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Kaupþing Bank Executives to Pay Estate ISK Millions

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Kaupþing Bank Executives to Pay Estate ISK Millions

Six former superiors at the now defunct bank Kaupþing (Kaupthing) must pay its bankruptcy estate more than ISK 4 billion (USD 32 million, EUR 25 million), according to a court order announced yesterday. The estate’s managers are demanding that assets both in Iceland and abroad will be liquidated to cover the debt.

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Archive photo by Páll Stefánsson.

The bankruptcy estate of Kaupþing has reached agreements with almost 50 of the bank’s former employees because of loans they received to buy shares in the bank. Tens of cases are currently in courts and the aforementioned six persons are the latest to have been ordered to repay the loans, ruv.is reports.

Shortly before Kaupþing collapsed the board decided to lift personal responsibility of loans key executives had received to buy shares in the bank, which amounted to more than ISK 30 billion (USD 245 million, EUR 187 million).

Kaupþing’s winding-up committee filed charges over these loans to have the action revoked and the sixth verdict in the ongoing court cases was announced at Reykjavík District Court yesterday.

Among those convicted yesterday was Magnús Guðmundsson, former director of Kaupþing in Luxembourg, who must pay the bank’s estate ISK 717 million (USD 5.9 million, EUR 4.5 million) with interests.

Overall, individuals have been ordered to pay the estate ISK 4 billion this month. Tens of cases are still in court; these include one against former Kaupþing chair Sigurður Einarsson.

However, even if the verdict is in the winding-up committee’s favor, it isn’t a given that the convicted can make the payment in question and so various actions must be undertaken.

Reykjavík District Court confirmed yesterday the seizing of Magnús’s 20 percent share in the company Hvítsstaða ehf. The company owns land but owes more than ISK 1 billion.

The company’s co-owners are all former key executives of Kaupþing. The bankruptcy estate has therefore made a demand, which has been approved, that all of their shares in Hvítsstaða along with other assets, wherever they may be located, be seized.

Most of these former key executives now reside in the UK or Luxembourg. If the Supreme Court of Iceland confirms the verdicts made by Reykjavík District Court, they will be enforceable overseas.

According to RÚV’s sources, the winding-up committee is considering liquidating their assets in Iceland to cover the debt and also their possible assets abroad.

Click here to read about charges filed against former key executives of Glitnir Bank and here to read more about the Special Prosecutor Office’s Investigation of the affairs of Kaupþing.

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