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Revised scheme of arrangement could improve payout for KSF IoM depositors

The Isle of Man is revising its proposed scheme of arrangement for KSFIoM depositors after a better than expected estimated return from the sister bank in London.

Ernst & Young, administrators of the UK bank issued an interim report this week indicating a possible overall recovery rate of at least 50 per cent for creditors of the UK bank.

This is higher than the rate anticipated by the Manx government and moves the estimated minimum recovery rate for the local bank from 65 per cent to about 75 per cent.

The IoM says the improved prospect of returns from the UK could accelerate repayments under the proposed SOA for IoM depositors so that individual entitlements of up to £50,000 could be paid in full in 12 months instead of 24 months.

The Manx government says the outlook for larger depositors would be better too with higher dividends expected.

The Treasury has agreed to further defer its ‘catch-up dividend’ from 60p in the pound to 70p in the pound meaning it would not recovery anything back under the SOA until all others creditors had received at least 70 per cent of their claims.

The SOA has been amended to reflect the latest information from E&Y and is expected to be issued to depositors next week ahead of their vote on the proposed scheme on May 19.

If approved, the High Court will be asked to sanction the scheme on May 27, otherwise the bank will face liquidation.

Isle of Man Treasury Minister Allan Bell MHK says: “A degree of clarity at last on recoveries that might be expected from KSF in the UK is indeed welcome.

The 50 per cent minimum indication is still low, which justifies our cautious approach, but it is better than working estimates so far. However, we note that this is dependent on the state of the UK economy.”

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