Supreme Court of Iceland emergency law ruling: reactions

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.

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