CREDITORS REPORT May - July 2010

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
Posted: Fri, 30/07/2010 - 19:31

The purpose of this document is to provide creditors with:
•a report on the period of the Liquidation from 27 May 2009 to 9 July 2010, on matters arising since the making of the Winding Up Order on 27 May 2009 and;
•a summary of the costs and disbursements incurred by the JLs for the period 27 May 2009 to 9 July 2010 inclusive and;
•a receipts and payments account to 9 July 2010 and an Estimated Outcome Statement.

•The JLs to compromise the KSFUK claim at not less than £250m in order that the claim can be finalised;
•The JLs to seek direction from the Manx High Court with regard to the acceptance by the Joint Liquidators of re-assignments of Proofs of Debt;
•The JLs to pay future dividends to claimants at not less than 5p in the £ of their admitted debt, as and when funds become available.
The COI is required to authorise any compromise of a debt, so to enable the final KSFUK claim to be agreed without further reference to the COI, a minimum agreed amount has been stipulated.
There have been a number of requests for re-assignment of claims from the DCS ‘back’ to the liquidation and this avenue will be progressed.
There is a fixed cost of calculating and paying a dividend, and stipulating that a minimum of 5p should be paid strikes a balance between cost and benefit of the return in the form of dividend.

Advances to customers
4.1According to the Directors’ Statement of Affairs, as at 9 October 2008 the Company had loans to customers, valued at a sterling equivalent of
£416m. This amount did not allow for the operation of set-off (see below) or for future interest income. The figures relating to outstanding loans quoted in this report are as at 30 June 2010, and the position has not changed materially to 9 July 2010.
As at 30 June 2010 there are 113 loan facilities, compared to 180 at 9 October 2008, with the outstanding capital value of the loan facilities of a sterling equivalent of £310.7m. Some of the loans are denominated in foreign currency. Between 27 May 2009 and 9 July 2010, £12.2m has been collected on the loans in respect of interest payments due and since 27 May 2009, £96.9m has been collected in respect of capital repayments, based on exchange rates prevailing on the date of repayment of any currency amounts.
The JLs have entered into negotiations with borrowers where the contractual repayment date was in 2016 or 2017 and have been successful in rescheduling most of these loans. Over 99% of outstanding loans are now due to be repaid by March 2014.

Total cash realised for the collateral shares is £121.8m.
6.Amount owed by KSFUK
6.1The Administrators of KSFUK have paid dividends of £71.75m to the JLs representing 35p in the £ on £205m of our claim which represents the
portion of our claim which has so far been agreed. Their latest estimate is that the total dividend that they will pay in due course may be in the range of 65-78p in the £, and they have announced that they will pay a dividend of 10p on 28 July 2010.
It is currently anticipated that a claim of £250.2m will be admitted in the Administration of KSFUK the particulars of which are discussed

The GMRA (“Repo Agreement”)
The Repo Agreement was an industry standard under which KSFIOM lent KSFUK £185m secured against various securities. These were reviewed regularly and, if required cash payments were also made to KSFIOM. The securities held had prior to our appointment been substituted on a number of occasions with the agreement of KSFIOM. In the period immediately prior to 8 October 2008 some securities were due to be swapped. [and] Securities held by KSFIOM were released, but the attempt to substitute them was aborted due to the appointment of administrators of KSF UK.
In addition some shares were removed without the consent of the management of KSFIOM This resulted in a shortfall in the value of the security based on the collateral value of shares under the terms of the GMRA. The JLs originally estimated this shortfall at £47.6m while the Administrators of KSFUK have [Ice: now] indicated a value of £43.2m.[Ice: previously they conceded just £21m.] In addition the JLs have stated that they have a claim in respect of the shares removed without agreement. The lower amount has been used in the above table but no provision has been made in respect of any recoveries that may arise from the claim in respect of the removed shares. [Ice: Previously reported to be £10m!]
We would point out that in any claim in respect of removed shares, credit would have to be given for the fact that the claim against KSFUK is higher as the Company did not hold these shares at the relevant date.

