Sigrún Davíðsdóttir's Icelog

Kaupthing challenges the prime minister

with 4 comments

Prime minister Sigmundur Davíð Gunnlaugsson has time and again said that the Winding up committees of Glitnir and Kaupthing have not yet presented any composition proposals to Icelandic authorities. Both estates have indeed done so long time ago, actually in 2012. Glitnir has earlier contested the prime minister’s words in the Icelandic media.

In a tv interview with Stöð 2 yesterday Gunnlaugsson yet again reiterated his earlier and by now oft repeated statements. Following the interview the Kaupthing Winding up committee sent out the following announcement:

In light of comments made by the Icelandic Prime Minister, in a news interview with Stöd 2, an Icelandic television station, released yesterday, where it was stated that Kaupthing’s composition proposal had not been presented to the Icelandic Authorities, Kaupthing wishes to reiterate the following:

On 24 October 2012, Kaupthing’s Winding-up Committee applied to the Central Bank of Iceland for an exemption from Iceland’s capital controls on the basis of provisions of the Icelandic Foreign Exchange Act. The application included a draft composition proposal. The purpose of the exemption application is to create the necessary basis for submitting a composition proposal to creditors and thereby concluding Kaupthing’s winding-up proceedings.

The exemption application is still under consideration at the Central Bank of Iceland.

It is not clear why the prime minister keeps on repeating something that is so obviously not correct. Glitnir has challenged him more than once on this. Now Kaupthing has done the same. It remains to be seen if the prime minister will stick to his version.

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Written by Sigrún Davídsdóttir

May 20th, 2014 at 8:22 am

Posted in Iceland

4 Responses to 'Kaupthing challenges the prime minister'

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  1. Sigrún,

    I don’t see an indication of a submission of a composition proposal in the Kaupthing statement you quote. The statement states that Kaupthing submitted an application for an exemption to capital controls to the CBI. An application for an exemption to capital controls is not a composition proposal. And an attachment of a draft composition proposal based on a grant of the exemption being requested is a supporting document for the application application for an exemption it is attached to. The attachment is not a submission of a composition proposal.

    I would assume it may be presumed that if an application for an exemption was submitted to CBI in 2012 and has not been acted on, the CBI does not intend to grant the exemption. Wherefore a draft composition proposal based on such exemption, for being not viable without the exemption is not a viable composition proposal and so is not a composition proposal.

    Is this explanation clear?

    It does not appear to me that Gunnlaugsson is wrong, it appears that Kaupthing is trying to pressure acceptance of its demand for lifting of capital controls, to the extents and per the criteria that you present in your previous post. It appears that those criteria favour the foreign creditors, to the detriment and probable fiscal endangerment of the people of Iceland, and it appears that the government of Iceland is balking acceptance.

    I imagine that if Kaupthing and the other ex-banks creditors’ advocates submitted composition proposals that fit within government and CBI criteria, instead of trying to force their preferences for criteria, their composition proposals would be recognised and accepted.


    21 May 14 at 1:41 am

  2. The exemption is placed as part of the composition proposal. The composition will only function with exemptions from the current law related to the capital controls.

  3. Sigrún,

    “The composition will only function with the exemption…”

    Exactly. Without the demanded exemption the composition is disfunctional/nonfunctional, and so no composition.

    The Kaupthing Winding-up Committee is screwing around with the CBI and government, and Icelandic people, instead of presenting a workable composition (what a request for a composition implicitly asks for). The Kaupthing Winding-up Committee is refusing to provide what was asked for, while attempting to force the ‘Icelandic authorities’ to provide to it what it asks for, and is pretending that it is not the aggressor, that it is not trying to jack the system.

    The Kaupthing Winding-up Committee in Iceland now is trying to do the same thing to the people of Iceland that they tried to do to the EIO property owners using the courts of Luxembourg. And they are trying to do so for the same clients.

    The next question is: Is the Icelandic Special Prosecutor Office taking any notice of these actvities?


    21 May 14 at 10:23 pm

  4. [Correction: It was the Landsbanki Winding-up Committee in the Luxembourg EIO (equity Investment Opportunity) situation-manipulation effort.]


    21 May 14 at 10:31 pm

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