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There are fewer bad loans on the balance sheets of European banks but they remain high, the European Commission said yesterday as it prepares to push through measures to force higher provisioning for soured debt despite the opposition of big lenders, Reuters reported. The 2008-2009 global financial crisis left European banks saddled with piles of non-performing loans (NPLs) which they struggled to recoup from distressed firms and households. But as the bloc’s economy recovers, the amount of bad debt is slowly receding, the European Commission said in a report. Using data from the European Central Bank, the EU executive said NPLs accounted for 4.6 percent of banks’ total loans in the period between April and June, a 1 percentage point drop from a year earlier. Despite the trend, bad loans were still worth 950 billion euros ($1.16 trillion) in the 28 EU countries and accounted for 5.4 percent of total loans in the euro zone, the European 19-country currency area.

Seth Klarman’s Baupost Group LLC and other hedge funds stand to make at least a $400 million profit from a bet on Toshiba Corp.’s bankrupt Westinghouse Electric Co. business, WSJ Pro Bankruptcy reported. Toshiba announced yesterday that it sold its claims in the Westinghouse bankruptcy case to a consortium led by Klarman’s Boston hedge fund for $2.16 billion. Baupost and its allies could make at least $400 million on the claims that it purchased from Toshiba, when the $3.7 billion cash proceeds from the recent sale of Westinghouse to Brookfield Asset Management Inc. is divided among creditors at the close of the bankruptcy process.

The judge overseeing the restructuring process of Brazilian telecom company Oi SA yesterday approved a massive debt restructuring plan and called a proposed shareholders meeting “absolutely unnecessary,” Reuters reported. In the decision, Judge Fernando Viana gave the official go-ahead to Latin America’s largest ever in-court debt reorganization. On Dec. 20, a majority of Oi creditors approved a plan to restructure 65 billion reais ($20.1 billion) of debt, putting an end to a year and a half of negotiations. The plan upset major shareholders, however, as it hands up to 75 percent of the company to creditors that include distressed debt funds, such as Aurelius Capital Management, and severely dilutes equity.

Owners of unsecured bonds in rig firm Seadrill have posted a cash deposit to back an alternative financial restructuring, paving the way for talks with the drilling operator over its future, Reuters reported. Seadrill, once the largest drilling rig operator by market value, filed for bankruptcy protection in a U.S. court on Sept. 12 after being hit hard by cutbacks in oil company investment following a steep drop in crude prices. The company’s main owner, Norwegian-born billionaire John Fredriksen, drew up Seadrill’s original $1.1 billion restructuring plan with Centerbridge Partners L.P. and a group of hedge funds in September. A U.S. bankruptcy court in Texas had been scheduled to hold a preliminary hearing on Fredriksen’s plan on Jan. 10, but this has been postponed until Feb. 1 after the payment of a deposit for a rival solution.

The first day of MiFID II for European Union markets wasn’t quite the disaster many in the financial industry had predicted, according to the bloc’s top markets regulator, Bloomberg News reported. “What we can see for our part is no glitches so far,” said Steven Maijoor, head of the European Securities and Markets Authority. The revised Markets in Financial Instruments Directive was introduced as part of the EU’s response to the financial crisis. It aims to push trading on to regulated venues, increase market transparency, curb speculation on commodities, adapt EU rules to new technologies such as high-frequency trading and boost investor protections. Industry critics have long complained that the law is too complex and overreaches in areas such as price transparency. “For us the key element is that in the course of today’s rules for the first time we see data of all financial instruments in the EU, the so-called reference data,” Maijoor said. “It will be the first time that we have the ability in the EU to have a complete overview of all financial instruments.”

Takata Corp.’s plan to shake off billions of dollars of defective product damages in bankruptcy passed preliminary court review Wednesday, but creditors are lining up to fight it, WSJ Pro Bankruptcy reported. Voting will begin soon on the chapter 11 creditor repayment plan proposed by Takata’s U.S. unit under a ruling from Judge Brendan Shannon. Once the votes are in, Takata must return to the U.S. Bankruptcy Court in Wilmington, Del., to seek final approval of its plan, an attempt to stretch scarce cash to deal with the damage from defective airbags. Takata is selling its non-airbag automotive parts business to Key Safety Systems Inc. for $1.6 billion. That is far from enough to make a dent in the airbag liabilities — car makers alone will sustain damages of more than $15 billion, according to estimates in court papers.

Oi SA’s largest equity investor called for a shareholders meeting to decide whether to take legal action against the chief executive officer and the chief financial officer and to scrutinize parts of the Brazilian phone company’s restructuring plan, Bloomberg News reported. CEO Eurico Teles and CFO Carlos Brandao exceeded their authority by negotiating the plan with creditors without the board’s approval, and investors should decide whether to file a civil liability claim against them, Pharol SGPS SA said in a letter published on Friday in a filing. The bankruptcy court overseeing Oi’s restructuring gave Teles full authority to negotiate with creditors without requiring the board’s approval, but that hasn’t stopped the shareholders from threatening legal action to keep the deal from going forward. The plan’s installment of new board members and a capital increase also require shareholders’ approval, said Pharol, a publicly traded holding company based in Lisbon, Portugal.

The history of the Baha Mar resort complex in the Bahamas is a lengthy and confusing affair that, according to the project’s unhappy former owner, hadn’t been fully told until this week, according to a WSJ Pro Bankruptcy commentary. BML Properties Ltd., the developer that lost an $845 million investment when the project collapsed into bankruptcy, sued the Chinese contractor responsible for building the project in New York state court on Tuesday, eight months after its long-awaited opening. The beleaguered resort, a $3.5 billion project that was stalled for more than a year amid a feud between BML, Chinese investors and the Bahamian government, is now being run by Chow Tai Fook Enterprises Ltd., the Hong Kong-based owners of the Rosewood Hotel chain.