Legal status

Kaupthing hf. (“the Estate”) is currently in winding-up proceedings during which the Estate is headed by the Resolution Committee, which is responsible for maximizing the value of the Estate‘s assets, and the Winding-up Committee, which handles the claiming process.

On 24 November 2008 the Estate entered moratorium proceedings pursuant to chapters III-IV of the Bankruptcy Act, cf. also Act 129/2008 amending the Act on Financial Undertakings no 161/2002.

Following a ruling of the District Court of Reykjavik on 22 November 2010, the Estate formally entered winding-up proceedings. Icelandic law provides for automatic end of the moratorium period upon entering into winding-up proceedings. Because of the legislative amendments by way of Act 44/2009, there is only a negligible difference in legislation applying to the Estate whether in moratorium or winding-up proceedings. The end of the moratorium has therefore not affected the operations of the Estate. Indeed, for creditors and counterparties, the change should hardly be noticeable.

The Resolution Committee and the Winding-up Committee jointly applied to the District Court of Reykjavik to formally recognize that the Estate is in a winding-up proceedings. This was done in order to ensure that the Estate continues to enjoy the same protections from litigation, collection measures and other depletion of assets as it has had during the moratorium.

Article 103 of the Act on Financial Undertakings stipulates that during winding-up proceedings the Resolution Committee shall manage the interests of the Estate according to the same rules as a trustee would be subject to according to the Bankruptcy Act, although with some exceptions. The exceptions mainly concern the objective for the Resolution Committee to maximise the value of the Estate's assets which includes waiting for the Estate's outstanding claims to mature, instead of realising them immediately. To this end, the Resolution Committee is allowed to disregard a decision of a creditors' meeting if the Resolution Committee deems such a decision contrary to its objective of maximizing asset value. This means that the Resolution Committee has ample time to safeguard the interests of the Estate and its creditors.

During the winding-up proceedings, the Winding-up Committee shall continue administering the claiming process and resolve disputes with creditors on recognition of claims.

For further information on legal status can be found in Chapter 4 of the Creditors’ Report.