Monday, April 30th, 2012
IT’s like,… so California- WOW, to be bankrupt,
Not that any financially squeezed Californians would be surprised, knowing the state’s grim fiscal outlook, huge Central Valley area home foreclosure swamp (one of the biggest regional concentrations of home foreclosures and declining property values in the U.S.), and marked by bankrupt or near bankrupt cities, towns, counties and districts with obscenely overstretched deficits, massive illegal immigration inflows and bloated public spending….
While inflation Grips ThailandTighter in 2012….
Yes, perhaps Thais were a bit shocked at the news California WOW Xperience Plc (CAWOW), one of the main fitness operators in Thailand, is being sued in the bankruptcy court by Bangkok Bank Plc.
Even thought their stock CAWOW went near worthless before being suspeneded and delisted a short time ago last year founder Eric Levine, “is continuing to make progress on the existing rehabilitation plan” according to the company’s financial report. Uh huh,.. Not likely. And now that they are (or will soon be) on a near total loan black list from Thai banks & domestic lenders, overseas creditors or private lines of credit would be their only hope of survival
CaliforniaWOW Women, developed at a cost of 160 million baht and which opened in 2006 on Sukhumvit 31 but has since closed.
The fitness centre company on Wednesday reported the bankruptcy lawsuit to the Stock Exchange of Thailand (SET).
Bangkok Bank, the creditor, filed a lawsuit after the company was unable to service debts totalling 75.87 million baht (debt of Bt71.90 million and default interest of Bt3.97 million).
This accounts for 9.05 per cent of the company’s total assets as of Dec 31 last year, Bt 838.79 million.
According to CAWOW’s report, the lawsuit will cause difficulties for the company to acquire future bank financing (let’s say, near impossible to be a lot more accurate) the report said of CAWOW, ..”
There have been consumer complaints about the company, which sells lifetime memberships but regularly closes facilities. Members have also complained about below standard services and breach of contract details, according to the Office of the Consumer Protection Board (OCPB).
Under Thai law a debtor cannot file for voluntary bankruptcy but its creditors must file a lawsuit, which if unpaid, then is cause for a bankruptcy ruling…. WOW!
IN related Thai economic news, inflation as measured by the consumer price index, stood at a moderate 3.4% last month compared with the year before, the recent price increases in food and energy especially belie a rising sense of discontent that costs are climbing quickly in recent months.Most Oil Fund subsidies are being decreased to reflect actual costs, so consumers have no one to serve as a buffer for their energy usage- or to blame…. This sudden return to reality is now putting Thailand producers’ prices on a par with traditionally higher priced markets in the global economy.
Food and beverages rose sharply in March, up 7.3% from 2011, while electricity, fuel and water prices jumped 8.5%.
The price hikes reflect a variety of factors, including supply disruptions following last year’s floods, with alternatively the impact of heat and drought conditions on the agricultural sector and higher energy costs. the governement’s heavily criticized rice pledging scheme is also a severe form of market distortion and should be abandoned immediately- if not sooner.
Recent wage increases, and the expectation of further hikes to come, is certainly a factor, as is the fact that many businesses are only now adjusting prices after holding back last year.
Prime Minister Yingluck Shinawatra this month said food prices are expected to ease starting in June, as supply shortages from last year’s floods ease.(we admit- we’re skeptical and fail to see which looking glass she’s using…)
But it’s a sentiment that few consumers or business leaders share, given rising energy and labour costs.
The government’s policy to lift minimum wages and civil service salaries has already led some producers to push up prices, said Pimonwan Mahujchariyawong, an economist at Kasikorn Research Center.
“But actually, prices now do not really reflect the rise in labor costs. We will start seeing the impact of the wage hikes over the next several months,” she said.