The Supreme Court of Iceland yesterday ruled that the emergency law on prioritisation of bankruptcy claims will remain in force. In the specific case of Landsbanki, this means that British and Dutch claims to cover the Icesave debt can now be paid out.
The court ruled on eleven different cases relating to the emergency laws and came to the same decision in all eleven cases. In one of them it decided that both Icesave and so-called wholesale loans will be counted as priority claims in the estate of Old Landsbanki — reinforcing a previous decision by the Reykjavik District Court. The public gallery was full when the verdicts were made.
Herdis Hallmarsdottir, a member of the Landsbanki resolution committee, told a press conference after the court verdict that claimants will not be told when payments will be made from the bankruptcy estate before the 17th November, when a claimants’ meeting will be held.
Hallmarsdottir said that the resolution committee is currently sitting on a pot of ISK 500 billion (EUR 3.1 billion) in cash from recovered assets; although some of that money will probably be discounted due to several ongoing disputes. Nevertheless, she said, there should be at least ISK 400 billion (EUR 2.5 billion) ready for payment to wholesale loan claimants and the British and Dutch governments (to reimburse them for covering lost assets in Icesave) within weeks — with more to follow. Priority claims to the estate of Landsbanki amount to a total of ISK 1,320 billion (EUR 8.25 billion).
Meanwhile, the Icelandic government welcomed the court’s decision; saying that all uncertainty surrounding this most fundamental of issues has now been eliminated.
Funnily enough, your overuse of the term strawman takes me back to the thread when you tried to make a point (without actually making it) about the ECB. Have a re-read of what you said back then (before the Kaupthing judicial review remember) – it certainly looks like you believe there were deliberate efforts to take down Kaupthing:
[QuestionMark]Furthermore, no one at the ECB or FSA attempted to kill off Kaupthing or the two other banks.
[Fisy]Really? Can you perhaps be hard of reading English? . . . But it is not the first attack against Kaupthing from the EU and its memberstate.
http://www.icenews.is/index.php/2009/02/13/former-icelandic-pm-haarde-on-hardtalk/#comment-64980
>>>As I maitain since start of this whole mess . . . situation is not as bad in assets of banks . . . as Brown Darling made out. ING was main competitor pushed out by IceSave and Kauthping Edge. This was about giving the Edge funds to ING for nice discount.
It’s difficult to have a conversation with you Fisy when you refuse to look at the judicial review. Would you like me to find the links for you again?
When you say that other UK banks were in a worse position, you might want to show that they had also come to the notice of the FSA prior to October and had disregarded FSA orders. Because, thanks to that review, we now know that Kaupthing had.
>Kaupthing.hf was deliberately taken down, is that still your belief?
That is straw man and not what I have said.
Kaupthing Singer and Friedlander UK regulated bank was denied access to the same short term liquidity that other banks in UK were given.
In every other country where its branches or subsidiaries were given short term liquidity help by central banks of those country — like other banks there those branches and subsidiaries were fine.
Kaupthing Singer and Friedlander was given demands of 90% plus backing suddenly — without access to same liquidity in UK as other UK banks at time who were in far worse situations.
Ha! What she said Fisy :P . Also, seeing as you linked to an old post of yours where you claim Kaupthing.hf was deliberately taken down, is that still your belief?
Good luck Anrigaut – be nice if the interest claim did knock you up to 100% of capital.
@Fisy, Appreciate your comment re the KSFIOM cash sent to London. The FSA effectively stopped communicating with the IOM regulator (FSC) in the weeks prior to the collapse and left them in the dark over its warnings to KSFUK over liquidity. But the ultimate responsibility for allowing the money to be transferred rests with the FSC, who were well aware of the growing Icelandic risk and,in May 2008, had passed a resolution requiring KSFIOM to remove all exposure to the Kaupthing Group – a resolution that was subsequently compromised by allowing KSFIOM to move money from its parent bank in Iceland to its sister bank in UK. Better than leaving it in Iceland, but had the FSC stuck to its guns the bank would have survived.
Thanks Bromley86. Let’s hope you’re right about the 30% or so, in line with – or maybe even better than – the around 25% we’d been working on (but certainly not counting on) until now. Yes, it’s a shortfall claim and its quantum can’t be determined until our liquidation ends in 3-4 years’ time. But as the claim includes lost interest, there is a possibility we could eventually reach 100% of our capital.
The high predicted recovery in the liquidation effectively shows that KSFIOM was a viable bank when it was brought down by the collapse of KSF-UK (to which a significant part of its funds had been upstreamed). Its predicted final recovery is better than that of KSFUK and much better than that of the common parent Kaupthing hf. But, unlike KSFUK depositors, we were not bailed out and had to wait a whole year before the compensation scheme paid out to those under the limit and other depositors began gradually to recover their savings through the liquidation – a desperate time for many. Three years on we have recovered 73.6%, with more expected later this month.
