MILLIONS of pounds lost by Barnet Council when two Icelandic banks went bust could be repaid after a landmark judgement this morning.

Local Authorities have been classed as “priority” creditors in the winding up of the Landsbanki and Glitnir banks, where the council had £27.4 million invested.

The two banks went bust in 2008 but had around £400m of British taxpayers' cash invested in them at the time.

Since then councils have co-ordinated with the Local Government Association (LGA) in a bid to get the money back.

Baroness Margaret Eaton, Chairman of the LGA, said: “It is excellent news that the judges in Iceland have heard the arguments on both sides and found in favour of local authorities.

“This judgment means that councils' claims have been recognised as deposits with priority status over other creditors' claims and will be at the front of the queue when it comes to getting their money back following the collapse of the failed Icelandic banks.

“We hope that our opponents will accept this clear verdict.”

However, the ruling does not mean councils will get back all of their cash, and could still be challenged by other creditors left out of pocket by the collapse.