DCS

  • adrienne
  • 10/10/08 13/05/10
  • a depositor
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Posted: Thu, 16/07/2009 - 09:40

Manx govt funding to speed up compensation for KSF IoM depositors
Hannah Stodell - 16-Jul-2009

The Isle of Man parliament has approved a £193m government funding package which will accelerate full repayment for more than three-quarters of depositors with Kaupthing Singer & Friedlander IoM.

The new funding package will enable full DCS entitlement to be paid out to claimants by early September, bringing a 100 per cent return of deposits to more than three-quarters of KSF IOM depositors.
The money from Manx government reserves will expedite payments of up to £50,000 per individual depositor under the island’s depositors’ compensation scheme.

The funding comprises £73m in direct support from government under the DCS regulations and an interest-free loan of £120m. This comprises £21m in advance of levies due from banks, and £99m against future dividends payable by the liquidator.

The move follows the rejection of the Manx Treasury’s proposed scheme of arrangement as an alternative to liquidation, in May. The bank was subsequently placed into liquidation and the DCS activated.

Treasury Minister Allan Bell MHK told Tynwald this week that £85m had already been paid out to depositors under the government’s early payments scheme with advance payments of up to £10,000 per depositor.

The current depositors compensation scheme is subject to a ‘sunset clause’ which means that its provisions are due to expire on October 23 this year.

Bell has assured that the level of compensation for individual depositors will be maintained at £50,000, at least, in the new amended scheme that will replace the existing legislation. He has stated that if the new scheme is not in place for October 23 the current arrangements will be extended.

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later DCS payments

  • Anonymous
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  • Sat, 18/07/2009 - 12:51

Any indication of when DCS payments after the initial payment will be made? Some of us waived our entitlement to apply for the first round of DCS to offer our proxy vote.

We now need to be given an assured time-frame for DCS payments, and that each payment for those applying late will be of the full 50.000 GBP. I emailed the DCS team with this question but they were unable to answer.

(I have also posted this question on another thread.)


DCS - Is there any chance of it being sent to bank A/C?

  • sabi Star
  • 10/10/08 n/a (free)
  • unspecified
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  • Sat, 18/07/2009 - 09:19

Page 2 of notes on Application form say -
"Payments will be made by cheque..."
There is NO mention of any possibility of a bank transfer.
Has anyone been allowed a bank transfer instead of cheque - which I do not want?
Thanks


Interest payments under DCS

  • chris watson
  • 23/10/08 31/03/10
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  • Sat, 18/07/2009 - 08:46

For those interested (i.e those fully protected creditors with under 50K), has there yet been any indication from the IOM whether interest payments between Oct '08 and May '09 on these protected sums will be payable via DCS if the total sum (principle + interest) does not exceed the 50K DCS limit?


Interest payments under DCS

  • Anonymous
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  • Sat, 18/07/2009 - 09:11

CW: THey say no and we think yes. They are asking the court for directions.


interest payments for sub £50K

  • Done like a Kipper
  • 10/10/08 n/a (free)
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  • Sun, 19/07/2009 - 03:06

If the court approve interest payments for the sub 50K depositors then where will these funds come from? The only possible explanation is that it will come from the pockets of the >50k depositors who will then suffer reduced payments in order to meet the interest payments of the <50K depositors.

It would therefore be grossly unfair to make any interest payments unless recovery for all reaches 100% - which is highly unlikely.


Done Like A Kipper

  • chris watson
  • 23/10/08 31/03/10
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  • Sun, 19/07/2009 - 08:25

OK, so no doubt I'll be accused by some of "stirring" and contributing to further disunity, but this is an important issue impacting the majority (by number) of creditors and I will not shy away from it for fear of abuse.

Have not all our deposits been gaining Interest since they were "frozen" in October, or has no Interest been accumulated since then?

If Interest has been accumulated, then it has been accumulated on all our funds. If so, the money in the "pocket" is not 'yours', it is 'ours'. It would therefore be unfair for the fully protected group to not receive the Interest generated on their deposits, and to claim such Interest via the DCS (so long as the total does not exceed the statutory compensation limit of 50K), on the basis that those who deposited more than 50K cannot claim the Interest themselves (although no doubt they would very much like to) via the DCS, as they had exceeded the compensation limit.

If I am correct, those with over 50K would receive a dividend based not on the amount held on deposit as of Oct, but on the amount held on deposit as of Oct + Interest generated on that amount up until May.