Don’t forget that a lot of this hard ship initially to KSF IOM depsotior was because of that £550m KSF IOM’s money sent to Kaupthing Singer Friedlander in London as ” overnight money” that UK FSA should have not allowed them to send instead treating it like they did with Brandford and Bingley in IOM.
http://www.icenews.is/index.php/2009/04/20/all-kaupthing-edge-deposits-in-germany-to-be-repaid/#comment-73215
>Was the fight worth it?
Difficult to say without the figures, but you should be much better off. i.e. 30% of something versus 0% of something.
Of course, I suppose you’ll only get the (say) 30% of the shortfall, so you’ll never reach 100% recovery through this guarantee.
Not that the situation appears to be all that bad. A 91.4-97.7% recovery sounds pretty good to me, especially in light of the recoveries that would have been experienced in the banks incorporated in Iceland if the Emergency Law hadn’t reprioritised deposits (I think something like 30% in Landsbanki).
http://www.kaupthingsingers.co.im/Files/IOM/20110623/KSFIOM_DAG_Loan_Trust_Proposal.pdf
That appears to be before the parental guarantee is taken into account, so you can add 1-3% to that.
@Fisy,
Saw your post after submitting mine. So, just to confirm, the parental Guarantee for Kaupthing Singer & Friedlander IOM depositors was upheld as an unsecured, not priority, claim. In view of the emergency law, where is the justice in that?
Quite so Peter. It looks as though the ordinary retail depositors of Landsbanki Guernsey and Kaupthing Singer & Friedlander (IOM) are going to be the only ones not to be fully paid out in this debacle.
Everyone talks about Icesave, but what about Kaupthing? Will anything be left in their pot to respect the parental guarantee given by Kaupthing hf to KSFIOM? Initially contested by the Kaupthing WuC, the validity of this guarantee, extensively used to sell Kaupthing’s IOM subsidiary to the innocent victims of the big Kaupthing scam in search of ready cash as things started to go badly wrong, was finally upheld on appeal by the Supreme Court. But, despite being for the benefit of depositors, it remains an unsecured claim. And it now seems that what the Supreme Court gave with one hand is being taken away with the other. Was the fight worth it?
>Depositors in the Isle of Man and Guernsey are treated the same as bondholders,
>even they put their money in a bank that’s was supposed to be guarantee by the >parent company.
Parental guaranntee for Kaupthing Singer Frielander IOM depositors was upheld by Icelandic courts.
Where do you get you ideas from Peter?
Its not just the bondholders who are screwed by this. Depositors in the Isle of Man and Guernsey are treated the same as bondholders, even they put their money in a bank that’s was supposed to be guarantee by the parent company.
This news has reverberated around the indebted world, to the countries whose citizens are enslaved to years of penury in order that the bondholders be repaid. Tonight there was strange but subtly spectacular display of the Northern Lights to the east of the capital Reykjavik. I can only interpret that as a heavenly endorsement for the inspired supreme court judgement :)
One thing that impressed me a lot about the Icelandic people during the crisis was how everyone fervently supported/defended their country and principles. I was also impressed(and made slightly jealous) by the sheer volume of intelligent posts made by Icelandic posters on various news sites. Very literate and informed.
Sometimes they did go below the belt though and the ‘brown is the colour of poo’ T-shirts were a bit nasty. It’s water under the bridge now for me though.
Are Mike and Gummi the same person? I’m still confused by that one…
>No dignity.
Get ready for inevitable ‘ classy and dignified ‘ Gummi posts.
The only thing I can think of in the bondholders’ favour, is that when they loaned the money, the law said one thing, then the law was changed while the banks were kept alive long enough (on artificial respirator) for the hard working parliamentarians to formulate new laws, minutes before the banks were declared dead/bust/upside down.
I quite like the idea of crafty parliamentarians, pulling of a stroke for the national interest for a change.
Brown is the colour of poo…such fine wit the designers displayed there. I actually thought that was really childish and distasteful at the time and still do. I could never understand why anyone would wear a T-shirt with those words emblazoned on the front. No dignity.
Bjarni Kristjansson says+ October 29, 2011 at 2:23 pm:
I have been reading this morning the Icelandic Supreme Court judgements, regarding the priority order of the FSCS/DNB claims in the bankruptcy proceedings of Landsbanki:
http://www.haestirettur.is/domar?nr=7618 (DNB)
http://www.haestirettur.is/domar?nr=7619 (FSCS)
This legal case has taken a long time, but the final judgement that the emergency laws 125/2008 were in fact valid, and those claims should therefore be classified priority claims.
