On April 10, 2025, the holders of Housing Financing Fund (HFF) bonds issued by the Housing Financing Fund (ÍL-sjóður) approved the Icelandic government's settlement proposal regarding the bonds. The proposals were developed by a negotiation committee appointed by the Minister of Finance and Economic Affairs, in cooperation with the pension funds’ advisors, LOGOS and Arctica Finance. The proposals entailed that claims under the HFF bonds, valued at 651 billion króna (€4.5 billion), would be settled by ÍL-sjóður and the Icelandic government delivering new government bonds worth 540 billion króna (€3.73 billion), other securities owned by ÍL-sjóður worth 38 billion króna (€262.6 million), and 73 billion króna (€504.7 million) in cash, of which euros equivalent to 55 billion króna (€380.1 million).
LOGOS began working on the matter as early as October 2022, following the release of a report by the Ministry of Finance and Economic Affairs on the status of the Housing Financing Fund. According to the Ministry, the report's findings supported initiating the process of dissolving the fund, enabling the distribution of its assets and the settlement of its liabilities. However, it was immediately clear that the government’s initial plan involved settling the claims based only on the bonds' principal and accrued interest, which would have resulted in significant losses for bondholders. LOGOS then conducted a legal analysis which demonstrated that such an approach would amount to expropriation in violation of constitutional provisions. It became evident that there was a fundamental disagreement between the Icelandic government and bondholders regarding the legal basis of the claims.
In February 2024, the Minister of Finance and Economic Affairs and representatives of 18 pension funds represented by LOGOS reached an agreement to begin negotiations on a settlement of the fund’s bonds. The goal of the negotiations was to reach a full settlement of the bonds and create the conditions necessary for dissolving the fund. By March 2025, the Minister’s negotiation committee and the pension funds’ advisors had jointly drafted proposals for such a settlement, which were subsequently approved by the bondholders at the aforementioned meeting on April 10, 2025.
LOGOS welcomes this outcome and the important collaboration that led to the approval of the settlement proposals. This milestone represents a major step toward resolving a complex situation and lays the foundation for a more stable financial market in the future.
The project was led on behalf of LOGOS by Supreme Court attorneys Óttar Pálsson and Hjördís Halldórsdóttir.