IS IT STILL WORTHWHILE APPLYING FOR DCS

  • hopeful
  • 11/10/08 31/05/09
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Posted: Wed, 08/07/2009 - 08:08

Following Hopper’s postings yesterday evening regarding the numbers (in particular 33p in the bag) can anyone advise if it is still worthwhile for creditors who had over 150k with the bank to apply for the DCS scheme if they have not already done so. I am in this group and decided to postpone my DCS claim until after the creditors meeting that took place yesterday, as I did not wish to assign my voting rights.

I assume that 33p “in the bag” means that 33p in the pound could be paid to creditors at this stage or is it not as simple as this. If 33p was to be paid in the near future someone with say 270k would expect to receive 90k, which is 40k more than the 50k maximum paid under the DCS. I would welcome comments on this matter.

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Drawbacks of claiming under the DCS

  • Iwantmymoneyback
  • 10/10/08 31/05/09
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  • Wed, 08/07/2009 - 18:09

I am in the same situation as Hopeful and have started reviewing documents on the DCS website; I have slightly less than £150k of deposit. I have pasted below their "Assignment of Rights" document. To my non legal mind, it basically seem to say that I delegate every right to them, including who to sue, what compromise to reach, etc (see (c) and (f)) and I would end up with my hands firmly tied, eg without the possibility of taking part to any collective action (it would basically be up to them to decide on this). This does not tie in with comments I have read on this website, in particular when the soa and the dcs were compared.

In normal language, can someone explain what rights we are giving up if we claim under the dcs?

ASSIGNMENT OF RIGHTS

Subject to and in consideration of the Scheme Manager agreeing to pay compensation in respect of the account details of which are set out in section 1 of this form ("the Account"), I/we by my/our signature on this form, hereby jointly and severally irrevocably:

(a) assign to the Scheme Manager absolutely the benefit of all such right, title and interest in the Account and in any other account or accounts in my/our name or in which I/we have a beneficial interest at KSFIOML (such accounts together with the Account being hereinafter referred to as "the Accounts") as I/we each may have now or in the future howsoever arising including, without limitation, the right to repayment of all sums standing to the credit of the Accounts or any of them ("the Rights");

(b) assign to the Scheme Manager absolutely the benefit of all such claims, rights, privileges and benefits as I/we each may have now or in the future of whatsoever nature and howsoever arising in respect of or in connection with the Accounts or any of them and whether against KSFIOML or any other person ("the Claims");

(c) acknowledge the right of the Scheme Manager to do or refrain from doing all such things as it may consider necessary or desirable in connection with the exercise or enforcement of the Rights or the enforcement or prosecution of the Claims including, without limitation, the right to issue, serve and prosecute proceedings (whether in the name of the Scheme Manager or in my/our name(s)) and to settle or compromise such proceedings or the Claims and the right, at the absolute discretion of the Scheme Manager, not to issue, serve or prosecute proceedings or otherwise pursue the Claims or any of them;

(d) undertake to provide to the Scheme Manager all such information, documentation and evidence as it may request in relation to or in connection with the Accounts, the Rights or the Claims;

(e) (a) undertake to do all things as the Scheme Manager may request in relation to or in connection with the Rights or the Claims or the exercise, enforcement or prosecution thereof including, without limitation, the execution of any deed or documentation and the issue, service and prosecution of any proceedings in my/our name(s);

(f) undertake not to take any steps or enforce the Rights or to enforce or prosecute the Claims other than pursuant to any request of the Scheme Manger and undertake not to do anything the effect of which is or will be or may be to waive, settle, compromise or otherwise prejudice the Rights or the Claims or any of them other than pursuant to any such request;

(g) undertake to account to the Scheme Manager for any sum or sums which I/we may receive in relation to or in connection with the Rights or the Claims forthwith upon receipt of the same (other than any such sum or sums received by way of loan);

(h) undertake to indemnify fully and effectively and hold harmless the Scheme Manager from and against any actions, claims or demands of whatsoever nature and howsoever arising which I/we may have or to which I/we may be entitled in relation to or in connection with any action or omission of the Scheme Manager pursuant (a) to (g) (inclusive) above; and

(i) agree to accept from the Scheme Manager at any time after the Scheme Manager has recovered from the liquidation of KSFIOML the amount which the Scheme Manager is entitled to retain under the Scheme Regulations a re-assignment of the rights and benefits assigned hereby.


