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7 maltatoday | SUNDAY • 2 AUGUST 2020 NEWS MATTHEW VELLA BANK of Valletta has offered a €50 million out-of-court settle- ment to Italian bondholders of the defunct Deiulemar shipping company, in return to drop a claim against the bank for €363 million. The offer was communicated to the controllers of the Torre d'Annunziata shipping compa- ny, whose fraudulent bankruptcy left thousands with lost savings after investing in the company's bonds. The offer also comes two years after BOV appealed an Italian court's order for a precautionary warrant that requested it to hive off €363 million, as a provision for damages requested by bond- holders. The Italian court in Torre d'Annunziata, a province of Na- ples, upheld the claim back in March 2018 after it was brought by liquidators of the Deiulemar group and representatives of the company's 13,000 Italian bond- holders. The reason Bank of Valletta is facing such a lofty claim for damages is because it had taken over a trust that held €363 mil- lion in assets of the Deiulemar company in 2009, which filed for bankruptcy in 2012. Two years later, seven members of the three founding families of the Deiulemar company were jailed for up to 17 years for illegal fi- nancial transactions when the company collapsed. It was de- clared bankrupt in 2012 owing more than €800 million. Bank of Valletta confirmed that it had made the offer to the Dei- ulemar bondholders. "The bank has consistently been advised by its lawyers that the Deiulemar case is complete- ly without merit. The advice has recently been confirmed by Ita- ly's leading legal authority in this area, and that advice has been brought to the attention of the court. This notwithstanding, the bank faces a most unusual risk in this litigation. It is seeking to eliminate that risk through proceedings filed before the Eu- ropean Court of Human Rights, and other measures," a spokes- person for the bank told Malta- Today. "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 com- mercial sense to offer a settle- ment to the curators in order to close this matter. The offer was made on a confidential, privi- leged basis. "Despite this, the offer has been (improperly) leaked in Torre Annunziata. The bank does not, of course, deny it has been made. However, the offer was not a result of any change the bank's conviction that the claim is entirely unmeritorious. The offer – which was rejected – was aimed at finding a prag- matic solution." 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 cred- itors and the 13,000 retail in- vestors who subscribed to their bonds. BOV has insisted that it was never in possession of any funds as a trustee when it was estab- lished in 2009, and the only trust assets it held consisted of shares in a Madeira-registered compa- ny, part of the Deiulemar group. According to local press, the offer was deemed "insufficient and inadmissible" by the cred- itors' committee of the Deiule- mar bondholders. BOV had insisted it was deter- mined to take all the action re- quired in any forum to defend itself against what it said were unfounded allegations levelled against it in the Italian Court of Torre Annunziata. Then, in 2019, it filed proceed- ings against Italy before the Eu- ropean Court of Human Rights in Strasbourg, trying to ensure a 'fair hearing' in the €363 million Deiulemar case. The bank had previously in- sisted that it was in a strong legal position to win the Italian case, on the basis of the fact that the events which caused the default of Deiulemar occurred before the bank became the trustee of the Deiulemar Trust. One of the pertinent issues the bank is facing is the location where the case is being heard, being the Tribunal of Torre Annunziata in Italy, which according to bank officials, could be biased due to the majority of the creditors originating from this relatively small provincial town. The Italian case force the bank to make a €75 million provision in 2018, which also affected the share price of the bank as it came under pressure from its in- creased risk profile, a suspension of the dividend that year, and the insecurity surrounding the future events it was exposed to. BOV's €50 million to Italian bondholders rejected Bank of Valletta attempts out-of-court settlement over €363 million claim from bondholders in bankrupt Italian shipping company