Individual claims under the PG - important
We have become aware that at least one depositor who lodged an objection to the rejection of his individual claim under the parental guarantee has just received a letter from the Kaupthing Winding-up Committee inviting him to a meeting (in Iceland – and in Icelandic) to attempt to settle the dispute. The letter states that, in case of non-attendance, the matter will be referred to the court unless the objection is withdrawn prior to the meeting and that failure to attend the court is likely to incur costs.
Anyone receiving a similar letter and not wishing to pursue their individual claim further, at risk of incurring costs (which cannot be borne by DAG), is advised to reply promptly (within the time limit stipulated) and withdraw their objection, whether or not they believe their claim has already been withdrawn.
DAG's advice over the pursuit of individual claims remains as stated previously (and reproduced below). The KSFIOM claim under the PG was lodged by the liquidators for the potential benefit of all creditors. Following the Icelandic Supreme Court ruling that KSFIOM has a valid claim, we see no point in continuing to pursue individual claims under the same guarantee.
Our previous advice, with reasons, was as follows:
The individual claims lodged by depositors on the basis of the Parental Guarantee were made purely as a precautionary measure in case the claim made by our liquidators on behalf of the bank (KSFIOM) - and thus for the benefit of all creditors - were to fail. These individual claims were rejected by the Kaupthing Winding-up Committee/Board (WuC/WuB) on the grounds that it was "of the opinion that only the joint liquidators of KSFIOM can make a claim on the basis of the guarantee as KSFIOM was the recipient and not individual creditors of KSFIOM". This view was in accordance with PwC's conclusion that they were indeed the right people to make the claim (a view which they shared with depositors, whilst not precluding the possibility of individuals having a claim). As we know, the claim of KSFIOM was subsequently rejected by the WuC who contested the validity of the guarantee. However, this dispute - referred to the Icelandic courts - has now been definitively resolved on appeal in favour of KSFIOM.
In the light of the recent ruling by the Supreme Court of Iceland recognising the claim by KSFIOM, there is therefore no longer any point in pursuing the individual claims. Our Icelandic lawyers BBA Legal have accordingly withdrawn all objections which were lodged by them on behalf of depositors after the first round of rejections in January 2010. If your claim was rejected later and you were therefore obliged to lodge your own objection, you could not be included in this list. Our advice to you would be to withdraw your objection by replying to any email you receive from the WuC.
BBA Legal have confirmed this advice : "I agree with you, the advice to be given to depositors who have lodged a claim against Kaupthing Bank would be, in light of the Supreme Court ruling, to withdraw their objection by sending a short notice in that respect to the WuB."
BBA Legal also state that "if the WuB will not get a response within the specified timeframe the WuB will consider the objection withdrawn. There should though not be any liability for cost through a lack of response or action in that respect." Nevertheless, to be on the safe side, we suggest you do reply.
Don't forget to include your claim number. You just need a short note of the sort:
"Ref Claim n° xxxxxxxxx
In the light of the ruling by the Icelandic Supreme Court that KSFIOM is entitled to claim under the parental guarantee in the winding up of Kaupthing hf, I hereby withdraw my objection lodged with the Winding-up Committee on [date]".
You should receive an acknowledgement from the WuC.
WuC email address
I am receiving recorded delivery envelopes from Icleand (in Icelandic) and obviously need to write to committee to withdraw claim and confirm to court but do not know contact details to do this - do you have WuC email address please.
@caledonia
Am surprised you are getting mail in Icelandic! The depositor referred to in my previous post had received a letter (summons to the Court) in English.
Kari Olafsson (address as given by TonyC) is Legal Counsel to the WuC. I suggest that in addition to withdrawing your objection(s) - giving the claim number(s) - you inform him that you are receiving letters in Icelandic which you cannot understand. Can you work out exactly who is sending them?. If these come from the Court you may also need to contact them directly, but I can't help with any address for that as I have not seen copies of their letter.
Good luck!
Anrigaut
Caledonia, Try kari [dot]
Caledonia,
Try
kari [dot] olafsson(?)kaupthing [dot] com
Regards, TonyC
Individual cases under the PG not withdrawn
We have recently been contacted by a worried depositor who, despite believing (his objection to the rejection of) his individual claim had been withdrawn, has received a summons to attend the Court in Rejkjavik.
It turns out that, without him realising it, he had two distinct claims registered with the Kaupthing Winding-up Committee (as a result of having submitted claims relating to two accounts with KSFIOM on separate forms), of which only one had been withdrawn.
After consultation with our Icelandic lawyers, we have advised him to immediately write (email) a) to the WuC - to withdraw his objection, stating the relevant claim number as it appears on the Court papers and b) to the Court - to inform them that he will not be attending and is withdrawing his objection. Our Icelandic lawyers believe this should stop the procedure with no cost to the depositor. I hope they are right!
