New York (HedgeCo.Net) – The government in Iceland is still refusing to speak to the hedge funds and other creditors that are trying to get their claims paid out. Bloomberg reports.

Kaupthing Bank, Glitnir Bank and Landsbanki Islands defaulted on $85 billion over 5 years ago. The government says solving the problem is not even on its agenda.

“Because these actors have such huge funds in the agreement, or will have, if such an agreement is reached, it will affect whether or not, and when, we can lift the capital controls,” Prime Minister Sigmundur D. Gunnlaugsson said yesterday in an interview in Reykjavik. “It’s in everyone’s interest to create a situation which would allow for the lifting of controls.”

“A number of the creditors waiting to get their money back are hedge funds that had bet on a faster resolution of Iceland’s banks. Firms including Davidson Kempner Capital Management LLC and Taconic Capital Advisors LP bought claims on the lenders’ assets at prices well below face value.” Bloomberg reports.

“It seems they’ve been waiting to see whether the government would somehow step into the process,” Gunnlaugsson said. “But this is not a project for the government. The only role of the government here is to assess whether they come up with a solution which allows for the lifting of the controls.”

The creditors in question “are just private entities trying to reach an agreement regarding a private debt,” he said. “So the state — the government — has nothing to do with that. We’re not in talks with those creditors and we won’t be. Never were going to be.”

Alex Akesson
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