Baugur Group put into liquidation

The District Court refused Baugur Group's petition for an ongoing moratorium yesterday. The judge ruled that plans for company reorganisation were unrealistic.

The Board of Baugur Group decided to file for bankruptcy yesterday, following the District Court of Reykjavik's decision regarding an ongoing moratorium. Kristín Jóhannesdóttir, chairman of the board of Baugur, released a statement saying that the District Court's decision is a great disappointment and comes as quite a surprise since the Board is of the opinion that the company had met all requirements for an ongoing moratorium and that the plans for reorganisation were realistic. "The management and employees of Baugur have been working hard to save all valuables within the company, in collaboration with company claimants ever since last fall when the Icelandic banking system collapsed, due to the credit crunch. We believed ourselves to be well on our way to reach a deal which would have satisfied all parties," reads Kristín's statement.

The District Court's finding is that Baugur Group's plans for reorganising are unrealistic and not likely to put new order on the company's finances. The Court therefore agrees with the arguments given by Glitnir Bank's Resolution Committee and Íslandsbanki, who also demanded that the company would not be given a prolonged moratorium, and would be put into liquidation. Ragnar H. Hall, Baugur Group's lawyer says the decision is of course a disappointment. The Court's ruling is final, since it is not open to appeal. According to the District Court's ruling, Baugur Group's debts exceeded its assets by over ISK 148 billion in January and that Baugur owes Íslandsbanki a little under ISK 6 billion, and approximately ISK 42 billion to Glitnir.