Extension of moratorium

The Reykjavik District Court issued a ruling extending the moratorium of Landsbanki Íslands hf. on Tuesday, 31 August 2010. The moratorium was extended up until and including 5 December this year, or to the limit authorised by law.  The premises provided in the ruling explain the details of the bank´s winding-up proceedings since 22 April 2009 which have been characterised  as moratorium, and its continuation in winding-up proceedings under general rules once the moratorium concludes.

The legal status of Landsbanki Íslands hf. after the moratorium is concluded December 5th 2010, will not change except that the position of Appointee in the special moratorium will cease to exist and the bank’s status will no longer be described as in moratorium but rather as being in general winding-up proceedings. Therefore the rules of Part B, Chapter XII of the Act on Financial Undertakings, No. 161/2002, will continue to apply as they have during the special moratorium since 22 April 2009 and the Appointee will remain as a member of the Winding-up Board although the position of Appointee will no longer exist. The same legal rules continue to apply concerning all the bank’s affairs of consequence, including the status of creditors, the tasks and position of the Resolution Committee and Winding-up Board, handling of claims, disposition of all interests and the conclusion of the winding-up proceedings. This means of course that all the provisions of the Act on Bankruptcy etc., No. 21/1991, to which reference is made in the relevant provisions of the Act on Financial Undertakings, continue to apply.

It should be underlined here that rules on protection against collection and enforcement actions by individual creditors continue to apply without alteration and there will be no change to the claims procedure and any type of handling of claims lodged against the bank following the Winding-up Board’s invitation to lodge claims.

Although the formal position of Appointee will no longer exist the courts will, in the future as in the past, maintain their formal legal role in the same manner as applies in liquidation of bankrupt estates in accordance with the provisions of the Act on Bankruptcy etc., No. 21/1991. Disputes which may arise can be referred to the courts and creditors have access to the courts, for instance, concerning individual measures of the Resolution Committee and/or Winding-up Board. The position of the Resolution Committee and Winding-up Board towards the courts is and will be substantively the same as that of an administrator in bankruptcy proceedings.

The winding-up proceedings of Landsbanki Íslands hf., which is currently referred to as being in moratorium, comply with EU Directive 2001/24/EC on the reorganisation and winding up of credit institutions, and as such are automatically recognised by EEA member states. Once the moratorium concludes and the general winding-up proceedings continue this comprises a winding up procedure covered by Title III of the Directive, i.e. Articles 9-18.

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