Of course, my interpretation may be incorrect, and as always I am happy to stand down on this point if it is factually wrong. However, with respect and using your own argument and expression, is it not "grossly unfair" that those creditors who did not oppose the SOA (including over 50K depositors and insurance companies) to have to pay for the costs associated with defeating it? In this instance as well, the money payable from the bank's assets for DAG's legal costs and expenses was also taken from 'their' pockets, and not just from 'yours'.


@CW Interest Payments

  • Done like a Kipper
  • 10/10/08 n/a (free)
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  • Sun, 19/07/2009 - 08:40

Would you be good enough to clarify and answer the question below?

So are you saying that the sub 50k fully protected depositor should receive via the DCS their deposited sum as at October 2008 plus interest on that sum but the partially protected depositors of >50k should get nothing? If this is your suggestion then who will ultimately finance the interest payments to the sub 50k depositors?


Done Like A Kipper

  • chris watson
  • 23/10/08 31/03/10
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  • Sun, 19/07/2009 - 09:17

You write: "So are you saying that the sub 50k fully protected depositor should receive via the DCS their deposited sum as at October 2008 plus interest on that sum but the partially protected depositors of >50k should get nothing? If this is your suggestion then who will ultimately finance the interest payments to the sub 50k depositors?"

No, if you re-read my post you will see that I am saying fully protected depositor should receive deposited sum as at October 2008 plus Interest on that sum through the DCS (so long as this total sum does not exceed the compensation limit of 50K) and partially protected depositor should receive a dividend based on deposited sum as at October 2008 plus Interest on that sum.

I have also written that the Interest payments to the fully protected depositor will be financed by the fully protected depositor's own Interest generated from their own deposit and not by the partially protected depositor. The total Interest earned from retail deposits, if any, between October and May has been Interest based on all of 'our' deposits, not just the partially protected. Therefore I do not see how it can be argued that any Interest generated within this period is the partially protected depositors Interest, and is due to the partially protected only, and thus not payable to the fully protected?

In actual fact, if the above scenario is correct, it would be the fully protected who would be financing the partially protected, as the Interest generated by the fully protected deposits would be going into the banks assets and be part of the assets paid out to the partially protected as a dividend!!

Could you also extend me the same courtesy and justify your argument that it would be unfair for 'you' to be (in your eyes) financing 'others' in this instance, when the costs 'you' incurred in defeating the SOA have indeed been financed by 'others' (e.g. those partially protected depositors and life co.'s who did not oppose the SOA)?

I am trying to understand your rationale on what is or is not "fair", as it does not appear to me to be consistent.


DLaK & CW

  • Peasant
  • 10/10/08 31/05/09
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  • Sun, 19/07/2009 - 12:22

Instead of debating as to who should receive interest that may have accrued from deposits. Is it not true that finance for interest will only be available after expenses for the present debacle have been paid.

If interest is to be paid, surely it should come from money that remains after all depositors (now creditors) have been repaid their initial deposit(s). Just remember you could have invested in shares.

Please remember, "The aim of an argument or discussion should not be victory, but progress" (Joseph Joubert)


peasant

  • chris watson
  • 23/10/08 31/03/10
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  • Sun, 19/07/2009 - 16:33

You write: "is it not true that finance for interest will only be available after expenses for the present debacle have been paid".

I did not know this. How did you come to this conclusion?

You write: "if interest is to be paid, surely it should come from money that remains after all depositors (now creditors) have been repaid their initial deposit(s)".

Alternatively, shouldn't any interest earned on deposits and covered by the DCS be paid under the DCS, as per it's regulations (see clause 9)?

You write: "Just remember you could have invested in shares".

I did not invest in shares. I deposited my cash in a bank and was relying on the interest generated from doing so, like most retail depositors on this forum, no doubt. Perhaps I have missed your point here.

You write: "Please remember, "The aim of an argument or discussion should not be victory, but progress" (Joseph Joubert)".

I do not see how Joubert would disagree with my attempt to make 'progress', if he were to accept the attempt to 'progress' Done Like A Kipper's or my interpretation of the situation. I think is perfectly acceptable to debate, and I think it is perfectly acceptable to respond to a direct question from another forum member - even if he fails to respond to my direct questions - especially if the forum member (Done Like A Kipper, who I believe has gone on record to graciously argue the compensation limit should actually be reduced back to 15K) is suggesting the majority of fully protected depositors are leeching off the partially protected (as no other interpretation is "possible", apparently), and when his argument can so easily be turned around to demonstrate the opposite could be true...


deleted - new forum topic

  • chris watson
  • 23/10/08 31/03/10
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  • Sun, 19/07/2009 - 12:18

deleted - new forum topic


Hopper - our thread is moved to "here"

  • chris watson
  • 23/10/08 31/03/10
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  • Sun, 19/07/2009 - 15:53

I'm sure you and others are well aware that the DCS regulations state in clause 9.

