A ruling handed down yesterday by the Reykjavik District Court puts Kaupthing Bank into formal break-up proceedings. Under Icelandic law, moratoria on payments expire when break-up proceedings commence.
The issue is covered on the Kaupthing website, where it says that the resolution committee and the winding-up board jointly requested that the Reykjavik District Court put the old bank into formal break-up in order to ensure that the bank enjoys the same protection against lawsuits, duress measures and other legal proceedings on assets that were covered during the moratorium on payments period, Visir.is reports.
The bank’s resolution committee and winding up board decided to apply for the court ruling before 24th November 2010, which is when the maximum length of moratorium on payments will expire.
The instigation of the formal break up of Kaupthing will have no immediate effect on the bank’s day-to-day running. During the process the resolution committee will continue to run the bank with the same goal as before; which is to maximise the bank’s assets for the benefit of claimants to its estate. The wind up board will also continue to oversee the claims process.
The new domestic arm of Kaupthing has been re-named Arion Bank. It is no longer formally connected to Kaupthing. It is owned by Kaupthing creditors who seek to turn it into a long-term profitable bank. Arion will not be affected by the break up of Kaupthing.