Councils have threatened to legally challenge a decision not to make local authorities priority creditors on the recovery of investments in a failed Icelandic bank.

The Winding Up Board of Glitnir Bank, in which local authorities have deposits of £217m, has opted to specify the claims as ‘general unsecured’ rather than ‘priority’ under the Icelandic Bankruptcy Act.

Without priority status, authorities would be likely to get in the region of 25-30% of their deposits back rather than 100%. . . .

Glitnir’s decision is at odds with that of Landsbanki, where council deposits of £414m were last month recognised as priority  claims.   Local Government Chronicle website - 15-Dec-09.

http://www.lgcplus.com/finance/lga-issues-legal-threat-over-icelandic-investments/5009672.article