Re-calculated value of the partial payments
On 24 September this year, the Supreme Court of Iceland pronounced its judgement in case no. 553/2013. LBI's Winding-up Board had referred the case to the courts on the basis of Art. No. 171 of the Act on Bankruptcy etc., No. 21/1991; the case was heard as a dispute in the winding-up proceedings of LBI.
According to Art. 99 of the Act on Bankruptcy etc. claims against LBI, which were lodged in foreign currencies, had been converted to ISK based on the quoted selling rate of the Central Bank of Iceland on the reference date of the winding-up, 22 April 2009. The dispute in this case concerned how the value of partial payments, made in foreign currencies on 2 December 2011 and 24 May 2012, should be converted to ISK and how the value of such distributions towards the claims in question should be determined. All of these claims were priority claims in the sense of Art. 112 of the same Act.
LBI's Winding-up Board had decided to calculate the value of partial payments in foreign currencies using the same exchange rate as was used to convert the claims, i.e. the exchange rate on 22 April 2009. This decision was objected to by certain creditors, who were of the opinion that the exchange rate on the date the partial payments were made should be used rather than that of the reference date of the winding-up. Various claims to this effect were made for different exchange rate references.
The Supreme Court's conclusion was that the date of payment of each of the partial payments, and the quoted selling rate of the Central Bank of Iceland on that date should be used as reference.
The significance of the judgement for LBI's winding-up proceedings is solely that those partial payments which had already been made when the judgement was pronounced must be recalculated. The Winding-up Board had reserved the right to make such recalculation in connection with the said partial payments. They retain their validity in all respects with the exception that their value as calculated in ISK terms changes slightly.
The principal changes following recalculation of the Winding-up Board's first four partial payments are:
- The first partial payments, made on 2 December 2011, amounts to the equivalent of ISK 410 billion instead of ISK 432 billion, as previously reckoned.
- The second partial payments, made on 24 May 2012, amounts to the equivalent of ISK 172 billion instead of ISK 162 billion, as previously reckoned.
- The third partial payments, made on 5 October 2012, amounts to the equivalent of ISK 80 billion instead of ISK 82 billion, as previously reckoned.
- The fourth partial payments, made on 12 September 2013, amounts to the equivalent of ISK 67 billion instead of ISK 69 billion, as previously reckoned.
- The total amount of the above partial payments, as recalculated, is equivalent to around ISK 730 billion.
- The above payments together represent around 54% of the total amount of priority claims, with reference to Art. 112 of the Act on Bankruptcy etc., instead of 55%, as was the case according to the previous premises.
It also derives from this that the judgement will mean that the value of subsequent partial payments in foreign currencies will be based on their exchange rates against the ISK on the date of each payment.
Updated and recalculated lists, giving a detailed breakdown of the above-mentioned payments, have been made available on the restricted creditors' area of the LBI website, replacing those previously published. Notifications will, furthermore, be sent to all creditors concerned in the near future. The Supreme Court's judgement can be accessed here and an unofficial English translation of this judgement is available here.