The High Court in London has approved compensation worth $1,800 million for creditors of the closed Bank of Credit & Commerce International (BCCI), but a similar decision by a court in Luxembourg is awaited.

The Luxembourg court - which in 1993 rejected a previous settlement proposal - held hearings on 30 November-1 December and is expected to give a judgement on 12 January. The package will be considered in the Cayman Islands on 12 January.

All the main creditors have agreed to the settlement, but former employees of BCCI continue to object (MEED 2:12:94). The former employees claim $150 million, plus $80 million in interest, relating to money held by BCCI in trust funds for staff. They want $350 million from the settlement to be retained in London to pay off specific claims relating to the funds, rather than being transferred to Luxembourg.

In a 19 December judgement in the London High Court, Judge Richard Scott said they could pursue this claim through other channels.

Scott expressed sympathy with UK depositors who complained they would receive only a fraction of their original deposits but concluded that while 'the strength of feeling of the depositors is entirely understandable...it cannot stand in the way of the liquidators' attempts to rescue as much as can be rescued from the wreck.'

If agreed by all three jurisdictions it is expected the first compensation payments will be made in the first half of 1995. Creditor action groups are calling for a minimum initial payment of at least 20 per cent by 5 July, the fourth anniversary of BCCI's collapse.

Under the terms of the deal, Abu Dhabi will pay $1,550 million immediately after court approval, $150 million 24 months later and $100 million 12 months after that.