Drawbacks of Claiming under the DCS

  • Jackie
  • 30/10/08 27/12/09
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  • Tue, 14/07/2009 - 00:12

Yes I agree. I am also very sceptical about claiming under the DCS. Has anyone seen a reply to the following letter dd 11.6.09 from Edwin Coe to the DCS? Are we able to get Edwin Coe to advise us on making this claim?

Dear Mr Fayle

Thank you for your message which is most helpful. Whilst you are correct to draw me up on the quantification of the protected payment, I may have missed the implication as to the payment of the protected deposit. I asked about the expressed intention to pay either the full £50,000 or £20,000 as applicable (subject to the deduction of any dividend paid out of the liquidation) within the next few months. Is that what is proposed?

I note your point about the provisions of Regulation 16 of the Compensation of Depositors Regulations 2008. I have to say that I'm not sure the regulation is as clear as you would suggest.

Regulation 16(1) states that the regulation has effect in relation to depositors who apply for compensation under the Scheme. 16(2) then goes on to say that the Scheme Manager shall not pay or determine to pay a compensation sum out of the fund in respect of a liability unless the depositor has agreed that the depositor's existing rights in respect of that liability shall vest in the Scheme Manager. There is no definition of which liability is referred to in this regulation. In particular, Regulation 9 is not invoked for the purposes of Regulation 16.

Regulation 9 stipulates that, "an eligible protected deposit liability" is the total liability of the participant to the depositor. As I say, however, that definition is not then carried into Regulation 16. Regulation 16 is talking about a liability and the willingness of the depositor to vest in the Scheme Manager existing rights in respect of that liability. Regulation 16 does not suggest that there has to be an assignment of the "eligible protected deposit liability" as defined in Regulation 9. Indeed Regulation 16 suggests that the liability referred to there is simply the payment that is received under the Compensation Scheme up to a maximum of £50,000 for individuals and a maximum of £20,000 (as you remind me) for companies.

Parking that one for the moment, the other point you make, repeated in your letter of 5 June, is that, "As soon as the compensation is recovered, any additional distributions in the liquidation will be redirected to you immediately". Surely the position should be that when the Compensation Scheme recovers the money which it has paid out to the depositor, there should be a reassignment of the remainder to the depositor so that they may pursue it. I note in particular with some concern the possibility of the DCS being able to compromise any claims against the relevant institution following the assignment.

There are some other issues on which I would be grateful for your guidance.

My understanding is that the Depositors' Compensation Scheme only becomes effective when there is an event of default on the part of the relevant institution. My understanding here is that that default took place when the Company was placed into liquidation. It does not take place when the winding-up petition is presented. Thus, accordingly, under Regulation 9(1) the liability for the definition of "eligible protected deposit liability" is the principal and accrued interest at the time of the default, namely 27 May 2009. I note the provisions of Regulation 9(4) but that talks about deposits and not accrued interest. I understand that it is being asserted that interest accrued as at the true date of default is not being allowed as part of a claim. I would be grateful for an explanation.

Under Regulation 16(5) there is a definition of the words "retained sum" for the purposes of Regulation 16(4). I have to say that I simply do not understand Regulation 16(5)(b) and perhaps that could be explained. I am sure my lack of understanding is entirely due to my own failings.

I understand that depositors are being pressed to lodge their claims by 30 June 2009. Could we know, however, what is the effect if they fail to do so? What if it is with you by 1 July, and what if it is with you by 31 July? What is the effect of any delay and, if there is an effect other than the delay in submission, why does that have any further effect?

