by political editor Paul Francis

Kent County Council is on course to get tens of millions of pounds back from former Icelandic banks after a long-running legal wrangle.

A court in Iceland has today confirmed Kent County Council’s status as a preferred creditor for its deposits with Icelandic banks.

The ruling brings to an end the final stage of a three-year process to recover KCC’s deposits and the authority believes that it will recover 100% from Glitnir and 98% from Landsbanki.

Very substantial dividend payments are now expected in a matter of weeks.

Under Icelandic law depositors are preferred creditors and they should receive a full payout before any other creditors are paid.

Cllr John Simmonds, KCC Cabinet Member for Finance, said: "I’m delighted that the waiting is now over and, as we’ve maintained all along, KCC will get most if not all of its deposits back. The return of these funds is very welcome at a time of real financial challenge for Kent."

He added: "I’d like to pay tribute to KCC’s Head of Financial Services who has played a leading role in the negotiations on behalf of the 123 UK local authorities which had money deposited in Icelandic banks."

The news also paves the way for other councils in Kent - Dover, Tonbridge and Malling and Canterbury City Council - to recover their money as it will for Kent Police Authority, which has £10m on deposit.

KCC had £50million deposited with Icelandic banks consisting of £32million from KCC, £16million from Kent Pension Fund and £1million from the Kent Fire & Rescue Authority.

The deposits were with three banks: £18million Heritable, £17million Landsbanki and £15million Glitnir. These banks were forced out of business by the banking crisis of 2008.

To date £11.086million has been recovered from Heritable and the forecast recovery from this Icelandic-owned but UK-based bank is 95%.