A group of international banks has filed a legal challenge against the Landsbanki dissolution committee claiming that they should be treated as priority claimants. If they win, only 30-35 percent of the bank’s assets will go to pay Icesave.
According to Old Landsbanki, Iceland’s emergency banking laws allow the bank to classify the Dutch and British depositors’ insurance funds as priority claimants; but other creditors to the bankrupt bank, including big banks and bondholders, have decided to challenge the decision in court under Iceland’s bankruptcy laws.
It is clear that if the Reykjavik District Court finds in favour of the claimants and forces the Landsbanki dissolution committee not to prioritise Icesave refunds to the UK and Netherlands, a very large sum would be left owing.
It is estimated today that priority claimants will retrieve 90 percent of their money; but if the big banks and bondholders are included that figure will drop to around 30-35 percent.
The claimants have until the 11th June to submit their claim in detail. It is already clear that if they win, any future Icesave negotiations at the government level will have a very different feel.