DAG Press Release 11 June 2011: Claim under parental guarantee upheld by Icelandic Supreme Court

Category: DAG Press Releases

KSFIOM Depositors Action Group has been informed by its Icelandic lawyers that the appeal in relation to the parental guarantee has been won by KSFIOM.

The Supreme Court of Iceland has ruled that the guarantee signed by the Icelandic CEO on behalf of Kaupthing hf was valid and binding on the bank. KSFIOM's claim was acknowledged pursuant to its claims before the Supreme Court, under Article 113 of the Bankruptcy Act.

The judgment was handed down on Friday (10th June 2011), and is posted (in Icelandic) on the Court website here
The decision of the Supreme Court is final.

KSFIOM DAG naturally welcomes this decision, but notes that creditors have suffered years of uncertainty and doubt as a result of the dilatory performance of the very institutions and authorities tasked with their protection, and calls on the authorities to put an end to their waiting now by implementing the proposed loan trust

Eighteen months after KSFIOM's claim under the guarantee given by its Icelandic parent bank Kaupthing hf was first rejected by the Kaupthing Winding Up Committee, a decision upheld by the Reykjavik court of first instance earlier this year, justice has finally been handed down – by an Icelandic court.

Despite the efforts of the IOM authorities to play down the potential value to creditors of the contested guarantee which, on their own admission, they did nothing to verify when it was put in place and widely advertised in promotional literature, we estimate that the now validated guarantee may eventually be worth 6 to 8 p/£ to creditors (assuming a pay-out of around 25% from Kaupthing). All the more reason for the IOM and UK governments to step in now with a (fully recoverable) loan, thus allowing hard-pressed depositors to recover their funds sooner rather than later.

KSFIOM DAG Strategy Team

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