The Malta Independent 4 December 2020, Friday

BOV €50 million out-of-court settlement offer to Deiulemar bondholders rejected

Tuesday, 4 August 2020, 13:01 Last update: about 5 months ago

Bank of Valletta has offered a €50 million out-of-court settlement to Italian bondholders of the defunct Deiulemar shipping company, in return for them to drop a claim against the bank for €363 million, however it has been rejected.

The offer, reported by MaltaToday, comes two years after BOV appealed against a court order for a precautionary warrant that requested it to hive off €363 million as a provision for the damages requested by the 13,000 bondholders.

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The offer was confirmed to the newspaper by BOV, who said that while the bank has been consistently advised by its lawyers that the case is “without merit”, the bank faces a “most unusual risk in this litigation” and had hence sought to eliminate the risk through proceedings filed before the ECHR and other measures.

“But the risk at first instance remains. Because of this – and because of the consequential costs it may have to incur – the bank decided that it makes commercial sense to offer a settlement to the curators in order to close this matter. The offer was made on a confidential, privileged basis”, the bank told MaltaToday.

The offer however was improperly leaked and was rejected, the bank said before adding that the offer itself was not a result of any change in the bank’s conviction that the claim is “entirely unmeritious”.

The reason Bank of Valletta is facing such a claim for damages is because it had taken over a trust that held €363 million in assets of the Deiulemar company in 2009, which filed for bankruptcy in 2012.

The Deiulemar shareholders were found guilty of fraudulent bankruptcy, having transferred their assets to Maltese, Swiss, and British Virgin Islands trusts to avoid their exposure to creditors and the 13,000 retail investors who subscribed to their bonds.

BOV has always held that it was never in possession of any funds as a trustee when it was established in 2009, and the only trust assets it held consisted of shares in a Madeira-registered company, part of the Deiulemar group.

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