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Month delay to plan KSF cash return

The liquidation of Kaupthing Singer & Friedlander Isle of Man has been adjourned until April 9 to allow the Isle of Man treasury more time to work up a scheme of arrangement to improve returns for depositors.

On February 19, the Isle of Man High Court gave the go-ahead for the treasury to continue developing an SOA for a further 30 days.

This scheme seeks to guarantee depositors at least 60p for every pound they have lost. But bondholders with money in KSF IoM are still awaiting details on how payments would be administered and whether they would be treated as individuals or as a collective as part of the scheme.

The SOA, which still has to be approved by the court and savers, is an alternative to liquidation of the company and activation of the Manx depositors’ compensation scheme and is underpinned by £150m of government funding.

The Manx government estimates the scheme will see 54 per cent of eligible depositors receive 100 per cent of their money back within three months of the scheme being signed, with 71 per cent repaid in full within two years. The Tynwald has approved a second and increased early payment scheme of up to £10,000 for all accounts including separate insurance bondholder accounts.

If the SOA is rejected, the bank is likely to be liquidated with payouts made from the Manx depositors’ compensation scheme and funds recovered during the bank’s liquidation.

Liquidator provisional figures given at the last court hearing show an estimated £402m is under the control of the UK Government, with clarity needed on how it will be recovered, with a further £140m in cash and £400m in the bank’s loan book.

Isle of Man Finance director John Spellman said a further payout depends on recovering assets seized by the UK.

He said: “No information has come through on this at all yet so we are trying to create something which gives the depositors some degree of comfort while the position is clarified on the available assets.”

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