LONDON - The British High Court has rejected an appeal seeking to block a worldwide compensation plan for former depositors of the collapsed Bank of Credit and Commerce International.
The plan, backed by Abu Dhabi officials and others controlling BCCI stock, was approved by the court last month in the face of objections by some creditors who complained it was inadequate.
If implemented, the multinational plan would result in a 30% to 40% payback to those who lost the equivalent of about $19 billion when BCCI was closed last July amid allegations of widespread fraud.
The High Court's ruling prevented the dissident creditors from pleading their case before the House of Lords, Britain's top legal authority.
The compensation plan is awaiting a last crucial endorsement today by a Luxembourg district court. In addition, the Cayman Islands, the other jurisdiction involved in the negotiations, has given its assent.
Lawyers said they were unsure how the judge in Luxembourg would rule. Three days of hearings were held in late June and early this month.
As a condition to receiving compensation, BCCI creditors would have to give up legal claims against Abu Dhabi, which has agreed to contribute $1.7 billion in cash.
"I'm surprised the judgment is coming so quickly after the hearings because the documentation is so vast," said Andre Elvinger, the lawyer who represented Luxembourg's bank regulator, the Luxembourg Monetary Institute.
Abu Dhabi Criticized
In the hearings, the regulator criticized BCCI's Abu Dhabi owners for not being passive investors and therefore being vulnerable to legal action.
Elsewhere, special managers of the Bank of Credit and Commerce Hong Kong Ltd. unveiled a plan that could result in full repayment to 85% of its creditors.
The center of controversy for a year, the Hong Kong unit was once seen as divorced from the scandal surrounding its Luxembourg-based parent.