Icelandic Tycoon Declared Bankrupt Skip to content

Icelandic Tycoon Declared Bankrupt

By Iceland Review

Icelandic tycoon, former Landsbanki chairman Björgólfur Gudmundsson, was declared bankrupt by Reykjavík District Court last week, according to his own request, on the basis that he isn’t capable of paying his debts.

Björgólfur Gudmundsson. Photo by Geir Ólafsson.

Gudmundsson’s personal debts amount to ISK 96 billion (USD 760 million, EUR 480 million) and his assets have depreciated by ISK 143 billion (USD 1.1 billion, EUR 720 million) since the beginning of 2008, Fréttabladid reports.

Gudmundsson is the second Icelandic tycoon to be declared bankrupt since the banking collapse in fall 2008. The first was Magnús Thorsteinsson, Gudmundsson’s business partner.

Thorsteinsson’s bankruptcy amounted to ISK 930 million (USD 7.4 million, EUR 4.7 million) and was at the time the largest bankruptcy of an individual in the history of Icelandic business. Gudmundsson’s bankruptcy is about 100 times more extensive.

Gudmundsson said in a statement that his personal assets and assets within companies in which he held a large stake were worth at least ISK 143 billion at the beginning of 2008.

ISK 81 billion thereof were held in Landsbanki, ISK 28 billion in investment bank Straumur-Burdarás, ISK 16 billion in transport company Eimskip and ISK 15 billion in the English football club West Ham.

After the collapse next to none of these assets were intact. The Icelandic state took over Landsbanki in October 2008 and Straumur-Burdarás went the same way early this year, while West Ham was taken over by a company owned by Straumur-Burdarás.

Gudmundsson has personal liability for extensive debt, ISK 96 billion. The final amount of the personal liability depends on how much will be paid out to claimants of companies that are in bankruptcy proceedings.

Some of Gudmundsson’s debts fall onto his son, Björgólfur Thor Björgólfsson, often spoken of as Iceland’s first billionaire, because of their joint liability. That includes their ISK 6 billion debt to Kaupthing bank because of their 2003 acquisition of Landsbanki.

Ásgeir Fridgeirsson, spokesman for Gudmundsson and Björgólfsson, told Fréttabladid that he is unaware of how much of Gudmundsson’s debts will be taken over by his son but that it is not a large part.

Click here to read more about Gudmundsson’s and Björgólfsson’s debt to Kaupthing.

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