Latest questions & answers from one of the JLs

  • Gordon 45
  • 22/10/08 n/a (free)
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Posted: Sat, 20/03/2010 - 10:39

Hi Folks,

I did manage to have another conference call with one of the JLs recently. I had hoped to post the info on the DAg more quickly, so my apologies for being slower than intended.

Most of the questions surround costs as I feel that they have and are still underestimating what the true total costs for the liquidation will be. I have started updating my last Table No.8 into my new No.9 but really await the next fuller set of information from the JLs, that will now hopefully be given out in April (see my questions list).

I hope the info helps you all in some to see where we are going and I will continue to attempt to speak with the JLs once they issue this next set of 'fuller' information.

Anyway here is the List of questions to one of the JLs and his answers, where given

Creditors

1 Can I ask why you have not paid out Preferential Creditors yet? And when would you expect to pay them?

Answer

Not paid yet due to tax implications etc

  1. Will the Creditors be fortunate enough, to now expect a monthly update on Loan Book & Cash in Hand as you have given out on 11.12.2009 and 13.1.2010?

Answer

Yes – hopefully there will be a monthly update on Cash Book & the Loan Book maturity ladder.

  1. How did JLs manage to lower the £909m owed to creditors - Inc Preferential Creditors to £898m (JLs update on 10.11.2009) if it was not due to the £10.6m ‘set off’?

Answer

This change was due to Letters of Credit expiring, contingency liabilities now up.

  1. Would you please show the ‘split’ for the £75m held back to cover – unclaimed, not yet ‘resolved’, Habana, Any other in flight transfers + any others that I have missed

Answer

Not happy at this stage to discuss in detail, as Habana claims not yet resolved.

  1. a) Is the Habana appeal result due in April 2010?
    b) Is Habana claims still £70m?
    c) Any other ‘in flight’ claims unresolved? If so for how much?

Answer

a. Yes still expected in April 2010.
b. No comment for reasons already mentioned.
c. There may be more ‘in flight’ claims, need to await the outcome of the appeal and go from there.

  1. How much has the following changed?
    a. £12m unclaimed creditors?
    b. £82m unresolved creditors?
    c. If some of the above resolved have the claimants been paid out?
    d. If not will they ‘catch up’ at next dividend payment?

Answer

a. £12m unclaimed now down to around £10m.
b. Now lower than £82m but do not know by how much.
c. Yes some payments have now been paid out.
d. Not applicable now

  1. If I take the £45.210m held back by JLs at 1st dividend and also take the £75m held back from the 2nd dividend it suggests a total of unclaimed/ unresolved/ Habana/Plus any other ‘in flight’ transfer claims totalling between £182.29m/£187.5m yet the total for these as far as I can tell is £12m + £82M + 70m = £164m. Can you tell me what is causing the difference of between £18-23m?

Answer

Rather not comment on this at present due to the Habana Claims.

Although from answers further down on what costs have been paid so far, Costs owed not yet paid etc it has become clear that the JLs when paying out a Dividend are holding back the balance of the total costs estimated as being required for the whole Liquidation process.

This in turn means three things to me:

· Firstly I should not need to show estimated costs for 2010 onwards to 2016, within my Tables, as long as the JLs continue to state the total amount held back at each dividend point. Table 8 showed a figure of £14.3m, that would mean we could bring back in the £14.3m less £11m = £3.3m within the cash available for Dividends (0.36p/£).
· Secondly it should also mean being able to bring back in the £3.446m I had allowed as extra contingency towards total costs in my Table 8, when I felt the original £15m allowed for by the JLs was far too low. This would raise Dividend payments slightly (0.38p/£).
· Having said that in two above, it is not possible to work out the exact payments made in total so far for all costs based on what we know, so I will probably leave £1.446m at the end in my next Table for cost contingencies and put £2m back into the dividend ‘pot’.

Costs

  1. Do the costs shown in data issued on 22.7.2009 (Prov up to 26.5.209) for legal and other professional fees of £1.024m equate to the figures shown in the table issued on 11.12.2009 of £1.137348m?

Answer

Yes

  1. Do the costs shown in data issued on 22.7.2009 (Prov up to 26.5.209) for Employees, rent, utilities, & other costs of £1.712m equate to the figures shown in the table issued on 11.12.2009 (for what appears to be the same items) of £1.823987m?

