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IoM investors in KSF face long cash wait

Offshore providers say depositors in Kaupthing Singer Freidlander Isle of Man are likely to get up to 80 per cent of their funds back but should expect a substantial wait for their money.

Last week, the Isle of Man courts granted a winding-up petition against Kaupthing Sin-ger Freidlander, seven months after the company was placed under a liquidator provisional.

On April 24, the Isle of Man government predicted that the minimum recovery rate for depositors was about 75 per cent. Creditors voted down a scheme of arrangement put forward by the Isle of Man authorities on May 19.

The KSFIOM Depositors Act-ion Group opposed the scheme, arguing that it would have offered little more by way of recoveries than liquidation but with less transparency.

Royal London 360 chief executive David Kneeshaw says that the life company voted in favour of the scheme of arrangement.

He says: “When all the details of the scheme emerged, it became clear that the difference between the scheme and liquidation was fairly marginal for us. I don’t think it will make a lot of difference for clients either. We think that depositors can expect to get 75-80 per cent back but the money has to be recovered first, which will take a long time. It is not going to happen within the next two years.”

Axa Isle of Man managing director Mike Foy says: “We share the Depositor Action Group’s desire to see 100 per cent recovery for its members. From discussions with the DAG, it is clear they wanted to retain the right to legal recourse at some point in the future and were concerned that accepting the Scheme of Arrangement would affect this.

“KSF was consequently put in to formal liquidation. The outcome for our bondholders should be unaffected. However, recovery under the liquidation process will not be as quick as it would have been under the SOA. A final recovery amount is very difficult to predict as it relies on many factors, including the performance of world stockmarkets and the successful management of an existing loanbook.

“Under the SOA, there was an expectation of 75 per cent recovery at least based on the liquidator of the UK arm of Kaupthing, suggesting 50 per cent recovery of UK-based assets held by the bank in the Isle of Man.”

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