Tchenguiz settles £1.5bn civil case with Kaupthing


Nick Clark
Tuesday 20 September 2011 00:00

The property tycoon Vincent Tchenguiz has settled his £1.5bn dispute with the collapsed Icelandic bank Kaupthing, which has seen him regain control of a string of property assets.

Mr Tchenguiz, his Euro Group business and the trustees of the Tchenguiz Family Trust announced yesterday they had reached an agreement "to settle all claims" brought against Kaupthing, which is currently being wound up. Mr Tchenguiz said he was "delighted that we have been able to bring this complex matter to a satisfactory conclusion".

The move is expected to pave the way for Mr Tchenguiz to refinance a £2bn debt pile, while it also raised questions over the strength of allegations from the Serious Fraud Office against the property investor as part of its investigation into Kaupthing's collapse.

Kaupthing went into administration in October 2008. The Tchenguiz Family Trust, among others, submitted claims to the bank's winding-up committee as a priority creditor.

The committee rejected its claims, which prompted the trust to submit dual civil claims against Kaupthing in England and Iceland.

Kaupthing had lent Mr Tchenguiz £100m as part of a £2bn debt package that he has been unable to refinance without settling with the Icelandic bank. The case related to assets used as collateral against the loan. The collapse of the bank saw the ground rents on as many as 250,000 residential properties in effect frozen.

Mr Tchenguiz, who is the chairman of Consensus Business Group, said: "All the parties have had to take some very public steps in the wake of the collapse of Kaupthing, in 2008, in order to protect their respective legal rights.

"However, in the meantime, the strength of our asset base and the commercial opportunities available to us have enabled us to work together with Kaupthing to achieve an outcome which benefits everyone."

The settlement brings to an end the trust's actions in both jurisdictions, including the claims against Kaupthing's estate in Iceland.

In the statement, the trust said the terms of the agreement were confidential, but added: "All the parties have reached a mutually acceptable resolution." It has not settled with the Tchenguiz Discretionary Trust, whose main beneficiary is Vincent's brother Robert.

In March, the SFO arrested both men, although they were released the same day without charge, as it investigated Kaupthing's collapse. Earlier this month, Vincent joined in the application for a judicial review of the SFO's actions.

Now that the claims have been settled, one source close to the family said Kaupthing's written defence could weaken the SFO's case. A spokeswoman for the SFO said yesterday's developments would have no effect on its case. "Their case was civil, this is criminal," she said.

The SFO alleges Mr Tchenguiz had not revealed certain facts related to the £1.5bn security on the loan, yet in its written defence Kaupthing has said it was aware of those facts.

In the wake of the arrests, Bank of America Merrill Lynch called in a loan worth £124.6m from Mr Tchenguiz's Peverel Group, prompting that company to go into administration.

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