I understood from a recent article that some further authority for distribution under the Scheme is required from Tynwald. Is that correct?

What are the Scheme’s intentions in relation to the vote at any creditors’ meetings in relation to any assigned rights? Will they be used in any way?

Regards

David Greene
Partner
For Edwin Coe LLP


@jackie - rights under DCS

  • anrigaut
  • 19/10/08 30/10/09
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  • Tue, 14/07/2009 - 00:29

Reply to David Greene's letter is here:
See http://www.ksfiomdepositors.org/public-page/dsc-manager-correspondence-e...

See also below: "Reassigning rights ...." and subsequent posts on this subject


Drawbacks of claiming under the DCSo

  • barrona
  • 17/11/08 31/05/09
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  • Thu, 09/07/2009 - 13:34

I must confess to still being confused as to whether or not I should claim under DCS following the hearing on 7 July.

I am in the category of a depositor who has between 100k -130k.
Although I appreciate that there have been many emails on this sibject on the website, can I have some additional clarification from either a member of DAG or the legal team as to what their advice is?

Although not a frequent contributor to the website I have read with considerable dismay some of the comments which can only drive a wedge between certain of the depositors.

This is not helpful to what I hope is still the ongoing wish of DAG to achieve a 100% return to all depositors.

I have also previously touched on the lack of information percolating from the DAG legal team. Whilst appreciating that certain matters, for reasons of confidentiality cannot be published, I am not alone in wondering what it is exactly they are doing to achieve a 100% return of our money.

Can someone please enlighten me?


Reassignment of rights assigned to DCS

  • anrigaut
  • 19/10/08 30/10/09
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  • Wed, 08/07/2009 - 18:22

Iwantmymoneyback:

This extract from a letter from of 17 June from Mike Fayle to David Greene of Edwin Coe may help:

"As we have already indicated, I confirm that the Scheme Manager intends to ask the liquidator to re-direct any future “surplus” dividends directly to depositors to avoid administrative duplication. Upon request, the Scheme Manager would also be prepared in principle to re-assign rights back to a depositor once a position of “surplus” has been reached (this position is also reflected in the claim form). The reason the re-assignment would only be made upon request is that in connection with previous schemes a significant amount of administrative time and effort was made contacting claimants to ascertain whether they wished their rights to be re-assigned. Many claimants did not respond, or after having indicated that they wished to obtain a re-assignment did not then complete the re-assignment forms. Many claimants therefore may well be satisfied with the re-direction process but, for the avoidance of doubt, the Scheme Manager would in principle, be content to re-assign once the scheme payment and recovery process has been completed."

See http://www.ksfiomdepositors.org/public-page/dsc-manager-correspondence-e...

The only slightly worrying words I can see there (twice) are "in principle"; what about in practice?


This helps but agreed on your

  • Iwantmymoneyback
  • 10/10/08 31/05/09
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  • Wed, 08/07/2009 - 20:20

This helps but agreed on your comment re.the "in principle" caveat. Whether we can get our rights reassigned is crucial if we want to be able to take any legal action and the last thing I want is to ask the Scheme manager's authorisation to take such action!!


Hear hear - retained rights

  • Julienne
  • 16/10/08 31/08/09
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  • Sat, 11/07/2009 - 09:34

I absolutely agree - this is exactly my worry - the ïn principle"- If they had proved honourable to date I would have more faith -- BUT I don't so am in a dilemma.

The re assignment of rights is crutial to me as I want 100% back and will join forces with those at the end of all payments in 5 / 6 years time and sue the pants of 'em!!


Hear hear - retained rights

  • Julienne
  • 16/10/08 31/08/09
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  • Sat, 11/07/2009 - 09:36

duplicated


Hear hear - retained rights

  • Julienne
  • 16/10/08 31/08/09
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  • Sat, 11/07/2009 - 09:36

sorry in a part of the world where clicking doesn't always show the result immediately so result triple post-


Recovery of rights

  • anrigaut
  • 19/10/08 30/10/09
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  • Wed, 08/07/2009 - 20:48

Further to the above, here is an extract from an email I received from the DCS Scheme. This sounds less ambigous, but it only from Scheme Agent Micky Swindle (sorry - Swindale!) ....

