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South Africa’s government will place the national airline under a local form of bankruptcy protection as a last-ditch measure to try and prevent its total collapse, Bloomberg News reported. State-owned South African Airways is entering a business-rescue process to allow a “radical restructuring” under which the carrier will receive 4 billion rand ($274 million) in funding, Public Enterprises Minister Pravin Gordhan said. The process will allow SAA to continue operating. SAA, which last made a profit in 2011 and has received 57 billion rand in bailouts since 1994, has been struggling to pay its bills after the National Treasury balked at providing it with more funding. Its finances took a further hit when staff staged a pay strike last month, grounding a number of flights and causing bookings to be canceled on a number of others. South Africa’s Companies Act enables firms in financial distress to file for business rescue. If granted, a business-rescue practitioner is appointed to help the company reorganize and assess whether it can be turned around. Companies in the process of being rehabilitated are protected from liquidation and legal proceedings, enabling them to keep trading.

Deutsche Bank has sued two offshore funds that funneled money to Bernard Madoff for 14 years, accusing them of reneging on their agreement to sell more than $1.6 billion of claims in the bankruptcy of the swindler’s firm, Reuters reported. In a complaint filed on Thursday night, the bank said Kingate Global Fund and Kingate Euro Fund exhibited “sellers’ remorse” by backing out of their 2011 agreement to sell the claims at 66 cents on the dollar, after the value of the claims had “materially increased.” According to Deutsche Bank, Kingate wrongfully concluded that the sale was no longer “binding” because too much time had passed and a related agreement had not been signed. The German bank is seeking to enforce the sale, or else obtain damages, in its lawsuit filed in Manhattan federal court. Based in the British Virgin Islands, the Kingate funds filed for protection under chapter 15 of the U.S. Bankruptcy Code on Sept. 5, citing the risk of litigation by Deutsche Bank. Robert Loigman, a lawyer for the Kingate funds, in an email called Deutsche Bank’s claims “utterly without basis,” saying the bank was trying to benefit improperly from a “lapsed trade” it refused to complete eight years ago. The Kingate funds were among “feeder funds” that supplied client money to Madoff, which he used to fuel his Ponzi scheme. They agreed in June to return $860 million in a settlement with Irving Picard, the court-appointed trustee liquidating the former Bernard L. Madoff Investment Securities LLC.

India’s bankruptcy-resolution process has just begun to find its feet with recent precedent-setting court rulings, but bankers, lawyers and insolvency experts say the system is about to face a huge test, Reuters reported. The non-bank financing giant Dewan Housing Finance Corp. Ltd (DHFL) will go into insolvency proceedings, the central bank said on Wednesday, making it the first financial institution to test the new laws. Shadow banks such as DHFL have been key drivers of lending growth in India, with their consolidated balance sheet worth a whopping 28.8 trillion rupees ($400 billion) in 2018-19, based on central bank data. With nearly 1 trillion rupees ($14 billion) owed to its staggering 85,000-plus list of financial creditors, DHFL’s insolvency will be by far the largest process handled by tribunals in the three years since the bankruptcy code was enacted. Its financial creditors range from banks to mutual funds and pension funds to deposit holders, which bankers and lawyers say could lead to conflicts over how any recoveries from the process are apportioned. That leaves little hope for vendors or other operational creditors who may also be owed money. “In the case of Essar Steel we saw there was a precedent set when Standard Chartered Bank was not treated at par with other lenders because of the type of collateral security held. We may see that happening in DHFL’s case too,” said independent consultant Ashvin Parekh, referring to a recent court ruling that paved the way for ArcelorMittal to buy Essar Steel.

India’s central bank yesterday said that it will begin bankruptcy proceedings against Dewan Housing Finance Corp. (DHFL), a move that puts the country’s ailing shadow banking sector back in the spotlight, Reuters reported. DHFL’s owes its lenders nearly 1 trillion rupees ($14 billion), including several mutual funds, banks, pension funds, insurance firms and retail investors. The central bank’s move on DHFL comes after a string of defaults by rival IL&FS last year, which triggered fears about contagion in the financial sector and forced the government to take over the lender. The Reserve Bank of India’s decision on DHFL, the first of its kind, comes after the federal government this month empowered the central bank to refer cases of stressed banking finance firms with assets of at least 5 billion rupees to the insolvency court.

India has amended its insolvency and bankruptcy rules to allow for greater flexibility in resolving problems at troubled non-banking finance companies (NBFCs), Reuters reported. The change follows debt defaults at shadow lender Dewan Housing which owes close to 1 trillion rupees ($14 billion) to its debtors, who include banks and mutual funds. The new rules, however, say that insolvency proceedings against such NBFCs or financial service providers can only go ahead if the appropriate regulator requests such action. India’s shadow banking sector has been struggling since last year’s collapse of the infrastructure lending giant IL&FS. That incident sent shockwaves through the shadow banking system, leading to a liquidity crisis at some NBFCs and exposing problems facing others including Dewan Housing.