'Inexplicable' - KCC baffled by Glitnir setback
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Exclusive by
political editor Paul Francis
Kent County Council has suffered an
unexpected setback in its efforts to recoup millions of pounds
deposited with Icelandic banks.
The authority has been told that administrators for one of the
banks, Glitnir, are not now regarding local councils as
preferential creditors.
The development is an unwelcome one because if the position is
maintained, it could place a question mark over the prospect of KCC
getting all its money returned.
Any assets will have to be distributed among all the bank’s
outstanding creditors, with UK councils among the 8,685 claims
lodged with Glitnir for a total of 3.4billion Krona.
Icelandic chill for Kent - read Paul's
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KCC has £15million tied up with Glitnir and only a fortnight
ago, a report presented to councillors was optmistic that it was on
course to recover 100 per cent of the money, partly because one of
the other banks - Landsbanki - confirmed it was treating councils
as priority creditors.
But that situation has unexpectedly changed in a move described
as "inexplicable" by finance chiefs.
The development also has possible repercussions for Canterbury City
Council, which has £2million on deposit with Glitnir.
Cllr John
Simmonds (Con) KCC cabinet member for finance, said legal
challenges to the priority status of councils were expected but
that administrators had appeared to have pre-empted that
possibility by effectively asking councils to prove why they should
be considered a priority.
"We have just been informed that the Icelandic Bank Glitnir
appears to have rejected depositor claims for priority status.
Their most recent statement is in conflict with all discussions
over the last year with the Icelandic government, legal advisers
and the banks themselves," he said.
He added that the position of bank's adminstrators contrasted
with Landsbanki, which KCC has £17million tied up in.
"The return of these deposits is a lengthy and complex process
and challenges at this early stage were always expected. Our legal
advisers are currently attempting to establish the reasons for this
position which we find inexplicable following all previous
discussions."
County Hall finance chiefs are travelling to Iceland on
Wednesday for a creditor’s meeting and talks with the banks’
administrators, along with representatives from the Local
Government Association and legal advisers.
Of the total of £50million KCC had on deposit, just under
£3million has so far been returned.
Tuesday, December 15 2009
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