Following the meetings of creditors on May 19, a report has been filed in the Isle of Man High Court today by the joint provisional liquidators confirming that the scheme of arrangement failed to be approved by two of the three meetings of classes of creditors.
But the provisional liquidators admit that they have been contacted by a number of creditors who did say they did not receive the voting forms.
At the next hearing in the Isle of Man High Court on May 27, the winding up petition is due to be heard and the provisional liquidators will support the making of a winding up order.
It is expected that the company will be placed into liquidation on that date.
The KSFIOM Action Group says the scheme would have given little more compensation than could have been achieved through liquidation.
The group says: “Since the scheme gave depositors little more then liquidation and in fact would have enabled the Isle of Man Government to disguise any underlying issues that led to the collapse of KSFIOM – in particular the potential regulatory failures that brought everyone to this place – depositors are looking for transparency and fairness.”
But the Isle of Man Treasury minister Allan Bell says the majority of votes were actually in support of the scheme and those with claims under £50,000 “overwhelmingly in favour”.
He says it was large depositors and unsecured creditors that were mainly responsible for blocking the scheme.
He says: “The majority who clearly supported the scheme of arrangement, including the vast majority of small depositors, will be disappointed that it has been vetoed, in effect, by the minority of larger depositors and unsecured creditors.
“However, we must respect the outcome of the voting, which leaves no alternative but liquidation of the bank and activation of the depositors compensation scheme.”
He adds: “In the particular circumstances of KSF IOM there was clearly potential for a tailored solution that would be better for depositors than conventional liquidation.
“Government had a duty to pursue that option and put in a huge amount of work doing so.”
The IOM Government says it will now work to achieve a similar outcome for creditors with claims under £50,000 as would have been achieved under the scheme of arrangement.