Landsbanki verdict received

Wyre Forest District Council has been informed today that UK Local Authorities have been successful in defending their “priority creditor” status in relation to the treasury deposits with the Icelandic Bank Landsbanki.

The verdict of the Icelandic Court came in a test case which had been brought by other creditors. Wyre Forest District Council has a £3m deposit with Landsbanki which was due to mature in late October 2008.

The court action has been on-going for over a year and has involved all of the affected Councils working together to obtain the best result for tax payers.

This is a very welcome decision for the Council and, coupled with the tough measures that were approved within the recent budget, provides financial stability for the Council during these extremely challenging times. If the Council had lost its priority status, this would have resulted in a significantly reduced payout for the Council which could have impacted on services.

John Campion, Leader of the Council said

“I am pleased that the judges in Iceland have heard the arguments on both sides and found in favour of UK local authorities and other UK wholesale depositors.

This judgment means that UK local authorities’ claims have been recognised as deposits with priority status over other creditors' claims and will be at the front of the queue when it comes to getting their money back following the collapse of the failed Icelandic banks. Councils hope that our opponents will accept this clear verdict.

Securing priority status in the administration of Landsbanki could save Wyre Forest council taxpayers as much as £1.8million.

This money is particularly important at a time when local authorities need to maximise resources to deal with the reduction in Government funding.

The way in which Wyre Forest has coordinated the legal action in this matter with the Local Government Association and other local authorities has minimised legal costs for all the parties involved and provided value for money for taxpayers. The cost of the litigation to date amounts to less than 1 per cent of the money councils expect to recover. If there is any further legal challenge, Wyre Forest will continue to co-ordinate its response with the other councils.”