Manx Herald Isle of Man: KSF (IOM) SoA gets ‘improved’ terms but still the doubts remain

KSF (IOM) SoA gets ‘improved’ terms but still the doubts remain
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Herald Editor on 03 May, 2009 02:27:00
 
Following the announcement that the UK administrators of KSF (IOM)’s ‘sister
bank’, in London, may be able to return 50%, or approximately £200million, of
the funds currently held ‘frozen’ in the UK, the IOM Treasury has amended
the Scheme of Arrangement (SoA) to take this news into account.
The Treasury is now proposing that depositors will get their protected amounts
of £50k, or £20k, within a year of the SoA gaining approval rather than the
two years previously proposed. They also say they will not seek to recover the
Treasury funded ‘top-up’ money, paid into the SoA, until creditors have
received 70% of their money back.
The 57 page SoA document, and the even longer, 71 page, explanatory statement
– neither of which will win an award for plain English – sets out, in some
complexity, what the terms and conditions are of the Scheme; and these seem
quite heavily stacked in favour of the scheme promoter and ‘managers’.
Several depositors have been in touch with us and expressed their serious doubts
about whether it will be in their interest to vote for the Scheme.
In the opinion of the Manx Herald what is on offer, particularly to larger
depositors, and bond holders, is not a ‘good deal’; but the reality is that
the alternative, liquidation and DCS, is probably no better and possibly worse.
It is pretty shameful that this SoA is the ‘best’ the IOM can offer
depositors, given that they thought they could believe, and rely on, all the
‘headline grabbing’ ‘well-regulated, compensation scheme’ claims made by
the Island’s finance industry and Government.
To rub salt in the wounds, sign the SoA - and it turns into a disaster – you
have signed away the right to hold the perpetrators to account.
It seems the only winners, as usual, in this fiasco will be the lawyers, the
treasury consultants and the SoA ‘administrators; who will all get paid
handsomely for their time.
Small depositors, with less than £35k at stake, may not do too badly; but any
with foreign currency accounts, and larger amounts, probably less so; as
exchange rates and potential loss of capital and interest will hit them hardest.
There is of course the possibility that a ‘miracle’ will happen and the
additional funding needed to guarantee 100% return of depositors’ money will
become available from one source or another; but the Manx Herald suggests
creditors shouldn’t hold their breath.
The meetings to vote on the SoA are set for19th May and will be held in Douglas.
Meanwhile Manx Herald hears that a further scandal could be brewing involving
another major deposit taker on the Island; and we are making inquiries to see if
we can to verify the information we have been provided with so far. We shall of
course report on our findings in due course.