" (1) An eligible protected deposit liability is the total liability of the participant to the depositor in respect of the principal and accrued interest on sterling and foreign currency deposits in the name of the depositor at the time of the default and made with an Isle of Man office of the participant."

so I do not understand why this liability should not be covered by DCS or, as you say, "why...the DCS (won't) pick this up"?

According to the FSCS website's FAQ:

"Interest owed to the depositor as at the date the bank is declared "in default" by FSCS will be paid as part of the compensation amount. Notice accounts will be paid as if notice had been served on the day the account was frozen and payment will be made, including interest, at the end of the notice period. Fixed term accounts will be paid at the maturity date with the interest that would have been paid by the bank at maturity date".

Presumably this is a precedent and was what actually happened when the UK banks "went under" (although they did not get liquidated as far as I am aware), yet I am not able to confirm this.

Perhaps someone else on this forum knows?


DCS - interest

  • anrigaut
  • 19/10/08 30/10/09
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  • Sun, 19/07/2009 - 12:20

Chris,

I refer you back to elgee's post above. Indeed, the date of default was declared as 27 May 2009. However, it appears that DCS are contesting your (and DSTs) interpretation of this and have asked the court for a ruling. So I don't see how discussing it further here can help; we shall just have to wait to see what the court rules.


aringaut

  • chris watson
  • 23/10/08 31/03/10
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  • Sun, 19/07/2009 - 13:10

Well, it may help if discussing it here clears up the interpretation by Done Like A Kipper (without your distraction) that if such interest is payable to the fully protected, it will be the partially protected who finance this, or my interpretation that if the DCS does not pay out interest owed the fully protected, it will be the fully protected who finance the partially and non protected. Perhaps we're both wrong, but it's important to understand if this group is to get some kind of consensus rather than revert to SOA-, HNW-, DCS-, DST-supporter bashing (take your pick).

Also, I do not believe the DCS Scheme Manager is contesting the date of the bank's default but contesting my (and DSTs) interpretation of the DCS regulations, which as you probably know, states in 9. (1) "An eligible protected deposit liability is the total liability of the participant to the depositor in respect of the principal and accrued interest on sterling and foreign currency deposits in the name of the depositor at the time of the default and made with an Isle of Man office of the participant", which by the way, mirrors the UK's own FSCS regulations.

Given this matter impacts the vast majority of creditors by number, I do not think you are in a position to silence it or distract from it.

Is that OK with you, "dude" :) ?


reply from a dude

  • anrigaut
  • 19/10/08 30/10/09
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  • Sun, 19/07/2009 - 13:18

If it helps, from a distracting dude who dares to intervene again, I believe you are in fact both wrong on the point you raise. The situation with respect to the liquidation seems quite clear: the claims made against the liquidation include no interest after 8 October (or if they do that part will not be allowed). It has been clearly stated that such interest will only be considered if and when all creditors have been paid out in full. So the dividends will not be based on amounts including interest after 8 October. For the same reason, the DCS will not be able either to recover anything from the liquidation in respect of interest they pay you as part of DCS. I'm not saying this to defend them in any way - just stating what I see as the facts.

"Also, I do not believe the DCS Scheme Manager is contesting the date of the bank's default " - yes, I agree: that is exactly what I said (or meant to say - sorry if my sentence was ambiguous). It seems to me that the DCS should include this interest, which would be paid from DCS funding and not from the bank's assets (until and unless everyone gets 100%). But since they have applied to the court for a ruling, I was suggesting we can only wait and see; nothing more, nothing less. Is that OK with you?

I do not understand why you call me a dude -or even quite what you mean by that. You are certainly the only person ever to call me that (for the second time now) - either here or elsewhere! I was certainly not trying to bash you or anyone else. Takes all sorts I suppose.

Nor do I see why you say I am "not in a position ...". Indeed it affects me too, but since I think my chances of ever getting 100% back from liquidation are negligible it is just not something I worry about personally. I'm all for you getting your's back from DCS if you can though. Is that OK with you?

