Bank of Valletta has reached a €182.5 million settlement over the long-drawn-out Deiulemar bankruptcy case in Italy.

In a company announcement on Tuesday, the bank said the settlement had been reached out of court.

Shareholders of the collapsed shipping giant were found guilty of fraud and seven members of the company's founders were jailed by an Italian court in 2014.

BOV had taken over a trust that held €363 million in the company's assets in 2009. When the company went bankrupt, bondholders whose savings were wiped out turned to BOV.  

The bank was on the hook for a €370 million payment to Deiulemar shareholders after losing its case in February before the Italian courts.

The bank said it had filed an appeal in March, and subsequently engaged with Deiulemar curators to explore the possibility of a “mutually satisfactory resolution to the dispute out of court”, and to mitigate the further litigation risk on appeal.

BOV said an agreement was reached earlier on Tuesday, whereby, without admission of any liability on either party, the bank will pay €182.5 million as a settlement of the disputes and of all claims that had been made by the curators against the bank.

The bank said the settlement will put it in a more secure capital position, and will make it better placed to carry out its business “with confidence and sustainability”.

In 2018, the bank had placed in excess of €363 million in the hands of an independent entity, following an order from the Tribunal of Torre Annunziata as precautionary security.

Two years later, BOV offered bondholders €50 million in an attempt to settle the case. The offer was turned down.

The bank said at the time that the out-of-court settlement offer was made in an attempt to find a “pragmatic, commercial solution” to a messy problem.

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