Kaupthing launches its composition proposal
Creditors have previously indicated that the implementation of a composition proposal, as opposed to bankruptcy proceedings, is the preferred route to achieve distributions from the Kaupthing estate. On that basis, the winding-up committee (the “Winding-up Committee”) of Kaupthing hf. (“Kaupthing”) has focused on ending Kaupthing’s current winding-up proceedings through a composition as soon as realistically achievable in order to effect distributions to unsecured creditors. Distributions to unsecured creditors, either through a composition agreement or bankruptcy proceedings, are, however, subject to certain currency control restrictions under the Act on Foreign Exchange (No. 87/1992) (the “Foreign Exchange Act”). As a result of these restrictions, certain exemptions granted by the Central Bank of Iceland (the “CBI”) after consultation with the Minister of Finance and Economic Affairs (the "Minister of Finance") and following a presentation by the Minister of Finance to the parliamentary committee on economic affairs, are required in order for distributions to unsecured creditors to be possible.
Kaupthing originally submitted an exemption application with respect to the restrictions under the Foreign Exchange Act on 24 October 2012 (the “October 2012 Exemption Request”), in order for Kaupthing to be able to make distributions to unsecured creditors pursuant to an approved composition agreement. However, prior to the CBI making any decision with regard to the October 2012 Exemption request, the applicable legal framework changed dramatically.
On 8 June 2015 the Icelandic Government announced its strategy for capital account liberalisation. The Government’s solution concerning the failed financial institutions’ estates, including Kaupthing, is twofold: stability conditions have been introduced and a 39% stability tax put in place, to be levied on the assets of the estates as at 31 December 2015 (the “Stability Tax”). According to current legislation, if the estates can complete composition agreements by the end of 2015 (subject to certain legal amendments which are currently under consideration by the Government and which could, if implemented, provide for an extension to the deadline for court approval of composition agreements until 15 March 2016), they can obtain authorisation to transfer funds, provided that they fulfil the stability conditions; otherwise, they will be subjected to the Stability Tax. The stability conditions and the Stability Tax are intended to prevent adverse effects on Iceland’s balance of payments stemming from the distribution of the domestic assets of the estates into the foreign exchange market.
As a consequence, unless Kaupthing satisfies the stability conditions and concludes its current winding-up proceedings with an approved composition agreement within the given time frame, its estate will be subjected to the Stability Tax. Accordingly, Kaupthing is working to achieve an approved composition agreement within the given time frame.
On 8 June 2015, the Ministry of Finance and Economic Affairs announced that it had received a letter from representatives of certain of the larger creditors of Kaupthing proposing a package of voluntary measures designed to neutralise the balance of payments risks posed by the ISK denominated assets in the Kaupthing estate (the “Original Stability Proposal”).
The Original Stability Proposal was made as a basis for Kaupthing to fulfil the stability conditions and hence receive exemptions from the Foreign Exchange Act and to proceed with the intended composition. The Original Stability Proposal involved Kaupthing making certain payments to the CBI and entering into certain other arrangements for the benefit of the CBI (the “Original Stability Contribution”).
On that basis, Kaupthing submitted to the CBI on 4 September 2015 an updated request for certain exemptions from the Foreign Exchange Act (the “September 2015 Exemption Request”), in which it agreed that, subject to approval from the requisite majority of creditors and the intended composition becoming effective, it would implement the Original Stability Proposal and subsequently make distributions to its creditors as part of the approved composition.
An open creditors’ meeting was held on 30 September 2015 where creditors holding 77.06% of Kaupthing’s unsecured claims approved the making of the Original Stability Contribution by 99.94% of votes cast.
Revised exemption request
Kaupthing received a written response from the CBI with respect to the September 2015 Exemption Request on 23 September 2015. Following further consideration, including consultation with its informal creditors committee, Kaupthing submitted a revised exemption request on 21 October 2015 (the “October 2015 Exemption Request”) including an adjusted stability contribution (the “Revised Stability Contribution”). In the October 2015 Exemption Request, Kaupthing agreed that, subject to the composition becoming effective, it will implement the Revised Stability Contribution.
Following the submission of the October 2015 Exemption Request and the changes to the Original Stability Contribution contemplated therein, Kaupthing proposes to hold a further open creditors’ meeting in order for creditors to consider, and if thought fit approve, among other things, the making of the Revised Stability Contribution.
Key adjustments to the Original Stability Contribution are as follows:
• the ISK-denominated secured promissory note to be granted by Kaupthing in favour of the CBI shall be repayable only from the proceeds of the sale by Kaupthing of its stake in Arion bank hf.
• the security for the ISK-denominated secured promissory note will, in addition to security over notes subscribed for by Kaupthing under Arion’s existing medium term note programme, also include Kaupthing’s shares in its wholly-owned subsidiary Kaupskil ehf.
• Kaupthing will make regular payments of its available ISK-denominated cash, net of certain agreed hold backs, to the CBI free of charge and without reducing the principal amount outstanding under the promissory note granted by Kaupthing in favour of the CBI
• Kaupthing will make its current foreign exchange deposits with the CBI available to Arion by subscribing for notes under Arion’s existing medium term note programme
Today, the CBI announced that it has concluded that the Revised Stability Contribution satisfies the requirements set forth in the Foreign Exchange Act, and that the fulfilment of the composition agreement together with the proposed countervailing measures will not jeopardise monetary, exchange rate or financial stability, which are the conditions for providing the necessary exemptions from currency control restrictions.
Kaupthing now awaits a formal response from the CBI to the October 2015 Exemption Request. Once the exemptions contemplated by the October 2015 Exemption Request are granted by the CBI, Kaupthing will be able to make payments to its unsecured creditors pursuant to an approved composition agreement, subject to making the Revised Stability Contribution in favour of the CBI, or other such entity as the CBI may designate. Kaupthing will provide creditors with an update on the progress of the exemption application in due course.
On Friday, 23 October 2015, Kaupthing gave notice to its creditors of the launch of its composition proposal by making the proposal document and related information memorandum available to those creditors which are entitled to vote on the composition proposal according to the Act on Bankruptcy (No. 21/1991), via its secure website available at http://creditors.kaupthing.com
and at the opening hours of its offices at Borgartún 26, 105 Reykjavik, Iceland.
Login details for the secure website have been previously provided to creditors. Creditors who are unable to access the secure website or who have not received login details should please contact Kaupthing’s information agent immediately using the details below:
Epiq Bankruptcy Solutions, LLC Epiq Systems Ltd.
777 Third Avenue, 12th floor 11 Old Jewry, 4th Floor
New York, NY 10017 U.S.A. London EC2R 8DU
Attn: Kaupthing Information Agent Attn: Kaupthing Information Agent
Phone: +1 (646) 282 2423
Kaupthing is convening two open creditors’ meetings in November 2015, including (i) an open creditors’ meeting on or around 11 November 2015, to provide an update on the composition process and seek creditors’ support in relation to the making of the Revised Stability Contribution and (ii) if that is supported, a second open creditors’ meeting on Tuesday, 24 November 2015 to vote on Kaupthing’ composition proposal.
The Winding-up Committee is, as ever before, committed to do its utmost to ensure that the winding-up proceedings can be concluded through an approved composition agreement before the year end, subject to the Revised Stability Contribution and the composition proposal being supported by the requisite majority of creditors in creditors’ meetings and subject to the CBI granting the necessary exemptions from currency control restrictions.
Quelle: http://www.kaupthing.com/home/announcem ... -proposal/