang and Jiangsu areas, and many companies have already gone bust because their owners personally borrowed a lot from these underground banks and then were not able to repay," said an executive at a real estate developer with projects in eastern China, who spoke on condition of anonymity.

"We have been hearing a lot of cases like this but this one is of a much larger size," he added. "I think by letting this news go public, the government wants to send a message to the market."

The true test of Beijing's commitment to risk reform will come when it confronts a potential default by one of the state-owned enterprises that dominate loan and bond markets.

"The X-factor here is (whether) the government will step in if some big guys start facing stress and big banks will be asked to provide more loans. If that doesn't happen and we start seeing medium scale defaults onshore, then we will see an easy 15-20 point drop in bond prices," said Credit Agricole's Verma. (Writing by Pete Sweeney; Additional reporting by Xiaoyi Shao, Koh Gui Qing and Kevin Yao in BEIJING, Tu Lianting in SINGAPORE and the Shanghai Newsroom; Editing by Chris Gallagher)

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Detroit asks U.S. court to consolidate bankruptcy appeals

March 18 Tue Mar 18, 2014 6:01pm EDT

March 18 (Reuters) - Detroit asked a federal appeals court on Tuesday to consolidate seven cases seeking to overturn a December ruling that found the city was eligible for Chapter 9 municipal bankruptcy protection.

In a motion, Detroit asked the Sixth Circuit U.S. Court of Appeals to force the parties, including the city's two pension funds, labor unions and retiree groups, to file in one lead case or to jointly file a principal brief accompanied by short individual briefs.

"Each of the appellants has the same interest - overturning the bankruptcy court's determination that the city is unconditionally eligible to proceed under chapter 9," Detroit's motion stated. "Moreover, the appellants raise largely the same legal challenges to that determination."

The parties that filed the appeals had mixed reactions to consolidation, according to the city's motion.

If consolidation of the appeals is not granted, the city asked the appeals court to give it more time to respond to the appeals by pushing the deadline the court set earlier this month to June 17 from May 27.

Meanwhile, Detroit's general and police and fire pension funds filed a motion on Tuesday asking the court to speed up the appeals process so that the case would be fully briefed by May 30 instead of sometime in mid-June. Oral arguments would take place sometime between June 16 and 27, according to the motion.

A debt adjustment plan Detroit proposed last month in U.S. bankruptcy court "threatens the accrued pension benefits upon which more than 32,000 active and retired city workers and other beneficiaries rely for their primary - and in many instances only - source of income in retirement," the pension funds' motion said.

It added that if the plan is confirmed by the court, the city is "overwhelmingly likely to seek immediate dismissal of these appeals" on the basis that they are moot.

Judge Steven Rhodes, who is overseeing Detroit's historic bankruptcy case, has scheduled a confirmation hearing on the plan beginning on July 16.

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Brazil's OSX board approves terms of unit's bond restructuring

SAO PAULO, March 18 Tue Mar 18, 2014 6:22pm EDT

SAO PAULO, March 18 (Reuters) - The board of OSX Brasil SA , the shipbuilder controlled by former Brazilian billionaire Eike Batista, approved key terms of the restructuring plan for its leasing unit, according to a filing on Tuesday.

Last week the unit, OSX 3 Leasing BV, reached a preliminary agreement to pay creditors more interest on $500 million of defaulted bonds, and said it would retroactively raise the coupon to 13 percent from 9.25 percent.

The plan still needs formal approval from creditors.

OSX Brasil filed for bankruptcy protection in November after the collapse of OGX Petróleo e Gás Participações SA, Batista's oil company and OSX's only customer. OGX, which was renamed Óleo e Gás Participações SA, also stopped payments on $3.6 billion of bonds, the largest-ever corporate default in Latin America.

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PRESS DIGEST-New York Times business news - March 18

March 18 Tue Mar 18, 2014 2:02am EDT

March 18 (Reuters) - The following are the top stories on the New York Times business pages. Reuters has not verified these stories and does not vouch for their accuracy.

* Mary T. Barra, General Motors' chief executive, announced another round of wide-ranging recalls on Monday, a sign that the company was moving with a new sense of urgency on safety problems after it disclosed a decade-long failure to fix a defect tied to 12 deaths. ()

* Tesla Motors, the maker of high-end all-electric cars, has time till April 1 to comply with New Jersey's restrictive dealership laws that prevent the company from making any direct sales to customers. After Texas, Arizona and New Jersey, Ohio too is considering passing a similar legislation that protects the interests of car dealers and franchises. ()

* About 10 days after being identified by Newsweek magazine as the mysterious creator of the digital currency bitcoin, Dorian Nakamoto, a 64-year-old semi-employed engineer, has hired a lawyer and issued a statement unconditionally denying that he had any involvement in bitcoin. ()

* A bond insurer on Monday struck a blow against Detroit's proposal to exit bankruptcy, arguing in a new lawsuit that Detroit's approach would illegally discriminate against the city's third-biggest group of creditors - the investors who provided $1.4 billion for its workers' pensions nearly a decade ago. ()

* American manufacturing output recorded its largest increase in six months in February and factory activity in New York State expanded early this month, the latest signs that the economy is gaining momentum after being dampened by severe weather. ()

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