Judge holds up BCCI payout

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BRITISH creditors of the collapsed Bank of Credit and Commerce International last night welcomed a decision by a judge in Luxembourg to delay the implementation of a compensation plan.

The judge, Maryse Welter, delayed until 7 October a hearing to approve it, saying that it was unclear whether the compensation plan would really benefit creditors.

The unexpected postponement surprised lawyers involved in drawing up the settlement, to which Abu Dhabi is to contribute between dollars 1.2bn and dollars 2.2bn.

There were suggestions in London that the delay risked undermining agreement to the plan by the Abu Dhabi authorities, although there was no reaction to the court decision from the Gulf last night.

Keith Vaz, the Labour MP who has been campaigning for a better deal for those who lost out when BCCI collapsed last July amid allegations of fraud, said: 'It's a brilliant decision and the first court decision which will please creditors and former depositors in Britain.'

The settlement has been approved by courts in London and the Cayman Islands.

Luxembourg is the only country standing out against the plan. All three must agree before it can go ahead.

Judge Welter ordered that all unsecured, known creditors of BCCI in Luxembourg should be consulted by the bank's liquidators in Luxembourg before 1 October.

On Friday, attempts by British creditors to get a better compensation deal were overturned by three appeal judges in London.

Under the terms of the settlement, Abu Dhabi's cash injection and the proceeds of the bank's liquidation would produce enough cash to pay back 30 per cent to 40 per cent of creditors' losses.

Creditors would have to give up legal claims against the emirate to receive the cash payment.