News announcement from LBI – Creditors' Meeting
The Resolution Committee and Winding-up Committee of Landsbanki Íslands (LBI) held an open creditors’ meeting today, 1 December 2010.
The meeting included presentation and discussion of decisions by the Winding-up Board on 6,659 claims lodged against the bank. The bank’s Winding-up Board has now taken decisions on a total of 9,152 claims. The majority of the claims discussed at today’s meeting were claims for notes issued and sold by the bank. At previous meetings the Winding-up Board presented decisions on 2,789 claims, of which by far the greatest number were objected to. As provided for by law, the Winding-up Board has arranged meetings to seek to resolve disputes on 921 claims. Of these 309 disputes have been referred to the District Court. Four Rulings in cases have been pronounced by the District Court, two of which have been referred to the Supreme Court.
Investigation of financial matters and measures taken by Landsbanki.
Around mid-2009 the Winding-up Board and Resolution Committee, in consultation with the international law office Morrison & Foerster, engaged a special forensic investigation team from Deloitte in London and Deloitte in Iceland to carry out, together with specific employees and experts from the Resolution Committee and Winding-up Board, the necessary examination of the bank’s financial matters and actions taken prior to its collapse. The general investigation is now concluded but work will continue on gathering and processing data concerning individual cases. This work has already brought good results and increased recoveries.
The Resolution Committee and Winding-up Board have recently initiated actions for damages against former managers of the bank concerning events which took place in 2008; the resulting losses incurred by the bank and its creditors amount to ISK 30-35 billion. The losses arose, on the one hand from failure to enforce a bank guarantee in the amount of ISK 18 billion, which had been provided to secure debts of the investment company Fjárfestingarfélagið Grettir, and on the other hand from loans granted to Straumur-Burðarás Investment Bank hf. at the beginning of October 2008.
In addition, the Resolution Committee and Winding-up Board have informed the bank's former external auditors of their presumed liability for damages due to negligence in auditing the bank’s annual financial statements for 2007 and endorsing its interim statements in the year 2008.
It should be pointed out that letters have been sent to those parties which the Resolution Committee and Winding-up Board hold liable for damages as a result of losses suffered by the bank as a result of the above-mentioned events, based on information available which has in part resulted from the above investigation. The letters explain the grounds for claiming this liability and set the parties concerned a time limit to make a response. This time limit has not yet expired.
In addition, the meeting was informed of specific voiding measures which are in progress and concern, among other things, purchases by the bank of its own shares in considerable quantity during the months preceding its collapse. The amounts involved here total over ISK 10 billion.
The meeting was informed that ISK 40 billion had been used by the bank to purchase its own shares during the week prior to its collapse and further investigation of this was underway.
It was also disclosed that the Resolution Committee and Winding-up Board had notified the relevant authorities, in particular the Office of the Special Prosecutor, of specific instances where there was reason to suspect punishable behaviour. In the interests of the investigation, further details of these cases could not be provided.
LBI’s financial situation
The creditors’ meeting was also provided with details of LBI’s financial situation in Q3. Considerable success has been achieved in increasing the bank’s recoveries, which amounted to ISK 18 billion more in foreign currencies in Q3 than in Q2. In foreign currency terms, recovery is estimated to be equivalent to 93% of priority claims, based on the ISK exchange rate as of 22 April 2009, which is the date used as reference for claims against the bank. Due to considerable strengthening of the ISK, however, the imputed percentage, based on exchange rates as of 30 September 2010, is 86%.
Attention was also drawn to the positive development that cash is being collected considerably more rapidly than expected. It was also pointed out that the bank’s income in Q3 amounted to around ISK 4 billion, while its operating expenditures during the same period amounted to around ISK 2 billion.
It should be pointed out that the highlights of LBI’s finances during the first 9 months of the year were made available to creditors and the media early last month.
From the time LBI requested the court appointment of an administrator for the operations of BG Holding in the UK in February 2009, major efforts have gone into securing the bank’s equity positions in the underlying companies. This objective has now been achieved and the following shares are now held by the bank:
A holding of close to 67% in Iceland Foods, which operates a large number of foodstores in the UK, a holding of close to 65% in the toy retail chain Hamleys’, a holding of close to 35% in the retailer House of Fraser and a holding of 66% in Aurum, which is comprised of the retail chains Mappin & Webb, Goldsmiths and Watches of Switzerland.
For more information contact Páll Benediktsson, tel: +354 410 3922, +354 895 6066, email@example.com