Role of the Winding Up Board

The Winding Up Board must issue and have published twice in the Legal Gazette a notice to creditors on the winding-up. The following considerations apply to the notice of creditors and the time limit for submitting claims:

• the time limit for submitting claims is determined by the Winding Up Board, but it can be from two to six months from the date of the publication of the advertisement;
• in addition to its publication in the Legal Gazette, notice is sent to all known creditors of the bank abroad;
• claims received after the expiration of the time limit cannot be considered, except in exceptional cases. If such exceptions do not apply, the claims not properly submitted are void against the bank;
• the notice to creditors must state the location and time of a creditors meeting to review the list of claims submitted to the Winding Up Board. Such a meeting must be held within a month of the expiry of the time limit for submission of claims. At this same meeting the Resolution Committee must submit a report on its assessment of the bank's assets.

Following the expiration of the time limit for submission of claims, the Bank must compile a list of the claims submitted. At the same time, the Winding Up Board must make decisions on recognising individual claims and report on these decisions in the list of claims. Various rules are provided for in the Bankruptcy Act;

• if a claim is rejected by the Winding Up Board, the creditor must be verifiably notified of such rejection at least one week prior to the creditors' meeting. Further explanation of the Winding Up Board's grounds for rejection shall be provided at the meeting;
• a copy of the Winding Up Board's list of claims must be available and accessible to creditors who have submitted claims against the bank a week prior to the meeting;
• a creditor unwilling to accept the decision of the Winding Up Board on his claim must state his objections at the meeting or in a letter which must be received by the Winding Up Board no later than the time of the meeting. An account must be provided of the objections of the creditor concerned at the meeting. Furthermore, others entitled to attend the meeting may oppose the decision of the Winding Up Board on individual claims;
• a decision by the Winding Up Board on a claim, which is not opposed at the meeting shall be deemed to be final;
• if it proves impossible to conclude decisions on all claims submitted, due to the scope and number of claims, prior to the creditors' meeting, to convene a follow-up meeting, to conclude the process of deciding on recognition of claims.

Following the creditors' meeting held by the Winding Up Board in accordance with the above, the Winding Up Board is authorised to pay the claims recognised in part or in full. This is subject to certain conditions:

• only recognised claims may be paid;
  it must be ensured that the bank's assets are sufficient to pay all equally ranked creditors an equal proportion of their outstanding claims;
• if a dispute on a claim which could be entitled to payment has not been finally resolved, assets must be set aside to enable its payment later if it is recognised;
• despite the above condition, individual creditors may be paid in advance if they offer to waive their claims in return for partial payment, provided that it definitely comprises a lower amount than would be disbursed to the claim at a later stage given its ranking.

The ranking of claims against the bank is in the main as follows:

• assets and interests in the possession of the bank shall be delivered to a third party if the third party proves his entitlement;
• claims on the estate resulting from a contract concluded after the entry into force of the Act or claims arising after the reference date as a result of measures approved by the Appointee;
• claims secured by a collateral or other security interest in the bank's assets, to the extent they can be settled by means of the proceeds from sale of the relevant assets and any income derived from them;
• priority claims, including various wage claims and claims on deposits;
• unsecured claims, i.e. all other debts not included in the above categories;
• deferred claims.

The Act's entry into force, 22 April 2009 will set a cut-off point for interest and cost on priority claims and unsecured claims. Accordingly, interest and cost on such claims accruing after the entry into force of the Act will be deferred claims.

The appointment of a Winding Up Board will have an impact upon other committees and working parties currently within Glitnir:

• the Netting Committee will disband and its role will be assumed by the Winding Up Board;
• various aspects of the role of the Settlement Committee (e.g. assessments of claims subject to set-off) will be assumed by the Winding Up Board.