"As the liquidation proceeds and distributions are made, the DCS will recover the compensation payment. Once the compensation has been fully recovered, any further distributions by the liquidator will be redirected to you. .

The assignment transfers all the right in the account (and any other accounts with the bank) to the DCS. If, after the recovery of the compensation, you actively wish the DCS to re-assign the rights to you, it is perfectly willing to do so. The re-direct approach for the actual payments will not require formal re-assignment.

I hope that clarifies matters.

Regards

Micky Swindale"

Scheme Agent "


I am in the same boat

  • Julienne
  • 16/10/08 31/08/09
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  • Wed, 08/07/2009 - 12:05

I too posponed my DCS claim until my votes could count at yesterday's meeting and have yet to claim from the DCS.

A question for manx -person - or anyone in the know
I would tend to agree the liquidators would stick with their original 14.5% 1st dividend BUT will they follow fairly swiftly to 33% - in otherwords another 18.5% which would take anyone with 150000 GBP at risk within spitting distance of their DCS payment all be it a little later.

Any opinions sought -


@julienne

  • manx-person
  • 17/10/08 31/05/09
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  • Wed, 08/07/2009 - 16:21

Well I am not in the know really, but I think the timing of future dividends would be something that hopefully the creditors committe would be able to influence.


Julienne & hopeful, re applying for DCS

  • Anonymous
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  • Wed, 08/07/2009 - 15:05

As I understand, there is no guarantee that payments totaling 33% will be paid out by the liquidator by year-end. Operating costs and monies set aside for contingencies would, to my mind, limit the cash from liquidated assets to something less than the 33%. On the other hand there could be further recoveries before year-end which could change the picture completely.

Regarding making an application for DCS at this stage, it is likely that you would miss the first payout and as such would receive an initial payment from the liquidator sooner, albeit perhaps a lesser amount. As you know, over the long term, recoveries for the partially protected over £70,000 depositor should be the same whether opting for the DCS or liquidation assuming a 70% overall recovery is achieved.


good question re DCS

  • Anonymous
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  • Wed, 08/07/2009 - 10:43

I too would appreciate opinions on this. Some of us between 50k and 150k net worth will have foregone applying for DCS to be able to contribute our proxy vote. (Let's hope that will have been worthwhile!)

Now the questions remain:

Should we now apply for DCS, and if so, will we still be in time for the first payment of it?

Should we wait for the first 14% dividend from liquidation and, if so, when will the next one be due?


Apply

  • bellyup
  • 10/10/08 09/01/10
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  • Wed, 08/07/2009 - 17:02

Apply what have you got to lose?

The moral blackmail employed by the IOM to make people apply before the CC meeting was to my mind outrageous and i would be surprised in reality if this will affect the timings of payouts at all.


Bellyup

  • Julienne
  • 16/10/08 31/08/09
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  • Wed, 08/07/2009 - 17:26

That has been my feeling to apply now - there is now nothing to lose.
I assume that by applying for DCS now we do NOT waive any right to pursue any 3rd party in the future for whatever percentage remains after the liquidator has paid everything out that he has - the 70%, 80% or even 88% that is currently thought to be possible over a number of years.

All that changes is the timing of my dividends and I know that by not submitting by 3rd July that I have missed the 1st payout and will get whatever the liquidator calculates. Presumable the balance to 50000GBP would be paid by DCS a few months later - year end or whatever, but there may well be another liquidators dividend at a similar time so it seems to be as broad as it is long!!

Please correct me if I have got any of this wrong.

My main concern is that I am willing to carry on until I get 100% returned by whatever means necessary - and I don't want to jepodise my ability to sue in the long term just to gain a bit extra in the short term!!


