Moratorium - Legal Status

On 19 March 2009 the District Court of Reykjavik granted the Bank a moratorium on payments to creditors. The moratorium was later extended until 11 December 2009. Further extension may be requested by the Resolution Committee if it believes that it will be in the best interests of creditors to extend the moratorium. If further extension will be requested, the Moratorium Assistant is obligated to summon the Bank's creditors to another meeting which is to be held no later than three days prior to 11 December 2009. According to Act No. 161/2002 on Financial Undertakings, the District Court can currently not authorize a moratorium lasting longer than a total of 24 months or until 24 November 2010.

The moratorium gives the Bank the opportunity to continue discussions with the Bank's creditors with the aim of maximizing recovery for all stakeholders. An Informal Creditors' Committee ("ICC") has been formed. The moratorium will assist in making the Bank's ongoing co-operation with the ICC more effective. The Resolution Committee communicates with the ICC regularly.

The moratorium is not a part of bankruptcy proceedings. The moratorium is a procedure under Icelandic law which has provided the Bank with appropriate protection from legal actions, such as the freezing of assets, and ensures that it is able to maintain a banking license sufficient to support its assets. Applying for the moratorium was, in the opinion of the Resolution Committee, a necessary step to ensure that all creditors of Straumur are treated fairly and appropriately by protecting the Bank’s assets in accordance with Icelandic law and EU directives.

Hörður Felix Harðarson, Attorney to the Supreme Court of Iceland, was appointed as Moratorium Assistant. He works with the Resolution Committee, which continues to wield the powers of the Board of Directors of Straumur in accordance with Icelandic law. His aims are consistent with those of the Resolution Committee, namely, to preserve assets and to optimize the recovery of assets for creditors.

According to the new Act no. 44/2009 amending the Act no. 161/2002 on Financial Undertakings, a winding-up board has been appointed by the District Court of Reykjavík to handle various matters which are beyond the capacity of the Resolution Committee. Both committees are dedicated to working together in the best interests of the Bank and its creditors. The Winding-up Board is comprised of Supreme Court attorney Hörður Felix Harðarson who is also the bank's Assistant in the moratorium process, Supreme Court attorney Ragnar H. Hall and Supreme Court attorney Lilja Jónasdóttir.

The main task of the Winding-up Board is to handle the claims registration and recognition process whereby it will be formally decided who the creditors of the Bank are as well as the quantum of their claims. The Winding-up board will also handle the payment of recognized claims at the appropriate time.

It should be noted the Resolution Committee continues the ordinary business of the Bank in spite of the claims registration process. The Resolution Committee continues to preserve and protect the Bank's interests as necessary.

Below are links to applicable laws, regulation and decisions:

Ministry of Business Affairs: http://eng.vidskiptaraduneyti.is/laws-and-regulations  
Ministry of Justice: http://eng.domsmalaraduneyti.is/laws-and-regulations/english
The Financial Supervisory Authority (FME): http://www.fme.is/?PageID=146 
FME, legislation: http://fme.is/?PageID=612
FME, decisions: http://fme.is/?PageID=867
Althingi, the Icelandic parliament: http://www.althingi.is/vefur/upplens.html