Legal Amendments concerning Winding-up Proceedings

Certain amendments were recently made to the Act on Financial Undertakings, No. 161/2002 (AFU), with the adoption of Act No. 78/2011 by the Althingi on 10 June this year. Among the changes is the application to the Winding-up Board of a financial undertaking being wound up (and to Resolution Committees or provisional Boards of Directors, where appropriate) of the special qualification requirements which apply to the management of financial undertakings, as provided for in the second paragraph, the fourth sentence of the third paragraph and the fourth paragraph of Art. 52 of the AFU. Rules were also adopted on the supervisory role of the Icelandic Financial Supervisory Authority (FME) regarding financial undertakings in winding-up proceedings, regardless of whether the operating licence of the financial undertaking concerned had been revoked or limited in connection with winding-up proceedings. The authorisation of the Winding-up Board to make payment towards finally recognised claims was limited to priority claims and provisions on payment to an escrow account, in cases of disputed claims, were clarified. Furthermore, the principle was enshrined in the statute that Winding-up Boards (and Resolution Committees/provisional Boards of Directors, as appropriate) are to disclose information on all significant measures taken concerning the sale or disposition of assets of the estate. The intention is to have such disclosure generally take place prior to the action, unless this could be detrimental to the interests of the estate.

Special attention is drawn to the fact that the Act includes an amendment to Point 3 of Temporary Provision V of the AFU (as adopted by Act No. 44/2009). This Point provides for the composition and tasks of Resolution Committees where they are still active. The amendment will repeal this Point as of 1 January 2012, from which time all the tasks of Resolution Committees will be incumbent upon the Winding-up Boards of the financial undertakings concerned. This amendment will not have a significant impact on the day-to-day activities of Landsbanki Íslands hf. – in winding-up proceedings

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