Will update here if we receive further news on this.
Please note that any costs incurred by failure to withdraw objections cannot be borne by DAG (unless of course the fault clearly lies with us or our lawyers - not so in the case in question as we were only ever notified of one claim number).
Summons to attend Icelandic court
Update:
We were informed yesterday of another depositor receiving a summons to attend the Icelandic court in connection with his individual claim under the parental guarantee. Anyone who failed to withdraw their objections to the initial rejection, either following the court ruling in June that KSFIOM's claim (for the benefit of all creditors) was valid or in August (or later) in response to an invitation to meet with the Winding up Committee (WuC), can expect to be summoned to attend the court.
Our advice to anyone in this situation remains as before, namely to write immediately:
a) to the WuC to request the withdrawal of your claim(s), stating the relevant claim number(s) as it/they appear(s) on the Court papers
winding-up(?)kaupthing [dot] com or kari [dot] olafsson(?)kaupthing [dot] com (legal counsel, WuC); and
b) to the Court to inform them that you will not be attending and have withdrawn your claim(s).
lilja(?)domstolar [dot] is
It is essential to contact the WuC (as well as the court) as it appears that only the WuC has authority to withdraw your claim - the court cannot do that.
At this late stage, it is possible that you may incur costs, but at least this action should minimise the damage. Please note that any such costs cannot be borne by DAG - unless of course they result from an error on the part of ourselves or our lawyers. If you suspect such an error has been made, you should contact us at dstcontact(?)ksfiomdag [dot] com. Please do not contact bbalegal directly; they would in any case be unlikely to reply to individual DAG members with whom they have no contract.
Our advice is based on our conviction - shared by our Icelandic lawyers - that there is no way the individual claims could succeed now that KSFIOM's claim has been accepted in principle. Should you nevertheless decide to continue the process by attending, or being represented at, the court, this will clearly be at your cost.
ok
ok
How about claims for unpaid interest?
Dear fellow depositors,
it is obviously good news that the parental guarantee is valid and that the WUC of KSFIOM can claim against the WUC of Kaupthing HF. This should help >50k depositors of KSFIOM to get more of their money back, potentially even a 100% revcovery.
But what does this mean for individual claims of individual KSFIOM depositors against Kaupthing HF?
For sure an individual claim from a KSFIOM depositor against Kaupthing HF is no longer possible if that claim relates to the amount of his deposit at KSFIOM as of 9 October 2008.
But what about claims for unpaid interest after 9 October 2008?
As I have not been able to claim unpaid interest after 9 October 2008 against KSFIOM in the Isle of Man I had submited an individual claim for this unpaid interest against Kaupthing HF in Iceland. The WUC in Iceland allows for such claims to be made.
The WUC had initially rejected my claim to which I objected. The WUC recently send me a letter saying if I do not withdraw my objection the case will be passed on to the District Court in Reykjavík and that I will be liable for legal costs if I dont show up at court or the court rules against me.
If my claim would have been for the balance on my KSFIOM acount as of 9 October 2008 I would have withdrawn my objection - this is what many readers here have done.
But as my claim is for unpaid interest after 9 October 2008 which I can not claim in the Isle of Man the situation is different.
Does anyone know what to do and/or has experience with this?
Interest claims under PG
Hi KSFIOMCRAP,
I too - and I presume most of those who lodged individual claims - included interest from 8 Oct in my claim. However, my understanding remains that there is absolutely no way any individual claims against Kaupthing hf could succeed since the only liability of K hf in respect of KSFIOM is that under the PG, now accepted as a valid claim by the bank (and not by individual depositors), and I have accordingly withdrawn my objection.
However, the claim made by the Liquidators under the PG DOES include interest post-October 2008 - indeed, in view of the expected recovery level of KSFIOM, this interest is expected to represent the largest part of the claim. This is possible because such interest does in fact become claimable in the IOM if and when all currently agreed claims, plus any capped interest as of 8 Oct 2008, have been met in full. It therefore logically forms part of KSFIOM's liability to its depositors covered by the PG.
Since the PG claim is treated as an unsecured and not a priority claim, any recovery under it will only be partial. It is thus only by inclusion of the interest that >£50k depositors have any chance of reaching "100%" (of capital).
It is my further understanding that the potential claims for interest apply equally to <£50k depositors and I have been assured by the DCS administrator that they would make such claims on behalf of all DCS claimants (including those fully paid out) if and when the KSFIOM recovery reaches "100%". His comment was something like "it will be a nightmare, but we will do it"!
I hope this helps.
@ Anrigaut
Hi Anrigaut,
many thanks for your quick response. I was not aware that the WUC of KSFIOM have included interest in their claim against Kaupthing Bank hf and that even the DCS of the IOM will make additional claims for interest if a recovery of 100% has been reached.
Do you know up until what date the claim for the interest is/will be?
