Bondholders clash with councils over £5bn Iceland cash

Bondholders who lost money in the Icelandic banking crash are poised for a legal battle with UK councils to renew their right to claim back £5bn they lost, the Telegraph has reported.

Local authorities lost around £1bn when Icelandic banks Landsbanki, Glitnir and Kaupthing failed in October 2008, and are still waiting for the bulk of the losses to be given back to them. However, bondholders owed $4bn (£2.5bn) - including hedge funds Arrowgrass, GLG and Varde - are fighting against the priority status given to local councils and the bail-out scheme by one of the banks, Landsbanki. A test case is due to start on Thursday in the Supreme Court of Iceland. As it stands, bondholders will receive nothing, while UK public bodies are likely to recover nearly all of their mo...