Straumur-Burdaras Investment Bank hf. is in moratorium.

Straumur Fjárfestingabanki er í greiðslustöðvun.

Q&A: General

Why has a Resolution Committee been appointed to manage the affairs of the Bank? What is the role of the RC?

The Resolution Committee has all the powers of the former Board of Directors of the Bank and will as a result undertake all affairs of the Bank, including supervision of its assets and its business operations. The Committee shall adhere to and carry out decisions made by the FME on the basis of Article 100 a, of Act No. 161/2002 as amended. Directly following the establishment of the Committee, the Committee focused on ensuring the on-going business of the Bank while protecting the interests of creditors and other stakeholders. The Resolution Committee continues to focus on maximising the realisation of assets for creditors, and to help co-ordinate communication with creditors and other stakeholders.

Is the Bank still active in the market?

The Bank has full banking license. However, the current operations are mostly limited to preserving the assets of the Bank.

Is there any chance that the debt will be paid back by the Bank with the full nominal amount at maturity?

The Resolution Committee is committed to the protection of the Bank's asset base. The recovery ratio of the Bank's debt is however uncertain at this date.

It seems like depositors claims are being preferred over senior bondholders claims. Why?

According to Article 103 of the Act on Financial Undertakings No. 161/2002, cf. Article 6 of Act No. 125/2008 (the emergency legislation), claims for deposits, pursuant to the Act on Deposit Guarantees and an Investor Compensation Scheme, and shall have priority as provided for in Article 112, paragraph 1, of the Act on Bankruptcy etc. No. 21/1991, when dividing the estate of a bankrupt financial undertaking.

Unsecured bonds are normal unsecured claims and come next in priority after the claims under Articles 109 – 112 of the Act on Bankruptcy etc. No. 21/1991, cf. Article 113 of the Act.

Q&A: The Moratorium

Why did Straumur file for Moratorium?

The Moratorium provides Straumur with breathing space to enable its assets to be collected, managed and disposed of in a way which provides the greatest value to creditors of Straumur as a whole. It therefore gives Straumur time to consider all strategic alternatives to provide the best return for the creditors. Without the Moratorium, there is a risk of hostile litigation and seizure of assets by individual creditors making it increasingly difficult for Straumur to collect and manage its assets. Whilst such action might benefit certain individual creditors, it is likely to destroy asset value for the majority of the creditors of Straumur.

What has happended at Straumur in respect of a Moratoriuim?

On 9 March 2009 Straumur applied to the District Court of Reykjavik, Iceland, for a Moratorium, pursuant to the Icelandic Act on Financial Undertakings. The District Court of Reykjavík has granted Straumur Burdaras Investment Bank hf. a moratorium order until 11 June 2009. Mr. Hörður Felix Harðason, supreme court attorney, has been appointed moratorium administrator.1. Does the Moratorium affect New Glitn

What effect will the Moratorium have on existing rights of set-off held by creditors?

Under Icelandic law, a creditor may continue to exercise contractual rights of set-off against Straumur. Although it is not possible for the creditor to enforce such set-off rights in the Icelandic courts during the period of the Moratorium, if  Straumur  seeks to initiate a judgment against a creditor during this time, the creditor may assert set-off as a defense. In addition, the EU Directive expressly provides that the rights of creditors to demand the set-off of their claims against the claims of Straumur will not be affected by the Moratorium where such set-off is permitted by the law applicable to such claims.

What is the effect of the Moratorium outside of Iceland?

The Moratorium is granted and has effect in Iceland. In addition, because Iceland is a member of the European Economic Area ("EEA") and is a credit institution within the meaning of the EC Directive on Reorganisation and Winding-Up of Credit Institutions (the "EU Directive"), the Moratorium will be automatically recognised as a "reorganisation measure" throughout the European Union and the three additional EEA states (Iceland, Norway and Liechtenstein). This means that the courts in such member states are, subject to certain exceptions including in relation to employment contracts and certain security and set-off rights discussed below required to give effect to the Moratorium and apply the prohibition on creditors bringing legal proceedings against Straumur including postponing any existing creditor actions. Similarly, neither creditors nor the authorities in such member states are permitted to apply to Straumur into local insolvency, bankruptcy, administration, winding-up or similar proceedings.

In relation to jurisdictions outside of the EEA where it has material assets, Straumur will take the necessary action to seek recognition of the Moratorium.

What is the process?

The Moratorium will be effective for an initial period of 12 weeks, until 11 June 2009. The District Court may subsequently agree to an extension of the Moratorium for successive periods not exceeding nine months provided that the Moratorium may not extend beyond two years from the date the original order was made.

What are the powers and duties of the assistant?

The assistant is appointed by the court to have an oversight role over Straumur during the period of the Moratorium. The Resolution Committee will continue to have day to day responsibility for Straumur and the management and collection of its assets. The consent of the assistant is however required before any material transactions can be entered into by the Resolution Committee including the disposal of assets. In practice, the assistant is likely to permit the Resolution Committee to enter into transactions and dispose of assets in the ordinary course of business subject to a specified de minimis threshold. The assistant will act as a fiduciary to the estate of Straumur.

What role do creditors have in the Moratorium?

Creditors have an active role in the Moratorium. Following the initial order issuing the Moratorium, a creditors' meeting must be held to allow creditors to express their views concerning Straumur plans during the Moratorium. Creditors are also entitled to attend all hearings of the District Court in respect of any application to extend the Moratorium period. At such hearings, creditors may seek to oppose an extension of the Moratorium if they so wish. Creditors can also seek to challenge the Moratorium by making a motion to the District Court asserting that the legal grounds for the Moratorium no longer exist.

Q&A: Creditors

What is being done to consult with creditors and what happens next?

Straumur management team will be assisting the Resolution Committee to set up an informal committee of creditors representing a broad range of creditors.

Those creditors of Straumur wishing to register their interest in this regard are invited to contact Straumur through the contact details shown on this website.

Will I be provided with more information?

Regular update information will be posted to this website as it becomes available.

Who are members of the ICC and how were they selected?

The members represent a broad cross-section of Straumur global creditor base. The identification of the members of the ICC is confidential.

The ICC has no formal powers, and its role is purely consultative. Members of the ICC are not remunerated and do not benefit from any special treatment in respect of any claim which its members may have against Straumur.

How much will I get back and when will I be paid?

In the current financial market environment, it is not possible to estimate the total payments to Straumur´s creditors with any certainty.

No timetable is currently in place in respect of potential payments to creditors. Further details on the timing of asset realization and payments to creditors will be released when they become available.

There are various and many reports in the press saying that Straumur is, or may be, considering selling assets of the bank quickly and at low values, often referred to as "fire sale"

Straumur´s strategy is to maximize the value and realization of owned subsidiaries and other assets. Straumur has not, and does not intend to, enter into any unnecessary quick 'fire sale' of subsidiaries or assets. Straumur intends to develop and pursue a considered strategy for maximising the realisation of assets. Straumur does not consider that selling assets in the current market environment to be generally consistent with maximising the realisable value of the assets it owns. In certain limited circumstances, particular regulatory factors affecting some overseas assets has meant that selling those assets has been consistent with maximising or protecting the value of subsidiaries or other assets of Straumur.

Who should I contact if I have further questions?