6.4Estimated recovery against KSFUK claim
For the purposes of the Estimated Outcome Statement, on a high case basis we have taken the agreed claim amount as £250m based upon the latest negotiations and have estimated that 78p in the £ is paid by KSFUK. On a low case basis we have taken the claim amount of £250m and have estimated that 65p in the £ is paid by KSFUK. These are estimations and until the claim against KSFUK is finally agreed we are not in a position to comment with any greater clarity as to the amount that might be recovered from this claim. We are hoping to finalise the position shortly in order that a catch-up dividend can be paid to KSFIOM from KSFUK. Based upon the above figures and the recent dividend announcement from KSFUK this would amount to £20.34m.

Much, much more in the full report.
Ice

5
Your rating: None Average: 5 (12 votes)

Comment viewing options
Select your preferred way to display the comments and click "Save settings" to activate your changes.

Ice, Again thanks and again

  • thesunnysouth
  • 10/10/08 31/05/09
  • unspecified
  • Offline
  • Mon, 02/08/2010 - 11:37

Ice,
Again thanks and again your views on a payments issue. My understanding is thatPWC will pay out once a 5% threshold has been met and by my calculation that is circa £45.4m? KSF owe a catch up payment of £20m (from COI report) and additionally on the 28th July they paid out a further 10p (10%) which on £250m is £25m. Quick maths suggest to me that once the catch up payment is collected we will have our 5% not even considering what may come in via the loan book so we should get a further payment sooner rather than later and if the loan book is performing at all the amount should be nearer 7.5% than 5%.

Yours and the views of Glen07 would be appreciated as we could be nearing 60% by the Autumn and 2nd anniversary. Bearing in mind the loan book is weighted heavily in the years 2011 and 2012 it would be a good launching pad to hit these next two important years from a base of 60%.
John


@sunnysouth

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Mon, 02/08/2010 - 14:11

Hello sunny,

Please see my reply to Brabander. Link:http://chat.ksfiomdepositors.org/forum-topic/another-view-and-analysis-potential-dividend-outcomes#comment-42594.

I think you'll find that the 10p/£ will have been calculated on £205m this time, not £250m. This is because the back-payment of £20.34m includes the latest UK dividend - they won't pay a dividend on the same sum twice. Even so, that's still c£41m, and as you say, there is loan book capital and interest to come - so even 10% could still be possible. :-)
Ice


@IceCrusher

  • Ashoker
  • 12/10/08 31/05/09
  • not prepared to answer
  • Offline
  • Sun, 01/08/2010 - 18:59

Many thanks IceCrusher for the sterling work you are doing with regard to putting pressure on the JLs, in addition to all the clear information you provide regularly on this site. Believe me - I am truly grateful.

I think you might need to change your pseudonym from IceCrusher to IceMelter soon, because it seems that the speed of change re. the claim against KSFUK, is now moving much more quickly than previously hoped for!

Once again, many, many thanks.


@Ashoker

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Tue, 03/08/2010 - 08:12

Hello Ashoker,

Thank you for your kind comments which are much appreciated; I would like to say though that I am just part of a team, perhaps not one with any particular leader, but a co-operative effort nonetheless. G45 has been in contact with one of the JLs on a pretty regular basis and has thus been able to bring attention to areas that have displeased us or where we think insufficient effort has been expended - straight into the horse's ear as it were. Without G45's telephone conversations this information would not find itself to those who need to know more than anyone else the general mood of the creditors. Similarly, the CoI have forwarded some of my invective directly to the JLs so at the very least they know that they are being closely watched and read. The CoI have a thankless task, because they cannot report back what it is they do - only the results and then often in a curtailed fashion. Probably the most important thing is to let everyone involved in our case know that we are still here and haven't gone off the boil.
Ice


JL's Report May 2009 - July 2010

  • barrona
  • 17/11/08 31/05/09
  • a depositor
  • Offline
  • Sun, 01/08/2010 - 08:31

Whilst the above certainly seems encouraging, in my opinion, any good news is to be measured against when we will eventually receive the final payment.

I have read various dates being bandied about, the latest of which was 2017?

It thought representation was being made, inter alia, to the new UK government to see if matters could be speeded up.
Can someone in the know please provide an update on this and any other developments?


You are quite right barrona.

