High Value Depositors, Insurance Co's and Bondholders Royally shafted by revised SOA.

  • podather
  • 10/10/08 31/05/09
  • a depositor
  • Offline
Posted: Tue, 28/04/2009 - 15:30

I read with interest yesterday the affidavit of Kenneth Clive McGreal Fiancial Controller of the Isle of Man Treasury in which
he states that the SOA will now pay out protected depositors with two assured payments as opposed to the original three
and that these would be £35,000 and £15,000 so paying out depositors all their deposit or up to the compensation limit within a year of the SOA being sanctioned by the courts.

But something troubled me, in all previous SOA documents you were paid either the greater of the assured payments or the dividend declared so those with a high value deposits would get more than those with less as the dividend would be greater than the assured payment.
But in Mcgreals affidavit it only mentioned the assured payments, not a mention of the dividend that would be paid alongside this to high value depositors and bondholders.

Now I know Mike Simpson had indicated that after the news from the UK that at least 50% of the deposit there would be coming back and he would receive 10% of the deposit within a matter of weeks he could declare a 20p/£ dividend at the first distribution stage but why wasn't it in the affidavit ?

So I called Mr McGreal at the treasury to ask him why.

His answer staggered me, the dividend had not changed, it was still to be 12.5p/£ as per the previous SOA , so £40 million or more will be coming back from the UK but high value depositors won't get the advantage of any of this.
So the rules preclude them from paying some depositors a higher percentage than others, so all the protected claims must still only be getting 12.5p/£ , in which case the extra £15,000 per claim must be coming from the Treasury.

So what has happened to the 20p/£ dividend Mike Simpson said he could pay and where has the £40 million gone?

Maybe I thought, there trying to pull a fast one and use the UK returns to pay the enhanced SOA payments to the detriment of all high value depositors and bondholders, but then I thought surely not, a government wouldn't do this.... would it?

Your rating: None Average: 4.7 (22 votes)

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

@Royally Shafted

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Tue, 28/04/2009 - 18:53

I would opt for a more simple explanation: the money from the UK is not yet in the pot, there are still a few hoops to jump through. The 12.5% was an example not a figure based on unknowable future probabilities.

The UK bank Administrators may start their distribution in June or July, and when MS is certain of the position a couple of months down the line, I expect he will set the appropriate distribution as he sees fit for payments in August. The Treasury already forsee this eventuality and have responded to the call for an increase in the repayment threshold to 70p/£.

The Treasury can also see that the need for the higher sums it had set aside for top-up funding has reduced because of the expected higher dividends, and can therefore afford to allow more in 'compensation' at an earlier stage in the payment schedule. It's a thought without poking the fire too much more.

First pari passu distribution

  • Brabander
  • 15/10/08 31/05/09
  • unspecified
  • Offline
  • Tue, 28/04/2009 - 22:08

Sorry Ice, I do not accept your explanation. According to Simpson's own figures on 31st March he had distributable assets equal to 16.5% of total creditors.
By July that figure will be higher irrespective of returns from KSFUK.
I suspect that the first distribution is deliberately held down to make the SoA appear more attractive.
It is as simple as that!
What other tricks do they have up their sleeve?

The original post related to

  • expatfrance1
  • 15/10/08 31/05/09
  • a depositor
  • Offline
  • Wed, 29/04/2009 - 07:54

The original post related to dividends under the SoA, not liquidation, being held down, so your assumption that it was being done to make the SoA look better is a bit off the mark.

Anyway, as it will be Mike Simpson that will be declaring the dividend perhaps it would be a good idea to find out from him what the situation is.

@brabander pari passu

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
  • Offline
  • Wed, 29/04/2009 - 07:32

No need to be sorry Brabander; we all have our viewpoints and I am trying to make mine more reasonable and less inflammatory. It is a fact that more human catastrophes occur through sheer incompetence than malice aforethought. We shall see what August brings if this thing comes about.

Royally shafted by SoA

  • cypheath
  • 01/11/08 30/10/09
  • a depositor
  • Offline
  • Tue, 28/04/2009 - 18:31

Letter from Skandia dated 22 April is now obviously well out of date as SoA has substantially changed.

It contains phrases such as:-

"As you are aware, Royal Skandia has lobbied the IoMG with regards to the SoA to ensure its policyholders are both fairly treated in comparison to other individual depositors and also to try to ensure that all receive a 100% return"

"After reviewing the proposed SoA in detail we still favour this way forward for a number of reasons......"

Surely in the light of what podather is saying above, they (Ins. Cos.) cannot possibly still be in favour as there is absolutely nothing in it for any bondholder at any size of deposit.

Are DAG Legal Team or any major player bondholders making sure that Insurance Cos. are fully aware of the current position?

What should all bondholders now be doing other than individually telling their Insurance Cos. the answer?
Surely it has to be a big, fat NO!

Podather you are a star!

  • mesufish
  • 21/10/08 01/10/15
  • a depositor
  • Offline
  • Tue, 28/04/2009 - 17:15

Thanks so much for your clarity, and patience in going over these documents. I had completely missed your point about the dividend payments amongst all the general verbiage of the SOA documents. It all goes to re-enforce the feeling that we the depositors must retain final control of the liquidation process - and we cannot do this through the SOA.

IoMG have probably done this to give Chris Watson more to shout about and to strengthen his arguments against the huge DAG conspiracy that is trying to do him down. (I say this tongue in cheek but it has a nice ring to it anyway)


  • chris watson
  • 23/10/08 31/03/10
  • a depositor
  • Offline
  • Tue, 28/04/2009 - 22:46

Even more deleted.