Baugur: who knew what?

Baugur's financial woes were known about almost a year before it finally collapsed, a new book claims.

According to The Icelandic Miracle, published in Iceland last week by former Icelandic stockbroker Jn Fjornir Thoroddsen, Baugur - which spectacularly fell into administration in February this year - was struggling to meet bond obligations as long ago as March 2008.

Baugur strongly denies the allegations in the book, which claims that senior management at Kaupthing - the now nationalised Icelandic bank that provided financial backing to Baugur and its UK retail investments, as well as snapping up direct stakes in some - held a meeting with Kaupthing's bond brokers on March 19, 2008.

The meeting was held to discuss Baugur's financial situation after issuing bonds for billions of Icelandic krona.

In February this year, after the collapse of Kaupthing and fellow Icelandic banks Glitnir and Landsbanki in October, Baugur fell into administration, leaving the future of UK retailers including House of Fraser, Hamleys, Iceland, Aurum and the now defunct fashion group Mosaic hanging in the balance.

"So it was in March 2008 that 30 to 40 people in Iceland learned that Baugur, the biggest debtor of all the Icelandic banks, was having financial problems," writes Thoroddsen

In an interview last week with Icelandic newspaper Morgunbladid, Baugur chief financial officer Stefan Hilmarsson said that Baugur's cash position was strong at the time of the 2008 meeting. He said that there was equity of ISK58.3bn (£277.34m) and cash in hand of ISK10.3bn (£49m) at that time.