Dec. 9 (Bloomberg) -- Landsbanki Islands hf, the bank seized by Iceland’s government in October, entered U.S. bankruptcy to shield itself from lawsuits as it reorganizes during the financial crisis.

The bank listed more than $1 billion in both debts and assets today in a Chapter 15 petition in New York. It said Dec. 6 it received legal protection from creditors under a “moratorium” it expected to be recognized in countries belonging to the European Economic Area and the European Union.

Kristinn Bjarnason, a court-appointed assistant overseeing Landskbanki’s Iceland reorganization, said today’s filing will “prevent creditors in the U.S. from taking actions that may frustrate the Icelandic proceeding.” The bankruptcy code’s Chapter 15 stops lawsuits and helps foreign companies organize U.S. assets during their reorganizations overseas.

“The economy of Iceland is in the midst of an unprecedented financial crisis,” Bjarnason said.

Financial firms have taken $980 billion of writedowns, losses and credit provisions since the start of the crisis, including more than $281 billion among European institutions, according to data compiled by Bloomberg. More than 201,000 jobs have been cut across the financial services industry.

The bank’s U.S. assets include bank accounts, receivables for loans made to U.S. entities, and bonds and stocks held for hedging positions. Landsbanki has also issued five tranches of U.S. notes since 2006, worth $2.6 billion.

Bank’s History

Reykjavik, Iceland-based Landsbanki, founded in 1886, was privatized in 1997 and fell prey to runs on Iceland’s banks in September. Iceland’s government seized control of Landsbanki, Glitnir Banki hf and Kaupthing Bank hf, the nation’s three biggest, after they were unable to secure short-term funding.

The three banks together amassed debt of $61 billion, about 12 times the size of Iceland’s economy, according to Bloomberg data.

The case is In re Landsbanki Islands hf, 08-14921, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Tiffany Kary in New York bankruptcy court at tkary@bloomberg.net.

Last Updated: December 9, 2008 15:16 EST