Reykjavik Court Orders Kaupthing’s Ex-Chairman to Repay Loan

Reykjavik’s District Court ruled that Kaupthing Bank hf’s former Chairman Sigurdur Einarsson was personally liable for a part of a loan he received from the failed lender.

Einarsson was found liable for 496 million kronur ($3.9 million) of the total 3.6 billion kronur he borrowed, according to the ruling. The court upheld a freeze on his assets pending an appeal to the Supreme Court.

Kaupthing’s board in a letter dated Sept. 28, 2008, had sought to revoke personal liability on loans given to a number of executives in connection with stock purchases after share prices declined. Kaupthing collapsed in October that year after it was unable to secure the short-term funding.

The bank’s resolution committee has made similar claims against a number of former executives, including then Chief Risk Officer Steingrimur Karason and the bank’s Ex-Iceland CEO Ingolfur Helgason.

To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik valdimarsson@bloomberg.net.

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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