Landsbanki Verdict Received

Wyre Forest District Council has been informed today (28th October) that UK Local Authorities have been successful in the appeal defending their “priority” creditor status in relation to the treasury deposits with the Icelandic Bank Landsbanki.

The decision came from the Icelandic Supreme Court test case, which had been brought by other creditors challenging the original verdict of the Icelandic District Court earlier this year. 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 the affected Councils working together to obtain the best result for tax payers.

John Campion, Leader of the Council said,

“We are delighted the Icelandic Supreme Court has found in favour of UK local authorities and other UK wholesale depositors in this test case.

“This judgment means that UK local authorities’ claims have been recognised as deposits with priority status over other creditors' claims. The priority creditors will be paid first when it comes to getting their money back and will recover almost all of the money they had on deposit with the failed Icelandic banks. However, we await confirmation from the winding up board of Landsbanki that it will apply the Supreme Court’s decision to the non-test cases and their intended next steps.

“Securing priority status in the administrations of Landsbanki and Glitnir will protect as much as £470 million of council tax payers' nationally.

“The decision, which comes more than 3 years after the banks failed, is a huge step in securing the return of authorities' deposits.

“The way in which the LGA and our legal advisors have co-ordinated the legal action with other local authorities has minimised legal costs whilst enabling us to advance the strongest possible arguments to secure this result. The cost of the litigation to date amounts to less than 1 per cent of the amount we expect to recover."

To date the Council has not received any dividend payments in relation to the Landsbanki deposit. However, subject to the winding up board’s confirmation that it will apply the Supreme Court’s decision, the Council is expecting regular payments over the next few years and that it should eventually recover the vast majority of the original deposit with Landsbanki.

Date of issue - 28th October