The Bank of Valletta (BOV) has reached a €182.5m ($192m) settlement over the long-running Deiulemar bankruptcy case.

The Maltese bank said it had agreed to settle the dispute out of court.

The agreement comes nearly a decade after dry bulk operator Deiulemar folded in 2012 with around €800m owed to Italian bondholders.

BOV’s involvement came from having taken over a trust in 2009 that held €363m in company assets, according to the Times of Malta.

When the shipping company went bankrupt, bondholders whose savings were wiped out turned to BOV, the paper said.

In February, an Italian court ordered BOV to make a €370m payment to Deiulemar shareholders.

The bank said had it filed an appeal against the judgment.

At the same time, it began talks with curators of Deiulemar to find an out-of-court resolution “and to mitigate the risk of further litigation”.

That culminated on 3 May in an agreement, “without admission of any liability by either party”, according to the bank.

But BOV said the agreement left it in “a more secure capital position” and better placed to conduct business “with confidence and sustainability”.

Long-running dispute

The settlement brings to an end the protracted dispute that BOV has been fighting in Italian courts.

In 2018, it placed in excess of €363m in the hands of an independent entity as precautionary security.

In 2019, the bank filed against Italy before the European Court of Human Rights in Strasbourg, worried that it may not get a “fair hearing” if the case was heard in the Tribunal of Torre Annunziata.

The court district adjourns the town of Torre del Greco, where Deiulemar was located and from where most of the bondholders originate.

BOV tried to settle the dispute in August 2020, offering bondholders €50m. The offer was rejected.

The Deiulemar saga was the largest scandal to hit Italian shipping.

Prior to its spectacular demise, the Naples-based company had been one of the country’s largest dry bulk companies.

Shareholders of Deiulemar were found guilty of fraud and seven of the company’s founders were jailed by an Italian court in 2014.

Deiulemar was named after the surnames of its late founders Giovanni Battista Della Gatta, Michele Iuliano and Giuseppe Lembo.