Document Type

Case Study

Case Series

Resolution and Restructuring

JEL Codes

G01, G29


The nationalization of Iceland’s Kaupthing Bank hf on October 9, 2008, caused a situation of cross-default and a depositor run at its subsidiary, Kaupthing Bank Luxembourg S.A. (KBL). A cross-default entitles creditors to request immediate execution of their claims. KBL responded on the same day by requesting and receiving a suspension of payments regime (including depositors) from a Luxembourg court, which also appointed administrators. The administrators placed KBL’s operations for sale later that month, receiving a bid from a private fund, Blackfish Capital, which crafted a restructuring plan that creditors approved on June 5, 2009. The restructuring plan, carried out on July 10, 2009, resulted in the transfer of domestic deposits to Blackfish Capital’s Banque Havilland, the transfer of Belgian deposits to Crédit Agricole Group, and the transfer of remaining assets to a special purpose vehicle (SPV) called Pillar Securitisation. Luxembourg and Belgium each lent EUR 160 million (USD 222 million) to KBL as part of the restructuring. Banque Havilland administered the SPV on behalf of creditors, including the two governments. All prior KBL depositors were 100% protected. Creditors with claims in the SPV, including the Luxembourg and Belgian states, had recovered 50% as of mid-2012.