Toska ordered to pay Nordic Pharma more than ISK 340 million

Reykjavik District Court has ordered Toska ehf., a company owned by Jón Hilmar Karlsson, son of Karl Emil Wernersson, to pay Nordic Pharma Investment Ltd. more than ISK 340 million plus default interest, mbl.is reported. The ruling was issued on Monday.

Nordic Pharma, which is owned by Karl Emil’s bankruptcy estate, had sought more than ISK 440 million plus default interest. The court reduced the claim because some of the interest was time-barred and ordered Toska to pay ISK 2.5 million in legal costs.

The case concerned two bonds Toska issued in June 2012 in connection with the Central Bank of Iceland’s investment route, part of a plan to lift capital controls after the financial crash. Nordic Pharma, then owned by Karl Emil, bought the bonds. Toska was also owned by him and served as the parent company of his group of assets.

The bonds had a combined face value of ISK 240 million and carried fixed interest of 7.8 per cent. Under their original terms, they were to be repaid in five instalments between 2018 and 2022. It was undisputed that Toska had never made a payment on them.

Toska argued that Nordic Pharma had forgiven the debt in 2013, citing an email from Karl Emil that year, Nordic Pharma’s accounts and the fact that no collection action had been taken. The court said Toska bore the burden of proving the debt had been waived. Although a written agreement was not required, the company had not established that the debt was forgiven.

The court noted that Toska had continued to record the debt in its annual accounts. The company attributed this to caution and the terms of the bonds. An auditor who had signed a statement about the alleged waiver told the court that the information and the explanation for continuing to record the debt had come from Karl Emil. The auditor had not independently verified it and did not work for Toska when the debt was said to have been waived. The court therefore did not rely on the statement in deciding whether the waiver had been proved.

The court also found that the lack of collection action or notification of default had limited evidentiary value, as both companies had originally been owned by the same person and were later owned by people close to him.

The bonds were removed from Nasdaq’s securities registry in 2023 at Toska’s request. That year, the company’s accounts also showed its long-term liabilities falling from more than ISK 337 million to zero, without explanation. The court said the bonds’ removal from the registry did not extinguish the claim. Nordic Pharma could bring a civil case to collect it, but would have to establish that the claim existed, prove its terms and show that it was the proper creditor.