Iceland Passes Last Hurdle in $11.4 Billion Depositor Payout

Iceland will start paying out as much as $11.4 billion in foreign depositor claims after the country’s top court upheld an emergency law that leaves bank bondholders in the lurch and protects ordinary account holders. ...

Comment posted by anrigaut:

"leaves bank bondholders in the lurch and protects ordinary account holders." It also leaves in the lurch the ordinary account holders with Kaupthing's Isle of Man subsidiary Kaupthing Singer & Friedlander (IoM) who, 3 years after the collapse of their bank, have so far recovered 73.6% of their deposits and were counting on the parental guarantee given by Kaupthing (Iceland), and recently upheld by the Icelandic Supreme Court, to cover the eventual shortfall in their bank's ongoing liquidation. But as the claim under this guarantee does not, it seems, benefit from the priority status accorded by the emergency law to depositors, the present ruling will push them to the back of the queue along with other unsecured creditors and reduce the value of their claim. These depositors have been helped nowhere - not in the Isle of Man, not in the UK (supposed to represent the IoM in negotiations with Iceland), and not, now, in Iceland.They remain the only retail depositors in Kaupthing not to have been fully compensated by government intervention, despite acknowledged regulatory and governmental failures in dealing with the bank’s insolvency