Kaupthing Bank hf. granted a moratorium



On 24 November 2008 the District Court of Reykjavik granted Kaupthing Bank hf. (“Kaupthing”) a moratorium on payments to creditors. In the opinion of the Resolution Committee, applying for the moratorium was a neccessary step in order to ensure that all creditors of Kaupthing are treated fairly and appropriately, in accordance with Icelandic law and EU directives. It will provide Kaupthing with appropriate protection from legal action, while retaining a banking licence sufficient to support its assets.

The moratorium will also give Kaupthing the opportunity to continue discussions with the bank’s creditors with the aim of maximizing recovery for all stakeholders. As has been announced previously, an Informal Creditors’ Committee (ICC) has been formed. The moratorium will assist in making Kaupthing’s ongoing co-operation with the ICC more effective. It is intended that a second meeting with the ICC will be held in December.

Mr. Ólafur Gardarsson, Advocate to the Supreme Court of Iceland, has been hired as Moratorium Supervisor. He will work with the Resolution Committee, which will continue to wield the powers of the Board of Directors of Kaupthing in accordance with Icelandic law. His aims are consistent with those of the Resolution Committee, namely, to preserve assets and to optimise recovery for the creditor body.

The moratorium has been granted until Friday 13 February 2009, at 2 pm Icelandic time. The Moratorium Supervisor is obliged to summon Kaupthing’s creditors to a meeting to be held not later than three days prior to that date. The moratorium process can, at a maximum, last for 24 months.

Nýi Kaupþing banki hf. (New Kaupthing Bank), which assumed the Icelandic operations of Kaupthing on 21st October 2008, is not affected by the moratorium.

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