  • anrigaut
  • 19/10/08 30/10/09
  • a depositor
  • Offline
  • Sun, 01/08/2010 - 09:02

You are quite right barrona. Discussions have been instigated and are ongoing with the new UK government with the aim of achieving 100% sooner, rather than later. While it is too early to predict the outcome, the initial reactions appear to be encouraging.

In addition to the updates emailed out by DST, which I believe you should normally have received, regular (roughly weekly) 'mini-updates' are provided in the Members only area of the KSFIOMDAG website in order to keep members, and especially those who have contributed to this campaign, informed of the latest developments. The last of these was posted 6 days ago and may be found (along with the 4 previous ones) here:
http://www.ksfiomdag.com/index.php?option=com_fireboard&Itemid=90&func=v... (you will need to log in first).

As Parliament is now in recess and a number of key people are on holiday, there will obviously be something of a lull during the month of August. The best use of this time would be for depositors to write to their MPs to urge them, if they have not already done so, to sign the re-tabled Early Day Motion EDM 63 (see DST blog on this site).


Ongoing discussions with HMG

  • barrona
  • 17/11/08 31/05/09
  • a depositor
  • Offline
  • Sun, 01/08/2010 - 09:33

Dear anrigaut,

Many thanks for your reply.


March 2014

  • tsunamivictim
  • 11/10/08 n/a (free)
  • a depositor
  • Offline
  • Sun, 01/08/2010 - 08:35

I think the report says that 99% of outstanding loans will be repaid by March 2014. Ice can probably answer you in more details on this though.


March 2014

  • barrona
  • 17/11/08 31/05/09
  • a depositor
  • Offline
  • Sun, 01/08/2010 - 08:48

tsunamivictim,
Your comment that 99% of the loans will be repaid by March 2014 gives me personally no great comfort.
Surely, our elected representatives should be putting pressure on HMG who in turn, should be pressurizing the IOM govt to do the decent thing and repay all creditors now!
If necessary, and I know this has been raised before, the IoM govt could surely request a loan from HMG?
Like many other creditors, my life has been turned upside down by this fiasco and has caused untold damage to my future retirement plans.


Just a couple of points as I

  • expat
  • 10/10/08 31/05/09
  • unspecified
  • Offline
  • Mon, 02/08/2010 - 07:40

Just a couple of points as I don't post much these days, firstly as far as I am aware there are no elected reps, just a few dogged people who keep trying as best they can, either as a group or as individuals. Secondly when you can see a return of over 90% coming then it is very difficult to get sympathy at any level. A figure by the way some were purporting as far back as November 2008 as being the likely return.

I have had many exchanges with IoM representitives for instance and we should all be aware that they have their own austerity budget, just as most governments have. It is hardly likely that a few depositors (there are I think now about 1,700 effected) are going to be at the head of their action list is it? I have many exchanges with my MP and others and get pretty much the same response, we are not high on the priority list!

Efforts are being made by a number of people to get the UK and IoM to talk, to build bridges, to stand in our shoes, however one has got to realsise that there is a far greater economic problem out there than us and frankly we are the victims of a busted and badly run banking group. My life has also been changed somewhat brabander, as have many, we don't give up, but we do need to face facts rather than what we want to believe.

The COI do a fine job on keeping abreast of things and we simply have to be patient, remember the Xmas Club fiasco a few years ago? They got about a 6% return, we are very fortunate, however long it's taking, to be getting the lions share back under the circumstances. So however much pressure is put on governments the reality is that we're doing better than the majority in a liquidation scenario. What we do want is justice about a major regulatory failure as far as I am concerned, that is an issue that cannot be allowed to go away.


@expat

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Mon, 02/08/2010 - 14:20

Hi expat,

I think you'll find it was barrona and not brabander who initiated the thread...

We pretty much agree on our situation going by what you've written above; life ain't fair, but we didn't get our faces blown off with a shotgun like some poor unsuspecting souls.

With £1.2 billion back in the tax coffers, HMT could extend a hand across the water, it would be good for all concerned I reckon - and put the Island's agenda in the hands of elected politicians rather than simmering on the back-burner tended only by civil servants - 'cos that's what I reckon happened here - just like the Falkland Islands fiasco all those years back.
Ice


Whoops you're right Ice!!

