BOV reaches deal to pay €182 million in ‘full and final’ settlement of Deiulemar bankruptcy case

Bank of Valletta (BOV) has reached a settlement to pay €182 million in the Deiulemar bankruptcy saga, it announced on Tuesday.

The deal comes after the bank was ordered by an Italian court in February to forfeit a €363 million precautionary security, plus court and legal fees, in a claim filed on behalf of 13,000 bondholders of Deiulemar group.

Soon after, the bank said it would be appealing the deal.

The claim against Malta’s most important bank was filed by liquidators of the Deiulemar Group, and representatives of 13,000 Italian bondholders who lost their live savings due to a fraudulent scheme dating back to 2009.

The €363 million claim reflected the amount held in a trust opened by the owners of the now-collapsed shipping giant Deiulemar.

BOV had taken over this trust in 2009, while Deiulemar filed for bankruptcy in 2012, with losses of more than €800 million on its books. This led to seven people linked to the shipping giant being jailed.

In the liquidator’s claim against BOV, the bank was accused of allowing Deiulemar owners to set up three trusts in 2009 – Capital, Giano and Gilda, which they accuse the owners of illegally funnelling millions into.

In 2020, BOV had offered a €50 million out-of-court settlement to the bondholders, in return for the claim by liquidators being dropped, however this was rejected.

In its statement announcing the new settlement, the bank detailed that following the filing of its appeal, it engaged with the curators of the bankruptcy of the Deiulemar group to explore the possibility of finding a mutually satisfactory resolution out of court.

Under the deal, neither party admits to liability and the bank will pay €182.5 million to the curators in “full and final” settlement of the disputes and of all claims that had been made by the curators against the bank.

“The bank will henceforth be in a more secure capital position overall and will be better placed to carry out its business with confidence and sustainability,” it said.