Today (Friday 28 October 2011) the Icelandic Supreme Court delivered a favourable judgment (voting 6 to 1 in favour) in the dispute concerning the status of funds placed by UK local authorities and other UK wholesale depositors with the Icelandic banks Glitnir and Landsbanki prior to their collapse. The Supreme Court upheld the decision of the Reykjavik District Court recognising the claims as deposits with priority status.
At the time of the collapse in October 2008, 145 Authorities with approximately £1.1bn on deposit with Iceland banks were faced with the potential loss of significant funds.
The successful judgment in the wholesale deposit test cases means that the Local Authorities (along with leading Universities including Oxford, Cambridge and other wholesale depositors) affected by the collapse of the banks will be at the front of the queue when it comes to getting their money back. Current estimates mean this could make a difference in excess of £470 million to their global recoveries and mean that they will recover almost all of the funds they had on deposit with Glitnir and Landsbanki.
Leading public services law firm Bevan Brittan LLP were appointed to act on behalf of the Local Authorities as part of a collective action co-ordinated and led by the Local Government Association (LGA). The firm also represents ten universities, one public sector organisation and a national energy company who also had wholesale deposits with the Iceland Banks.
Commenting on the victory, lead Bevan Brittan partner Virginia Cooper said “This decision comes more than three years after the banks failed and has vindicated the local authorities and other wholesale creditors who always believed they had deposits with the Icelandic banks. It is testament to the hard work and commitment which has been contributed by everyone, including our clients, to win this fantastic result. The prospect of recovering almost all of the money they had with the Icelandic banks will be a huge boost to our clients at a time when many are facing significant budget cuts.”