Iceland's Deadbeat Banksters

[marmar]

Aug. 5 (Bloomberg) -- Iceland’s failed banks may drop efforts to reach an orderly settlement and instead file for bankruptcy protection after a court ruled that creditors with rejected claims can seek repayment, Glitnir Bank hf said.

The Reykjavik District Court ruled July 19 that ALMC hf, formerly Straumur-Burdaras Investment Bank hf, must pay Stapi Pension Fund 5.2 billion kronur ($45 million) even though its claim was filed after a deadline set by the bank. The decision will encourage more creditors whose claims had been deemed invalid to seek repayment and threatens to postpone indefinitely efforts to settle, said Arni Tomasson, who heads Glitnir’s resolution committee.

“If this ruling is upheld in the Supreme Court, it will open the floodgates of claims from everyone and anyone who believes he or she has unfinished business with the banks,” Tomasson said in a phone interview in Reykjavik. “Everyone gets a hunting license. It might be better for us to seek bankruptcy protection than to seek a composition agreement. Everything will change if this ruling is upheld.”

Iceland’s failed banks have yet to start repayment on the $85 billion they defaulted on in 2008, leaving creditors such as Deutsche Bank AG and BNP Paribas SA in the lurch. Before last month’s ruling, Tomasson said approved creditors might get some funds repaid by 2013, half a decade after the collapse of Iceland’s financial industry. The District Court’s decision means it’s now impossible to commit to any target, he said. ...........(more)

The complete piece is at: http://www.businessweek.com/news/2011-08-05/iceland-defaulted-banks-may-drop-repayment-target-after-ruling.html