@Julienne

  • anrigaut
  • 19/10/08 30/10/09
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  • Wed, 08/07/2009 - 18:00

DCS have said that, once they have recovered the £50,000 they will have paid you, you will be able to request (and they will agree) for all your rights to be reassigned to you. But you will have to ASK - it will not be done automatically.

I hope this helps to reassure you. I am in a similar position, though in my case it will likely be a long wait to improve on the £50K from DCS. So I shall certainly apply for DCS.


@ Julienne

  • bellyup
  • 10/10/08 09/01/10
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  • Wed, 08/07/2009 - 17:30

You wont as far as I am aware jeopardise any of your rights to fight on for 100%

This is the major difference between the DSC and the SOA.


Distributions

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
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  • Wed, 08/07/2009 - 08:53

Liquidators don't distribute all the cash they receive immediately they retain some to cover contingencies (such as the Booker share contingency) and also to fund the running costs of the liquidation.

My guess is that they would stick with the proposed 14.5% dividend at make a further dividend in a few months time when there have been further realisations.


Payout and Bondholders

  • chipmunk
  • 13/10/08 31/05/09
  • unspecified
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  • Thu, 09/07/2009 - 07:03

Can somebody tell me as a Bond holder if I should expect to rcv within the first Divi (August) a full 50K or 14.5% or whichever is the greatest...or a percentage of 50K depending on the number of depositors within the same Bond Or the latter but a percentage of 20K..........its still not clear to me.


Bond holders aren't (really)

  • frog
  • 10/10/08 13/09/09
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  • Thu, 09/07/2009 - 09:53

Bond holders aren't (really) covered by DCS, so you'll get the payout expected to be around 14.5% - well that is what the life company will get - what they hand over to you plus when is something you'll have to check with them. The £20K split between all the bondholders wouldn't go very far, so I expect (but don't know for sure) that the life companies didn't apply. In fact, because they voted at the last meeting, it is almost certain that DCS isn't involved in the Bond holders dividends.


@ FROG

  • 345681
  • 28/11/08 31/05/09
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  • Thu, 09/07/2009 - 10:14

Has it been agreed yet what, if any, deduction will be made from the first dividend to repay
EPS 2? Whilst I had originally understood that EPS 2 would have to be repaid in full before any dividends are paid to depositors, I have seen a suggestion recently that if the initial dividend is, say, 14.5%, then IOM Treasury would only claim 14.5% of its EPS 2 payment (i.e. £1,450) from the initial dividend, stand aside for the remainder and then make a proportionate claim on subsequent dividends. Does anybody know what the situation is likely to be?


Hi numbers, I'm afaraid I

  • frog
  • 10/10/08 13/09/09
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  • Thu, 09/07/2009 - 13:07

Hi numbers,

I'm afaraid I don't know about that - it's a very good question. I doubt that they'll only take the same percentage as they will expect to get 100% back (and not the 73-88% expected from liquidation) - I vaguely recall that they will have the first claim on their £10K in the agreement, so will probably take the first £10K . I'm not sure though - I'd have to go back and read the EPS agreement again - which I will do.


Next MS Conference Call?

  • mikepapa
  • 10/10/08 n/a (free)
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  • Thu, 09/07/2009 - 15:15

Dear Frog,

Long time no see.... welcome back :-)

Are you going to schedule a conference call with Mike Simpson any time in the near future?

After the meeting to appointment CC I am sure that are many issues that
members would like you to put to MS for clarification.

Kind regards,

Mike


Thanks MikePapa, I haven't

  • frog
  • 10/10/08 13/09/09
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  • Thu, 09/07/2009 - 15:43

Thanks MikePapa,

I haven't scheduled a call - although my impression is that people still want to have them in the main. The CC results should be posted hopefully in the next few days and I agree there will be some questions.

One thing that could cause a change in format is that I am one of the candidates for a slot on the CC, but with the DST not wanting to work with any other groups (like the insurance companies or HNW) means that we now have no idea yet on who would be put on the committee. BTW, I wouldn't have been on the CC if the DST had accepted the proposals from the Insurance companies and HNW, but then we would have had 4 depositor reps... oh well...