BTW, my name is anrigaut, not aringaut...


Anrigaut

  • chris watson
  • 23/10/08 31/03/10
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  • Sun, 19/07/2009 - 13:30

Apologies for misspelling your name and for calling you "dude". With regards to writing you are "not in position to..." I am referring to your not having the position to 'silence debate', which is how I interpreted you initial post to me on this thread.

So, I am wondering on what basis you state that "the claims made against the liquidation include no interest after 8 October (or if they do that part will not be allowed)", where this "has been clearly stated that such interest will only be considered if and when all creditors have been paid out in full" and that "the DCS will not be able either to recover anything from the liquidation in respect of interest they pay you as part of DCS".

I appreciate you are not saying this to defend the IOM in any way, but I have obviously missed the "facts" from the source you are relying on. This seems to contradict the DCS regulations which state in clause 9 (quoted above) that interest will be liable under DCS up until the bank's default (i.e. May 2009) and clause 4 (quoted below), which states the DCS will be able to recover interest associated from the scheme:

(1) Where a participant has defaulted, compensation costs are those costs which fall to be met by the Scheme Manager, are directly attributable to the default, and arise from the payment of compensation or the establishment of compensation claims.
(2) In relation to a default, compensation costs are taken as including not only compensation sums, but also -
(a) any interest or other drawdown costs on indebtedness incurred to enable compensation to be paid; and
(b) costs of establishing compensation claims, including legal and accountancy
services, and other costs.

Where is your info coming from, and (question to myself) how did I miss it?


Chris

  • anrigaut
  • 19/10/08 30/10/09
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  • Sun, 19/07/2009 - 14:14

Apologies accepted!

Clarification on completing proof of debt forms was posted on the bank's website on 18 June:

"18 June 09

Update on completing the Proof of Debt Form
With reference to the Proof of Debt Form, attached to the letter to creditors dated 10 June 2009, we have been asked to clarify Point 3 of the form, which asks creditors to state the:

“Total amount of claim, including any Value Added Tax and outstanding uncapitalised
interest as at the date the company went into liquidation”.

Please note that this is a statutory form and, for the purposes of completing Point 3 of this form, the total amount of claim is as at the date of the commencement of the winding-up of the Company, being 9 October 2008."

You probably missed this because you had applied to the DCS so did not have to complete this form. Although I will be applying to DCS shortly, I deferred doing so in order to vote so had to fill in the form. Since any money which DCS recovers from the liquidation will be that they can claim on your behalf, it must be subject to the same rules (they are simply standing in your shoes in the liquidation).

The question of the possible payment of interest by the liquidation at some stage has been discussed on the forum and I am sure it has been "clearly stated" somewhere (probably it was a question posed by frog to Simpson). But I'm saying that from memory; you would have to search for it. But the above statement by Simpson makes it clear that it cannot be included in the initial claim.

As to what the DCS should pay you, that is a separate issue. I have agreed that their regulations (clauses 4 & 9) suggest they should indeed pay out interest (but this is what they are contesting). Clause 4 does not say "the DCS will be able to recover interest associated from the scheme" ; this would in any case make no sense as "the scheme" IS the DCS. What they imply is that YOU can recover it from the scheme (DCS). In any case, there's no mention here of the liquidation (which I think is not a "scheme"); so no contradiction.

Hope this helps.


anrigaut

  • chris watson
  • 23/10/08 31/03/10
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  • Sun, 19/07/2009 - 15:29

Yes this does help. I remember the remark from Simpson as well, but it never seemed to be properly explained anywhere, and I'm not sure of the logic behind it - I just know I do not agree with Done Like A kipper's reasoning as to why DCS should not pay out the interest liability. Nor am I sure why a Proof Of Debt form or Simpson's comments should over rule what appears to me as plain English in statute (I am referring to clause 9 of DCS).

I should have been clearer in my post with regards to my interpretation of Clause 4, as it is the same as yours.


chris - DCS interest

  • anrigaut
  • 19/10/08 30/10/09
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  • Sun, 19/07/2009 - 16:30

Glad to be of help.

Just to confirm my reading of the situation: As far as I know no-one is suggesting the proof of debt form or Simpson's comments could over-rule the DCS Regulations. The proof of debt form is for claiming in the liquidation and is totally independent of the DCS. But I don't know on what grounds the Scheme Manager is contesting the payment of interest by the DCS.