Dec. 20 (Bloomberg) -- An Icelandic court ruled that Magnus Gudmundsson, the former head of the Luxembourg subsidiary of failed lender Kaupthing Bank hf, must repay loans given to him by the bank to buy its shares.
Gudmundsson is liable for a 717.3 million-krona ($5.8 million) loan the bank provided, according to the ruling announced today by Reykjavik District Court. The court upheld a freezing order on a 20 percent stake in Gudmundsson’s limited liability company Hvitsstadir ehf, which was imposed by the Reykjavik District Magistrate’s Office in June.
Less than two weeks before Kaupthing’s failure in October 2008, its board sought to revoke personal liability on loans given to a number of executives in connection with purchasing stock. The decision followed a drop in the lender’s share price.
--Editors: Jonas Bergman, Christian Wienberg
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