If I am on the committee, I would plan to publish the discussions that occur (as much as possible notwithstanding items that are regarded as confidential at the time) - and that may be a more appropriate way of handling responses in the future - but until then, I was planning to await the outcome of the CC and get an understanding of the format for communication back to us 'uninformed' and 'beyond ridiculous' depositors before seeing whether the calls were needed any more.


Thanks MikePapa, I haven't

  • Anonymous
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  • Sun, 12/07/2009 - 12:19

Frog: It is starting to look as if your factual errors are deliberate. Of course the DST wants to work with the insurance companies, contrary to your statement above. It has been talking to them ever since the DST came into existence (and before) and is still doing so. As for the HNW group, what on earth makes you think that the DST did not vote for one or more CC candidates from the HNW group?


Well in your judgement you

  • frog
  • 10/10/08 13/09/09
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  • Sun, 12/07/2009 - 13:01

Well in your judgement you say that I am deliberately trying to mislead others on this site.... Says a lot about your judgement.

While you have little to lose, and I'm now not clear of your motivations on this site any more since you got mostly paid out - mine have been and still are the same - get the best we can out of this sorry situation. I'm not here for ego reasons - I want my money back, along with all those who haven't been paid out.


Well in your judgement you

  • Anonymous
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  • Sun, 12/07/2009 - 14:08

Frog: my motivation for being here is and always was to help depositors. It never had anything to do with my own (very small) deposits. It could hardly be "ego reasons" as you suggest, since I never use my real name.

Also I say that your factual errors appear to be deliberate because you keep repeating them after being corrected. Why else is it that you can't get your facts straight however many times it is pointed out to you that you are wrong?


As I said, your 'facts' are

  • frog
  • 10/10/08 13/09/09
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  • Sun, 12/07/2009 - 15:09

As I said, your 'facts' are opinions, and I hold others. Unlike you though I am not contributing to this site 'for the benefit of depositors' in such a selfless way - I am a depositor and trying to move things on. You though seem to have changed from providing useful facts to pushing opinions and this is unhelpful to the cause (well the depositors' cause anyhow).

BTW, you don't have to provide your real name to promote your ego - I, for one will not further contribute to your games. Bye.


As I said, your 'facts' are

  • Anonymous
  • Offline
  • Sun, 12/07/2009 - 16:12

Frog: no, you are wrong again, my "facts" are facts, not opinions.


Thanks Frog. I ceratinly

  • mikepapa
  • 10/10/08 n/a (free)
  • a depositor
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  • Sun, 12/07/2009 - 11:36

Thanks Frog.

I ceratinly agree that it was a great shame that DST did not put differences aside and support HNW proposal for CC vote........ seems like a bit of a footshot for depositors!

Understand that you are canditate for CC, so as you suggest let's wait and see outcome.
Either way I think most depositors would still like some sort of means to directly question MS as the liquidation proceeds.

Kind regards,

Mike


Thanks MikePapa, I haven't

  • Anonymous
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  • Thu, 09/07/2009 - 16:23

Could Simpson be asked if he could account for the fact that 80 - 90% of depositors voting in all 4 recent DAG polls indicated that they had no confidence in the joint liquidators (provisional)?


To what benefit? All

  • frog
  • 10/10/08 13/09/09
  • a depositor
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  • Thu, 09/07/2009 - 16:42

To what benefit?

All creditors voted on whether to continue with PwC as Liquidator at the creditors meeting on the 7th and the resoluton was passed that a majority of value and quantity approved. Lets move onward.

BTW, I'm not sure about your figure for 4 polls.


Booker share and 33%

  • jmf
  • 16/10/08 31/10/09
  • a depositor
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  • Wed, 08/07/2009 - 16:11

I'm another partially protected depositor who has waited for the voting day to pass before considering the DCS. If the Booker share realisation is not included in the pay out what % dividend are we talking about receiving in the not too distant future - more or less? Noted manx-person that the Liquidator will not pay out everything he has.