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India tightened its fledgling bankruptcy and insolvency rules on Thursday, potentially barring owners of 12 of the country’s biggest loan defaulters from bidding to buy back their assets when they are auctioned as part of bankruptcy proceedings, Reuters reported. The government passed an executive order that aims to “keep-out such persons who have wilfully defaulted, are associated with non-performing assets, or are habitually non-compliant and, therefore, are likely to be a risk to successful resolution of insolvency of a company,” the corporate affairs ministry said in a statement. Under the revised rules, borrowers whose loan accounts are classed as non-performing for a year or more will not be eligible to bid for the assets in bankruptcy proceedings, the ministry said. The revised rules also bar "willful" defaulters and associates of the defaulting borrowers from bidding for the assets, according to the statement. 

Brazilian telecommunications firm Oi SA's chief executive has resigned, a spokeswoman for Oi's largest shareholder said on Friday, two weeks before crucial talks in Latin America's biggest-ever bankruptcy proceedings, Reuters reported. A spokeswoman for Portugal's Pharol SGPS SA, which owns about 27.5 percent of Oi's voting shares and is part of a controlling shareholder bloc, said it had been informed of Marco Schroeder's resignation. Telecoms regulator Anatel had threatened to intervene in the carrier if it changed management. However, a government source, who spoke on condition of anonymity, said on Friday that Schroeder's departure did not make intervention more likely. Oi is two weeks away from a crucial creditor vote on a proposal to restructure 65 billion reais ($20 billion) of debt, with creditors and shareholders fighting over vastly different proposals for Brazil's biggest fixed-line phone company.

Vietnam’s national assembly yesterday gave authorities the ability to declare troubled banks bankrupt, through an amendment to a law on the operation of credit organizations, the government website said, Reuters reported. Approval of a bill establishing the right to declare bankruptcies came about five years after the start of a banking crisis that Vietnamese authorities still have not fully resolved. State Bank of Vietnam Governor Le Minh Hung said recently that bad debts and potential bad debts amounted to 8.61 percent of total credit at the end of September. The level of non-performing loans in September 2012 was 17.21 percent. Under the law’s new provision, which takes effect on Jan. 15, the first step for dealing with a troubled bank would be to put it under the “special control” of the central bank. The government could then consider a merger, transfer of the bank to other investors or a break-up before the financial institution would be allowed to file for bankruptcy as a last resort. Any bankruptcy declaration would have to be approved by the government.

HSBC Holdings Plc’s private-banking unit was fined a record HK$400 million ($51 million) over sales of structured products linked to Lehman Brothers Holdings Inc. in Hong Kong, Bloomberg News reported. HSBC Private Bank (Suisse) SA will have its license to advise on securities suspended for a year, while its dealing license will be partially suspended, the Securities and Futures Appeals Tribunal said in a ruling today, as it upheld previous findings by the Securities and Futures Commission (SFC). HSBC said that the suspensions won’t affect private-banking operations in Hong Kong. The SFC had originally imposed a HK$605 million fine, penalizing the private bank for alleged failures of its internal controls and sales practices in relation to the sale of Lehman notes and products in the five years leading up to the bank’s bankruptcy in 2008. The subsequent collapse of the Lehman investment products sold to individuals roiled Hong Kong, causing street protests and prompting banks to overhaul sales procedures. The HK$400 million penalty is a record sum, the SFC said on its website. “The bank’s failings were serious; they were systemic in nature, extended over a relatively lengthy period of time and not only put clients at risk but caused loss to many,” the tribunal said in its ruling. “Against that, however, it has to be recognized that the bank’s failings were not shown to be dishonest, they were not shown to be intentional or reckless.”

A battle of “bankruptcy tourists” has erupted in New York court, with unclear consequences for global companies and their bondholders, Bloomberg News reported. Bankruptcy Judge Martin Glenn yesterday refused to issue a ruling on a request by Ocean Rig UDW Inc. to block a lawsuit in the Marshall Islands that it said threatens a $3.7 billion restructuring approved in Cayman Islands Courts. Judge Glenn said he would think about the “extraordinary” issues the case raised, possibly ruling later. "You want me to stop litigation in another sovereign country," Glenn said in court Thursday, adding that he had never seen such a request and that there was no clear precedent. If Highland wanted to try to recover Ocean Rig’s U.S. assets in U.S. court, then the issue would be in his jurisdiction, he said. Any decision in the case could have wider implications for what restructuring experts call "bankruptcy tourism." In the past, bankruptcy participants wrangled over the merits of Delaware versus New York courts, and sometimes drew criticism about "forum shopping" for a venue that favored their case. Now companies and creditors are engaged in international battles over where they can best win their debt wars. "This is the next phase of the restructuring business,” said William Brandt Jr., chief of a New York-based restructuring advisory firm Development Specialists."Bankruptcy tourism will come into the fore." Brandt cited his work as a trustee in the international case of China Fishery Group Ltd., where he regularly travels from Lima to Hong Kong. Another example, he said, is Oi SA, a Brazilian telecom company, in which Aurelius Capital Management is fighting a battle that involves jurisdiction of Dutch, U.S. and Brazilian law.

What a debt restructuring at Noble Group Ltd. might look like has become an even more pressing question after the beleaguered commodity trader started talks with stakeholders on potential options to address its capital structure, according to a Bloomberg News commentary today. The company said that discussions are at a preliminary stage and in line with its objectives to “manage the maturity of its borrowings,” moving it a step closer toward restructuring its borrowings. The coming weeks are likely to be critical for the company, which posted another $1 billion-plus loss in the third quarter. It also saw the departure this week of key executive Jeffrey Frase, previously co-chief executive officer, leaving Will Randall as sole CEO. BNP Paribas SA, JPMorgan Chase & Co. and Deutsche Bank AG are among banks that have said the company will probably be forced to restructure its remaining debt.  Noble Group is grappling with $3.8 billion in unsecured debt, including a $1.1 billion revolving credit facility due in May. The firm had $262 million of usable cash as of Sept. 30. At the same time, Noble Group’s business is dwindling. A restructuring of its debt is likely to include some kind of write down, according to Nomura International (Hong Kong) Ltd., according to the commentary. 

A U.S. bankruptcy judge yesterday granted formal recognition to Takata Corp.’s Japanese court restructuring proceeding, a step forward for the company as it works to address massive damage claims tied to defective air-bag parts, WSJ Pro Bankruptcy reported. The auto-parts maker filed for court protection from creditors in the U.S. and in Japan in June after being swamped with litigation over air-bags that deployed with explosive, sometimes deadly, force. As of the bankruptcy filing, at least 16 deaths and more than 180 injuries were linked to the defect. Yesterday’s hearing in the U.S. Bankruptcy Court in Wilmington, Del., was a pivotal moment for the Japanese company, which is selling much of its business to appease creditors. A lot of the money from the $1.58 billion sale will be routed to the Japanese parent, and then to the U.S. Justice Department to pay $850 million owed on a settlement of a criminal case. That cash will go to car makers that have been footing the bill for the largest recall effort in U.S. automotive history.