The supreme court also reached decision in several cases regarding wholesale deposits of Councils and other organizations in UK/Netherlands. In short, Icelandic laws do not make any distinction between deposits by sophisticated investors and regular depositors, and therefore those deposits will receive priority status along with other ordinary deposits.
Overall I am impressed with the judgements and the legal reasoning given. The decision seems well supported and made in accordance with Icelandic laws and previous rulings.
Now that the legal cases have run their course and priority status of all the claimants has been established, there is really no impediments left for the winding-up board of old Landsbanki to start processing payments from the bankruptcy proceedings.
http://www.lbi.is/library/Opin-gogn/skyrslan/Financial%20Information%20Q2%202011%20-%20eng_open%20site.pdf
According to their last report, the recoveries have been rising steadily since 2009 and are now estimated at 1290B ISK (8B Euros). The total priority claims by FSCS and DNB have now been confirmed as 852B ISK (5.3B Euros) for FSCS and 282B ISK (1.8B Euros) for DNB. The Supreme Court rulings now also allow the other priority claims (Councils and other wholesale depositors) to be correctly estimated by the winding-up board.
If we assume the other priority claims to be somewhere around 200B ISK (1.3B Euros), the total priority claims are therefore likely to be somewhere close to 1350B. This means the final recovery rate for priority claims is likely be somewhere around 95%. If the recoveries by LBI continue to rise, like they have in the past, it is quite possible that the full 100% of the priority claims will be paid out in the end.
P.S. Congratulations to the Dutch for a well deserved win today, at the Bridge World Championship in Veldhoven.
+http://www.icenews.is/index.php/2011/10/28/order-of-priority-claims-under-the-emergency-act-deemed-valid-by-icelandic-court/
Bill Kearney, IceNews is not place to talk about conspiracy theories.
But yet the assets of the old Icelandic banks has now recovered from their short term impairments. Its still a mess being unwinded that takes time but assets were of lot better quality than many banks else where so there is at least something to recover.
Although it is out of fashion now, this fine teashirt was a popular Christmas gift both in Iceland and UK during 2008 Xmas season:
http://www.dogma.is/en/online-shop/362/
The bond holder will be upset by this — but as Lee Buichet did say in the context of IceSave — there has been a financial loss that had to be apportioned.
It is more fair that depositors come first than bond holder, even though in generall usually they are equal in priority in law.
Where is Mike UK Nordic analyst — recently he has not posted for a long time. Always interested to hear his postings.
http://www.icenews.is/index.php/2011/04/01/uk-and-dutch-councils-to-be-priority-claims-on-old-icelandic-banks/#comment-548655
In my view the bond holders and other investors who lost money on Landsbanki should sue the former owners, like the Bjorgolfs for example.
I would be happy to help to help find information to support such a lawsuit.
There is a lawsuit being prepared in Iceland.
The owners walked away from this with lots of money, you might ask yourself who’s money that was.
There was a conference about the Icelandic economy last week, the situation in the Western world was also discussed.
Here is a interview with some of those who spoke at the conference.
http://www.ruv.is/sarpurinn/nr/4611468/
first at min 32:50 the dept director of the IMF
at min 50:10 Simon Johnson from MIT
at min 57:42 Paul Krugman from Princeton
and min 72:10 Wilhelm Buiter economist at City Bank.
Simon Johnson’s speech from the conference
http://visir.is/section/MEDIA99&fileid=CLP7055
The rest of conference can be seen here
http://www.imf.org/external/np/seminars/eng/2011/isl/index.htm
Really? Where do you wear it? Where I live in the UK, no-one would know what country’s flag it was and would be unlikely to know anything about Icesave.
Not quite sure how you link deposit guarantees with your Great Global Banking Conspiracy. Also, payments haven’t started. Also, those payments are not by Iceland (which is funny really, because you say “you” after explaining how you inform others about the difference between Iceland and Landsbanki).
Hi you Viking Warriors!!
I wear a T-Shirt with an Icelandic flag on the front,unsurprisingly I get abuse from so called British patriots,moaning about money owed to Britain by Iceland.Of course I soon put them in their place by explaining that it is private banks that owe the money and not Iceland the Country.Nice to see you have started to reimburse GB and the Dutch.In saying that,I hope Iceland does not become too apologetic with these two leaders in the Great Global Banking conspiracy against the Sovereign Nation! ICELAND BEING ONE(past!! PRESENT? FUTURE???)Remain vigilant.