Indeed only greater value to creditors, no one else.
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Quelle surprise for the loan holders who found their loan have doubled in value in this crisis as well as being index linked to inflation.
The financial loss to the creditors pales into comparison with the loss to, for example, over leveraged house mortgage holders.
Creditors willingly pumped in an excessive foreign currency money supply into a fragile economy, smashing the limits of prudence and reason to go diving into the realms of investment insanity.

As with the effects on such over burnt economies, the main pain is carried by the ordinary citizen with mortgages and the business who are still left will struggle with the impossible for some time.
The citizens bear the brunt of a depressed economy, reduced public services, bear the brunt of the cost of a economic ruin and still have to pay off the losses of speculators who gambled on borrowed money.
It is an illusion that the State is actually the guardian of the citizens.
State money has been used to purchase housing assets from financial institutions at full inflated market price, to bring them into the ownership of the Housing Finance Authority.
State money has also been given to other financial institutions and we watch as they use that money to buy up housing assets at bottom forced auction price.

You don’t understand that the creditors are losing a great deal of money through this settlement. The correct wording to this item should be that the creditors will suffer less loss, rather than return greater value.

The bank’s creditors all along have insited that the Icelandic assets pledged as collateral to their loans must be yielded up. This is what normally happens in any winding up situation. But rather than break-up the bank the deal is to keep it intact as a going concern. It is this that gives the probability of suffering less loss.

The alternative would be for Glitnir to disappear as an institution – with loss of jobs in Iceland – and also widespread direct foreign ownership of Icelandic assets (houses, businesses, and various exploitation rights). In that case payments from mortgages would go straight out of the country, creating greater loss within Iceland and a deeper and longer lasting recession. Foreigners would then accumulate ISK and use it to buy more Icelandic assets. So again, Utlendingar, this is not just about the creditors – there are other stakeholders involved and they are gaining from this. (The only group definitely losing out are the old shareholders – but they knew that was the case last October.)

And Utlendingar you are NOT picking up anybody else’s bills – this is a purely commercial affair between the failed bank and its creditors. The role of the government in this is merely to supply a subordinated loan (a small one in the great scheme of Icelandic debt) which will be repaid by the bank. Why is the loan subordinated? Because the new owners don’t trust this, or future, Icelandic governments. If the government tries to grab back any Icelandic assets it will suffer loss.

In fact the subordinated bond isn’t money lost to anyone as such – it is merely an addition to the national debt. You can argue that this reduces the available national debt for other purposes but I would venture to say an investment in a foreign-owned Glitnir is more useful than some of the other uses the Icelandic government can think of!

I do wish people would look at what is happening in these deals rather than making incorrect points.

(In case I haven’t said this before – this deal, like many others, represents a “workaround” to avoid Icelandic legislation that runs counter to normal international practice. For example, many Icelandic owners of fishing rights used those rights as collateral to take loans. Now the loans are unpaid those rights revert to the creditors. Since most of those creditors are foreigners this would have meant that foreigners would become direct owners of Icelandic fishing rights. So there you have a contradiction between two Icelandic laws. By maintaining Glitnir as an Icelandic legal entity that clash doesn’t occur. Equally, the Emergency law of last year set up a series of artificial barriers that would stop normal winding-up proceedings. That law is essentially trashed in this case.)

That didn’t happen. All of the Icelandic deposit monies have been protected, but that isn’t going to happen for free.

Where is this money going to be squeeze from? or better, from whom? at what interest rate?

“as there is a good probability that this route can return greater value to creditors”

Indeed only greater value to creditors, no one else.