This afternoon the Isle of Man High Court in Douglas ruled in favour of a scheme of arrangement being put to vote by KSF creditors on whether they are willing to accept it.
The decision was greeted by disbelief and anger from depositors who had protested outside the court.
Depositors will vote on the scheme on May 19 before it returns to the court and the petition to wind up KSFIoM has been adjourned to May 27.
“Trade creditors”, depositors with 100 per cent cover by the depositor compensation scheme (DCS) and depositors partially covered by the DCS will have to approve the scheme by 50 per cent in number and 75 per cent by value held for it to be accepted. This will apply to depositors attending the meeting or voting by proxy.
If approved, the High Court will be asked to sanction the scheme will be on May 27 but if rejected, KSF will be liquidated and the DCS triggered.
Isle of Man Finance director John Spellman says: “The Deputy Deemster is satisfied that there is merit in the scheme for it to be presented to the creditors but the onus is now on the Isle of Man Treasury to identify the clear benefits for each group of depositors.”
Bondholders will only receive cover under the early payment scheme of up to £10,000 per bond and will receive payment of “parri passu” under the scheme of arrangement.
Spellman says: “It has been identified as a point of law that an insurance company is a depositor in its own right and therefore beneficial owner of those deposits and individuals won’t be recognised for inidividual payments but they will still receive the same benefits as other depositors on the parri passu payments.”
DAG spokesman Olly Scott says: “This decision is an outrage. It devastates thousands of UK citizens by robbing them of money that is rightfully theirs.
“Instead it gives the IOM Government the right to do as little as possible at a leisurely pace, failing to protect depositors in respected IOM banking institutions. It should act as a sign to those who still choose to trust their money to IOM institutions.