THE SUPREME COURT OF ICELAND HAS REJECTED LBI’S REQUEST FOR AN APPEAL ON THE APPELLATE COURT LANDSRÉTTUR´S DECISION IN THE GRETTIR CASE
On 15 September 2021, the Supreme Court of Iceland announced that it had rejected LBI's request for an appeal on the appellate court Landsréttur’s decision in the Grettir case. At the same time, the Supreme Court also announced that it had rejected a request for appeal from one of the defendants, Sigurjón Árnason (SÞÁ) former CEO of Landsbanki Íslands hf.
The Supreme Court’s reasoning for its decision is short. It simply states that the requirements for an appeal have not been met. The Supreme Court states that a judgement in the case would not be of value as a precedent in addition to existing court decisions. It further states that it cannot be seen that the decision of Landsréttur is obviously wrong on merits or in form.
According to Article 6 of the Terms and Conditions of the Bonds a partial conversion of the Bonds into Class A Shares may be effected by the Issuer, provided that the Board of Directors has determined, acting reasonably, that it is reasonably likely that the Issuer will be unable to redeem the Bonds in full on or before the Final Maturity Date.
The aggregated amount by which the Bonds may be redeemed shall not exceed the amount equal to the tax losses available to the Issuer in the financial year in which the Partial Issuer Conversion is proposed to be effected and which will cease to be available after the end of that financial year.
The Board of Directors believes that the conversion is in the best interests of both LBI and the Bondholders, as it is reasonably likely that LBI will be unable to redeem the Bonds in full on or before the Final Maturity Date and due to the fact that post income year 2021 the Issuer should not have sufficient tax losses available to cover later income that LBI will realize from later conversion or cancellation of debt. The Board of Directors therefore would like to propose a Partial Conversion at this point.
LBI’s Management Accounts for Q2 2021 and investor call presentation have been made available on LBI’s website under https://www.lbi.is/financial-info.
LBI will host an investor call to present and discuss the results on Thursday 12 August 2021 at 14:00 (GMT), 15:00 London (BST) and 10:00 New York time (EST).
Please note that shareholders of LBI will need to register in advance to participate in the call by sending email to email@example.com at the latest before 18:00 (GMT), 19:00 London (BST) and 14:00 New York time (EST) on Wednesday 11 August 2021.
On 28 May 2021, the Landsréttur Court of Appeal handed down a judgement in the Grettir case, by which the D&O Insurers, the former CEO, Halldor J. Kristjansson, and the former Head of corporate finance, Sigridur Elin Sigfusdóttir were acquitted. The individuals were acquitted on same grounds as in the first instance.
The acquittal of the D&O Insurers is based on the grounds that in the beginning of 2008, when the insurance was renewed, the company was negligent when giving information on the status of the company. The Court specifically addresses incorrect information on holding of own shares in the company, insufficient reporting of need for impairment of loans to large groups and insufficient information on large exposures. The Court also refers to market manipulation being conducted within the bank at the time of renewal the D&O policy.
The Court found that the former CEO, Sigurjon Þ. Arnason, is obliged to pay LBI ISK 50.000.000 with default interest from the day the case was filed before the Reykjavik District Court in November 2011. The Court found that Arnason was liable due negligence in relation to not securing that a valid bank guarantee, securing a large loan exposure, was called when the loan was not paid back. The Court lowered the amount payable by Arnason at its discretion based on law on limited liability companies.
Finally, the Court awarded legal cost to the D&O Insurers, the former CEO, Halldor J. Kristjansson, and the former Head of corporate finance of total ISK 36.000.000 payable by LBI.
LBI is currently reviewing the judgement with it’s legal team and considering next steps, including whether to request for appeal of the decision to the Supreme Court.
Pursuant to 9.1 (d) of the Conditions LBI hereby confirms, as the Euro Equivalent Available Cash, as determined on a Determination Date in respect of a Payment Date, is lower than the Distribution Threshold, LBI has decided not to make a payment of principal to the Bondholders on 15 June 2021 and to postpone such payment of principal until the scheduled Payment Date on 15 December 2021 unless postponed further.