LBI loses D&O cases at the Reykjavik District Court

In 2011 and 2012 LBI ehf. (formerly Landsbanki Íslands hf.) initiated three court cases (jointly called “the D&O-cases”) before the District Court of Reykjavik (cases no. E-3826/2011, E-3827/2011, and E-991/2012) against four former employees of LBI, four former directors of the company (case no. E-991/2012 only) and 26 insurers of directors' and officers' liability insurance policies which were purchased by LBI in 2008.

 On 28 December 2018, the Reykjavik District Court handed down decisions in the three above referenced D&O-cases. In two of the cases, E-3826/2011 and E-991/2012, the court dismissed LBI’s claims due to uncertainty on whether the loss incurred by LBI had already been compensated by a by a settlement in a court case that LBI had initiated against the former auditors of LBI.

In the third case, E-3827/2011 the Reykjavik District Court handed down a judgement by which individuals as Defendants, the former CEO’s and a managing director were acquitted. The judgement is based on the conclusion that legitimate premises are lacking to place liability for damages to the Plaintiff, as their former employer, with the Defendants. The Insurers as Defendants were acquitted on the grounds that the former CEO’s and managing director were not considered liable against LBI.

The Reykjavik District Court awarded the four former employees of LBI legal fee in the three cases of a total ISK 96 million (equivalent to approx. EUR 720.000) and the two remaining insurers a legal fee of total ISK 27 million (equivalent to approx. EUR 200.000).

On 14 November 2018, as previously reported, LBI reached a settlement agreement with 24 of the 26 insurers discharging these 24 insurers from all three court cases. In November 2018, LBI also withdrew its claims against four former directors of LBI in case no. 991/2012.

LBI will review the decisions and decide whether to appeal the rulings and the judgement to the appellate court, Landsréttur. 


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