Do you possibly have a link to a webpage or letter from the Mike Simpson (IOM WUC) or the IOM DCS which addresses this topic of claims for interest after 9 Ocotber 2008 in relation to the parental guarantee?
Best Regards
@KSFIOMCRAP
The fact that interest has been or will be included in the claim under the PG has been part of my personal 'knowledge base' (confirmed by discussions with CoI members) for so long that it's hard now to know where best to find written confirmation. Clearly this aspect was overshadowed for a long time by the rejection of the guarantee and the subsequent court proceedings and it seems few details have been given, but there are some passing references to it in communications from the JLs, including:
- CoI minutes 5 Nov 2009: the claim was not yet finalised but it was intended to be "as wide as possible ..."
http://www.kaupthingsingers.co.im/Pages/2009/November/25November2009.asp
- Notes of a CoI conference call 12 Nov 2010: "... Also, as it is a shortfall claim, it accrues interest."
http://www.kaupthingsingers.co.im/Pages/2010/December/23December2010.asp
- Progress Report to creditors from 10 Jan 2011 to 9 July 2011 (para 7.1): "However the quantum of the claim against KHF under the guarantee needs to be adjusted continuously to reflect the actual shortfall position following realisation of the Company's assets and the accrued rights of the creditors of the Company to interest on their claims under Isle of Man insolvency law."
http://www.kaupthingsingers.co.im/Pages/2011/August/12August2011.asp
This last - in bold type - seems the clearest indication. The possibility that interest could (and should) be included in the claim was first proposed by elgee who put the idea to Peter Spratt (Joint Liquidator) back in October 2009. The idea was favourably received and, after consultation with PWC's lawyers, it was agreed that the claim would be made on this basis. The matter was discussed at some length at the time on the ksfiomdag.com site here: http://www.ksfiomdag.com/index.php?option=com_kunena&Itemid=90&func=view... (log in required), where the idea was explained in some detail and the upshot of the correspondence with Peter Spratt reported as "Laurence has now heard from Peter Spratt who has looked into his 'closing the gap' idea and confirms that PwC's "present thinking is to include an amount for interest" (in the claim under the PG)", but I don't think it was reported on this site (from which elgee had just been banned!). Whether PwC would have got around to this idea on their own we will never know. But I think we have reason to be thankful to Elgee for his inspiration and persistence.
Our CoI members have since confirmed to DST that this remains the basis of the claim. The precise details of how the claim will eventually be calculated remain unknown, but I gather a nominal (maximal) amount for interest has been included to reserve our position. In principle, KSFIOM will be claiming the interest (at whatever is the statutory IOM rate - around 4% we believe) on oustanding amounts throughout the liquidation. But obviously the fine detail will have to be negotiated with and accepted by the Khf WuC.
Regarding the DCS, there is nothing in writing. However, when it began to seem possible that 100% of currently approved claims in KSFIOM might be met - at which point interest would become claimable in the liquidation by under 50k depositors fully paid by the DCS, I raised the question directly with Mike Fayle (DCS ) in the course of a telephone call. He was quite firm in saying that in that event (which he agreed was now a distinct possibility) they would be obliged to claim on behalf of all DCS claimants, including those fully paid out, to whom any interest paid would be passed in the way amounts recovered from the liquidation over and above the 50k compensation are currently being paid to an increasing number of partially protected depositors. What was not possible under the IOM regulations was for lost interest to be paid by the DCS itself.
Thanks!
Ok, many thanks for all this information. So there is still some hope. Obviously it will all boil down to the ability of Kaupthing Bank HF to make payments to KSFIOM under the parental guarantee.
It seems to me that the WUC in Iceland is trying all they can to get rid of any claims relating to the parental guarantee.
That the KSFIOM claim under the PG has been rejected and the PG declared invalid initially just because of some home made internal mess (i.e. missing internal approvals and signatures) is a joke.
Also the way they are now pushing individual claimants to drop their claims under the PG is unfair and brutal.
I initially refused to drop my claim and they invited me for a meeting in Iceland taking place just a few days later which was supposed to be held in Icelandic language - haha, very funny!!!
The WUC also refused to do the requested meeting via telephone or video conference. Finally the WUC said if the claim is not dropped they will pass the case to the courts and that the claimant shall be liable for legal costs.
All this does not sound right to me - its Kaupthing Bank which blew up and created all this mess and now depositors are supposed to fork out even more money to fight for their rights and lost deposits at courts in Iceland.
If the WUC in Iceland decides not to resolve disputes with claimants on their own in an efficient way and in a language which we all speak but prefers to pass these disputes on to the courts well fine, then it should be their business and they should be liable to pay for any court fees but not the claimant.
I am wondering if the way these pirates are handeling these things is legal.
Anyway, I will never put my money into such a dodgy viking bank again - thats for sure!!!!