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Landsbanki Guernsey to take legal action against Iceland

The administrators of Landsbanki Guernsey are preparing to take their case to Iceland, in the event they are unsuccessful in their efforts to maximise returns for depositors caught up in the bank’s co

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The administrators of Landsbanki Guernsey will take their case to Iceland’s courts should they be unsuccessful in their efforts to maximise returns for depositors caught up in the bank’s collapse last year.

The Royal Court in Guernsey has agreed to allow the action, according to Deloitte.  Deloitte partners Rick Garrard and Lee Manning are the Landsbanki Guernsey administrators.  

The move followed a vote in which what Deloitte said was an overwhelming majority of depositor creditors voted in favour of such action.

Last resort

The administrators would only file suit against the Icelandic government if the Guernsey branch of Landsbanki “is treated as an ordinary creditor” by the bank’s winding-up board at a key creditors’ meeting in Reykjavik on 23 November, and if a subsequent objection to this treatment also failed to deliver satisfaction to the Guernsey depositors, a Deloitte spokeswoman in London said. 

“Having seen depositors in IceSave being bailed out by UK and Dutch governments, [the depositors and administrators] are naturally aggrieved, and are further aggravated by seeing those governments now being prioritised over them,” Deloitte said in a statement.

According to Deloitte, its claim against Iceland centres around that country’s  implementation of so-called “Emergency Laws” on 7 October 2008 – the day before Landsbanki was put into administration – which it says excluded Landsbanki Guernsey from a priority list of depositors.

Deloitte said the administrators of Landsbanki Guernsey “believe that it is not fair or equitable for governments to enjoy priority over the bank’s depositors, and by doing so significantly reduce the recovery obtained by those depositors.”
 

In its statement, Deloitte noted that the administrators were “disappointed” that they had been unable to obtain assistance" in mounting a challenge against the Icelandic government in Icelandic courts, from the UK government, Treasury and Justice Select Committees or the International Monetary Fund.

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