PRESS RELEASE FROM KAUPTHING BANK:
On 24 November 2008 the District Court of Reykjavik granted Kaupthing Bank hf. (“Kaupthing”) a moratorium on payments to creditors. In the opinion of the Resolution Committee, applying for the moratorium was a neccessary step in order to ensure that all creditors of Kaupthing are treated fairly and appropriately, in accordance with Icelandic law and EU directives. It will provide Kaupthing with appropriate protection from legal action, while retaining a banking licence sufficient to support its assets.
The moratorium will also give Kaupthing the opportunity to continue discussions with the bank’s creditors with the aim of maximizing recovery for all stakeholders. As has been announced previously, an Informal Creditors’ Committee (ICC) has been formed. The moratorium will assist in making Kaupthing’s ongoing co-operation with the ICC more effective. It is intended that a second meeting with the ICC will be held in December.
Mr. Ólafur Gardarsson, Advocate to the Supreme Court of Iceland, has been hired as Moratorium Supervisor. He will work with the Resolution Committee, which will continue to wield the powers of the Board of Directors of Kaupthing in accordance with Icelandic law. His aims are consistent with those of the Resolution Committee, namely, to preserve assets and to optimise recovery for the creditor body.
The moratorium has been granted until Friday 13 February 2009, at 2 pm Icelandic time. The Moratorium Supervisor is obliged to summon Kaupthing’s creditors to a meeting to be held not later than three days prior to that date. The moratorium process can, at a maximum, last for 24 months.
Nýi Kaupþing banki hf. (New Kaupthing Bank), which assumed the Icelandic operations of Kaupthing on 21st October 2008, is not affected by the moratorium.
To TWR:
>>>>Alex, IMF is not investing in recovery of economy, but in country debt…
Actually if you read the IMF press releases, you will find that the purpose of the loan is to “to support the country’s program to restore confidence and stabilize the economy”
http://www.imf.org/external/np/sec/pr/2008/pr08296.htm
http://www.imf.org/external/country/ISL/index.htm
Specifically the IMF program will focus on:
– Preventing further sharp króna depreciation
– Developing a comprehensive and collaborative strategy for bank restructuring
– Ensuring medium-term fiscal sustainability
One part of the bank restructuring will be to facilitate “maximizing asset recovery in the old banks”, but this does not involve paying any debt.
>>>>Now, all the money IS received will be spend on paying debts of private companies (basically few richest people) leaving rest of the population with pleasure of paying out this debt.
Where exactly are you getting this information? I have seen no documenation anywhere, that the IMF loans will be used to pay “debts of private companies”. In fact this would be in direct contradiction to the stated agreement between Iceland and IMF.
The governments of UK, Netherlands, and Germany are now negotiating loans to Iceland to cover the first 20K Euro deposit guarantee. There are no loans being negotiated for paying the debts of the Icelandic banks.
>>>>I’m still don’t get it, how allowing those banks to go bankrupt would be worse for Iceland then as it is now?
It not a question whether to “allow” the banks to go bankrupt. When there is a run on any bank or the bank looses its credit lines, there are only three options available:
1. Nationalize it
2. Find a bigger bank to take it over
3. Let the bank go bankrupt
Icelandic government was too small, so option 1. was never available. Option 2. would have been the best, but since all the Icelandic banks failed, there was no bigger bank immediately available. There is still talk about whether foreign banks (the creditors) might decide in cooperation with the Icelandic government to take them over. This would allow the maximization of the bank assets, by collecting the customer loans over the full loan terms. If this does not happen, then only option left is option 3.
TWR
Very good question.
There is only one answer: Guilty demeanor…
Alex, IMF is not investing in recovery of economy, but in country debt…
Now, all the money IS received will be spend on paying debts of private companies (basically few richest people) leaving rest of the population with pleasure of paying out this debt.
I’m still don’t get it, how allowing those banks to go bankrupt would be worse for Iceland then as it is now?
I hope Kaupthing will be fair and will paid back bonds due to investors abroad, which are by the way investing again with IMF in the country recovery.
I hope the Icelandic banking authorities aren’t giving “currency” (pun intended) to the Chavista trend of declaring foreign debt “illegal.”. Joking aside, Iceland has tremendous natural resources, and clever people. This too shall pass. Bless.
[…] Anmerkung von Jan: Die (alte) Kaupthing Bank hat nach einem Beschluss eines isländischen Gerichts Zahlungsaufschub bis zum 13.02.2009 erhalten. Rechtliche Zwangsmittel wie Zwangsvollstreckung und Insolvenzverfahren sind (weiterhin) nicht möglich. Dadurch sollen alle Gläubiger eine maximale Rückerstattung erhalten. Siehe die Berichte auf Englisch hier und hier. […]
“we are talking about a moratorium… and not a memorial”
Exactly! It’s a large musical composition, kind of like a medieval opera. I just hope that Gardarsson guy finds the right tune. Well, at least there are some creditors, so paying for the choir, the costumes and the stage should be no problem. Really, a great idea, immortalizing the drama with an oratorio…oh…wait…
“I am not exactly sure that this follows the international standards”
Of course not. That’s why I wrote “from now on”.
Just checking that something has not been lost in translation – we are talking about a moratorium… and not a memorial…..
@gray
Nýi Kaupþing banki hf. (New Kaupthing Bank), which assumed the Icelandic operations of Kaupthing on 21st October 2008, is not affected by the moratorium.
I am not exactly sure that this follows the international standards…
“On 24 November 2008 the District Court of Reykjavik granted Kaupthing Bank hf. (”Kaupthing”) a moratorium on payments to creditors.”
As if they paid anything back to creditors in the last weeks! However, better late than never, this move back onto legal ground. Let’s hope all proceedings will follow international standards from now on.
[…] Die (alte) Kaupthing Bank hat nach einem Beschluss eines isländischen Gerichts Zahlungsaufschub bis zum 13.02.2009 erhalten. Rechtliche Zwangsmittel wie Zwangsvollstreckung und Insolvenzverfahren sind (weiterhin) nicht möglich. Dadurch sollen alle Gläubiger eine maximale Rückerstattung erhalten. Siehe die Berichte auf Englisch hier und hier. […]