  • expat
  • 10/10/08 31/05/09
  • unspecified
  • Offline
  • Mon, 02/08/2010 - 15:30

Whoops you're right Ice!! Sorry barrona, senility!


@barrona...

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Sun, 01/08/2010 - 11:05

barrona,

You are an unfortunate victim of a bank under liquidation; no one wants to be in this position and I'm sure that there are an awful lot of us who have had our plans thwarted. But those who had £98,000 or less have now received at least £50,000 - or their original deposit back - and those with more at stake have collected more pro rata. I have received just over £200k back now, so I can hardly claim destitution - though I continue to pursue the remainder with proactive vigour because it is still my property. I am pleased to see that our monies will likely reach >90% of its original value and for this to happen in four years rather than eight has to be good - not bad. As Dr Phil says, it's not what happens to you that really matters, but how you respond to it.

I did not elect any representative, but I know that some of our stalwarts put themselves into the firing-line to do their best for their fellows - and continue to do so. You raise the question as to why the IoMG is not being pressured to do the decent thing? The IoMG stood their ground under immense pressure to pay-up in the early days and if they didn't break then, what can a few DAG reps do now to break them? IoMG has seen all of the sub £50k depositors (70% of all savers) repaid 100% - and the remaining 30% have got back more than 50% of thir money in less than two years. No one is on the paupers list and any pressure in that regard eased some time back - that is no longer a relevant or appropriate playing-card.

I have written a letter to Danny Alexander, The Chief Secretary to the Treasury, pointing out that 45% has now been paid to KSF UK creditors - this includes HMG/FSCS standing in the shoes of the Edge depositors to the sum of £2.6 billion. The Treasury has therefore recovered nearly £1.2 billion from the adminstration of KSF UK. I suggested to Danny that HMT now has the money to stand in place of KSFIoM depositors for the £250m still owed to us from that bank. I pointed out that this would be a great opportunity for the coalition to build bridges and start afresh with the needs of the Crown Dependencies instead of casting them aside and obliging them to carry the can for mistakes made by the former UK Government. Darling has an awful lot to answer for IMO, and the coalition could expose that failing by remedying his intransigence and paying us off - at least the UK monies.

As with so many things in life, you can only show people the way - you cannot force them from a position of weakness, but instead position them to see the right way and hope that kindles the incentive to pursue the right outcome.
Ice


Potential for pressure on government(s)

  • Brabander
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Sun, 01/08/2010 - 20:02

Icecrusher, excellent summation. I agree with you that unfortunately we always had even less leverage with the UK government (whatever colour!) than we had with the IOM government.

Now that we have received over 50% back and will probably, eventually, receive back around 90% this leverage has further diminished. A family (joint depositors) with £100k has already been fully compensated and it should be remembered that to the man in the street a family with over £100k in an account with a bank on the IOM cannot be paupers!
The loss of interest is of course painful but bear in mind that the "man in the street" currently only receives around 0.5%. Little sympathy there either.
Let us be realistic what kudus are there for a politician to fight on behalf of "rich" offshore depositors?

The best strategy was therefore always to ensure that the JL's would do their job properly and fight their corner for us. Ice and apparently the CoI appear to have done so on our behalf. Much credit to them.
The pressure on the JL's must however not be relaxed.

Brabander


As usual, absolutly brilliant

  • Jean-Charles Marlier
  • 10/10/08 31/05/09
  • a depositor
  • Offline
  • Sun, 01/08/2010 - 14:20

As usual, absolutly brilliant answer,what a gem of a man you make,taking all of your personal time,to answer us all in such a crystal clear way.Couldn't have been put any better!
Many many thanks,
Jean-Charles


Well said Icecrusher

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
  • Offline
  • Sun, 01/08/2010 - 14:12

An excellent summation of the situation Ice.


Ice, Thanks for your comments

  • barrona
  • 17/11/08 31/05/09
  • a depositor
  • Offline
  • Sun, 01/08/2010 - 11:20

Ice,
Thanks for your comments which I was mostly aware of. As you say, hopefully the Coalition will have more respect for the IoM depositors than their predecessors who had no respect for us.
Only time will tell!


2019?

