8. jul 2020
Orkuveita Reykjavíkur has today assigned their general counsel to appeal the verdict of the District Court of Reykjavík to Landsréttur Appeal Court, wherein the company is made to pay the amount of 740.000.000 ISK plus interest as settlement of derivative contracts agreed with Glitnir Bank during the years before the collapse of the banking system in Iceland.
The verdict does not consider the main arguments of Orkuveita Reykjavíkur in this matter. Firstly, that Glitnir Holdco the plaintiff, is not legally involved in this case since the claim was assigned to the Icelandic State in 2016. Secondly, an Appraisal report by Court-Appointed Assessors was presented to the court on behalf of OR stating that the bank was in fact insolvent as of January 2008 and existing contracts thus defaulted at the time and derivative contracts dating after that time would not have come to existence.
OR has reported the legal proceedings in the company‘s financial statements and has set aside the principal amount of the insolvency board’s claim, 740.000.000- ISK as a precautionary measure. The final verdict’s amount, however, will not be payable until the final decision of the courts has been reached, be it in The Courts of Appeal or The Supreme Court of Iceland.
From the Financial Statement:
Among other current liabilities are derivative contracts accounted for that are in default. The contracts have not been settled and Orkuveita Reykjavíkur has recently been sued regarding the claims. Great uncertainties is on how to settle them. In previous periods ISK 740 million have been expensed. This action is in no way an admittance of the debt on Orkuveita Reykjavikur's behalf and the amount can either increase or decrease when the contracts are settled. The contracts are accounted for among other current liabilities.