Ágúst and Lýdur Gudmundsson, CEO and chair of ready-meals giant Bakkavör, are facing investigation into loans they received from failed Icelandic bank Kaupthing.

This week it emerged Kaupthing had lent hundreds of millions of pounds to its largest shareholder Exista, a financial services company controlled by the Gudmundssons through a 77% stake. As Kaupthing collapsed, Exista sold off many assets as its future was cast into doubt. This included its controlling 39.6% stake in Bakkavör, which it sold to ELL 182, a Gudmundsson investment compan y. Kaupthing is under investigation as Icelandic authorities examine the failure of the country's three largest banks. Two senior Kaupthing employees were charged last week with manipulating Exista's stock market price .

Iceland's Government this week appointed an international expert on financial corruption to aid its investigation into Iceland's banking collapse. This will include analysing Kaupthing's loan books - plus those of the other nationalised banks - which show it had lent significant sums to its owners.

Documents seen by The Grocer show that on 30 June 2008, three months before Kaupthing's collapse, the bank had lent ISK108.4bn (£560m) to Exista. Loans to other companies in which the Gudmundssons had an interest brought the total to ISK169.1bn (£880m). The collateral for these loans has not been made public.

Later in 2008, the future of Exista was cast into doubt by the turmoil in Iceland's financial sector. On 7 October, two days before Kaupthing's nationalisation, Exista began selling off its assets to reduce its liabilities. That day, it sold its 20% stake in insurance company Sampo. At the time, Lýdur Gudmundsson said Exista had "no plans to sell other assets". Two days later - the day Kaupthing failed - Exista sold its 9% stake in another company, Storebrand.

The next day Exista sold off its controlling stake in Bakkavör - one of its most significant assets - to the Gudmundssons themselves. On 10 October, Exista sold its 39.6% controlling interest in Bakkavör to ELL 182 . The sale was made for ISK9.79 (6p) per share, less than a fifth of their value six months before. Since then shares in Bakkavör have fallen to ISK1.7 (1.1p).

Since October, Exista has delayed publishing its annual accounts until late April as the company battles the financial crisis. The Gudmundssons increased their stake and launched a formal takeover bid , which, if successful, would de-list it from the stock exchange.

In a market update this month, the company acknowledged its "position is unclear" as it works to delay interest payments on its existing loans and other payments. The statement also said: "Exista is engaged in discussions with domestic and foreign financial institutions concerning a review of loan agreements and the settlement of mutual claims."