  • Valentine
  • 18/10/08 31/05/14
  • a depositor
  • Offline
  • Mon, 02/08/2010 - 04:00

barrona,

I believe that the March 2014 date only refers to the KSFIOM loanbook.
I think I read somewhere that KSFUK will not finish paying out until 2019.
Someone please correct me if I'm wrong.
All the more reason to keep pressure on the UK Govt.


JLs 'dungood'

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Sat, 31/07/2010 - 07:11

At last, the JLs have turned the tables on the E&Y administrators and got a result in our favour - with a possibility of winning even more ground before this is over.

The boost from the previously 'agreed' claim of £205m against KSF UK up to £250.2m is made up of two parts:

  1. An increase in the sum owed by KSF UK between the purchase cost of the repo shares (£185.3m with interest added) and the value accorded to them by the non-defaulting party. This sum appears to have now been agreed (for now) at £142.1m thereby producing £43.2m to be added to the unsecured monies held on deposit.

  2. A reduction in the set-off claimed by KSF UK against KSFIoM to £143.4m produced £21.6m in our favour. The original claim was for £163.9m which rose to £165m in the JLs last report, but E&Ys 'Report to (UK) Creditors' indicated a worrying increase to £200m. The recent appeal by E&Y against an earlier judgement regarding set-off was upheld, which turned the issue of set-off in KSF UK's favour for nearly one £billion debts owed to them - but worked against them in KSFIoM's case for they were the debtor.

The JLs have agreed a sum of £250m (minimum) in order to move on, E&Y are clearly not giving any more ground than they must. However, there is still the matter of several million pounds of shares having been removed from the repo agreement without KSFIoM's knowledge and our JLs continue to pursue this matter. It looks as though they won the argument on the date of default (and so improved the recompense from £21m to £43.2m) that being so, it could follow that certain shares will be proven as speciously withdrawn from the account and will have to be repaid.

The CIO's report indicated a 'worst case' value of £254.3m in our claim against KSF UK. This likely reflects the JLs intention to recover more monies based on the their valuation of the repo shares as at the day KSF UK went into adminstration on 8/10/08.

SIMPLE SUMS:

£349.6m unsecured deposit less revised set-off of £143.4m = £206.2m

Compensation on the repo agreement (interim) £43.2m

ISDA reduced from £2.5m to £2.1m

Total: £206.2m + £43.2m + £2.1m = £251.5m

The £300k interest earned on the £185m repo shares is already with the JLs and there is also £1m to be deducted because KSF UK paid out some 'in-flighters' so:

£251.5 - £1m - 0.3m = £250.2m

This is just another way of showing how the JLs came to £250.2, but I hope it makes more sense shown this way.

The JLs are still being cautious, but my guess is that they will win at least a percentage of the c£10m worth of shares withdrawn without agreement from the repo account and probably even more in compensation if they get their way with the 'day of default' valuation. Seems to me that as E&Y's overall position improves, the more likely they are to concede points to PwC.
Ice


Too Soon?

  • Valentine
  • 18/10/08 31/05/14
  • a depositor
  • Offline
  • Sun, 01/08/2010 - 01:26

Thanks, Ice - this is great news.
I have finally worked out how an appeal on the issue of set-off that went in E&Ys favour could work out in OUR favour as well!

Maybe it's a bit soon to heap praise on the liquidators. After all, they have only done what they are supposed to do!


@Valentine

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Sun, 01/08/2010 - 03:23

I've been giving the JLs a hard time almost since day one, it is only fair to give credit where it's due - even though it's been a long time coming. They have probably had to dog the UK administrators as much as I've dogged them. I just hope they keep on dogging for the shares that were removed from the repo account. E&Y know this happened for sure, they are just fighting a rearguard action to hang onto as much loot as they can - I bet they are under strict instructions from HMT to do so.
Ice


This is great news. Thanks

  • tsunamivictim
  • 11/10/08 n/a (free)
  • a depositor
  • Offline
  • Sat, 31/07/2010 - 08:26

This is great news. Thanks Ice for explaining it so clearly...looks like our JL have actually done better than expected. Things are looking up! At last.!


Typo

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Sat, 31/07/2010 - 08:59

Sorry, read CoI (Committee of Inspection) instead of CIO in my comment above.