The District Court of Reykjavik has refused Baugur Group’s petition for an extension of the moratorium of the company, forcing it to file for bankruptcy.
Baugur applied for an extension to its moratorium to give it more time to sort out its affairs. The investment firm first applied for the moratorium, which temporarily granted it suspension of payments, after its UK division went into administration.
Baugur Group chairman Kristin Johannesdottir said: “The court‘s ruling is a disappointment to everyone at Baugur. We believe that the company fulfils all the conditions for the extension and that the restructuring plan was viable. However, following the ruling, we have no choice but to file for bankruptcy.”
He added: “The management and employees of Baugur have been working hard to save the company’s assets in co-operation with its creditors since the collapse of the Icelandic banking system in October 2008. The Board of Directors of Baugur Group would like to express gratitude to the employees and everyone else the company has had the pleasure of working with in recent years.”
Icelandic firm Baugur was hit hard by the collapse of the Icelandic banking system earlier this year, and the highly leveraged company struggled to recover.