Answer

Yes

  1. Can you confirm if the Legal & Other Professional costs of £1.137348m and the staff costs etc of £1.823987m as shown on 11.12.2009update, have all been paid prior to the ‘cash in hand’ total issued on 21.1.2010 of approx £130m?

Answer

I was informed if costs are shown in the Receipts & Payments Sections of updates, they have been paid. I felt this was a different answer to that given to me on the last occasion we spoke (based on info given out on 11.12.2009 that included a page on Receipts and Payments shown within the cash book update as at 30.11.2009).

Could have been I put the question poorly at that time. But I was definitely informed last time that nothing had been paid to PWC at that point (they were due a total of £2,953,683 at that point) and that was shown within the Receipts & Payments page as at 30.11.2009. See question below on this.

4.
a) Can you confirm that the Liquidator costs of £2,953,683 has not yet been paid to PWC?
b) And if not yet paid, when would you expect these costs to be paid?

Answer

a. Some of the costs due to PWC have been paid. Just over £1m.
b. Hopefully PWC will receive some more soon

That would suggest to me that of the £2,953,683, around £1m has been paid leaving a shortfall of around £1.953m still to be paid. And that only covers up to 30.9.2009. But this shortfall should be within the £11m held back as per statement on 21.1.2010.

  1. Is it correct to assume the Legal & Other Professional Costs between 26.5.2009 & 30.9.2009 of £972,762 + £45,131 = £1,017,893 has been paid prior to ‘cash in hand’ total of approx £130m, issued on 21.1.2010?

Answer

As these figures appear on the same cashbook update of 11.12.2009 within the Receipts & Payments page, it is fair to assume they have been paid as per reply to Question 3 (Costs) above.

  1. Is it correct to assume that the total costs for the following – Staff, Rent, Rates, IT, Sundry, Refurb, Insurance, Statutory, COI, 3rd Party Funds = £1,351,419 between 26.5.2009 & 30.9.2009 has been paid prior to ‘cash in hand’ total of approx £130m, issued on 21.1.2010?

Answer

As these figures appear on the same cashbook update of 11.12.2009 within the Receipts & Payments page, it is fair to assume they have been paid as per reply to Question 3 (Costs) above.

7.
a) You have already stated that you expect total costs to be approx £15m (albeit you said it was a conservative estimate). Total costs so far, appear to come to £8,284,330 (1st year only).

Answer

Total expected costs have been revised to a figure of £18m. JL seemed quite confident this would be sufficient, even if I didn’t. I will revamp and use this figure in my future estimated dividend payments tables.

b) Within the data issued on 11.12.2009 within the Cash Position (page showing costs)
· Legal & Other Professional Costs appear to total £2,110,110 + £45,131 = £2,155,241
· Staff costs etc £1,823,987 + £1,351,419 = £3,175,406 of which I think around 2/3rds is due to staff costs & IT.

c) So, can I ask if we have spent around £8,284,330 in approx 12 months (still got to see Oct/Dec2009 figures), if you have or will revamp your £15m estimated costs?

Answer

See above – now £18m

d) And do you now think that estimated costs could be around £21m now (again I think at a conservative estimate)?

Answer

See above

g) Legal & Other Professional costs on same statement total £2,110,110.
h) So if we guestimate the following:
i. Staff etc 2010-2016 (7 years) lets say £5.5m
ii. Legal + Other Prof Fees (based on £2.1m so far, again I think it will drop substantially so for 2010-2016 £3.5m
iii. PWC, so far £2.954m, I reckon including expenses (next 7 years) £4.2m
iv. Gives a total of 13.2m + £8.3m already spent = £ 21.5m

i) Would you be willing to comment on the above hypothesis?

Answer

Again see above total estimated costs by JLs moved from £15m to £18m.

KSFIOM Loan Book ‘Maturity Ladder’ & ‘Cash at Bank’ Statements

  1. Re the difference between the £4.5m returned on the loan book in January 2010 and the figure of £3.5m gain in the Cash Statement is this due to £1m less on FX gains between Dec31st 2009 and Jan 31st 2010?

Answer

Makes sense

  1. Are you now issuing monthly updates for KSFIOM Loan Book and ‘Cash at Bank’?

Answer

Yes

  1. Will you be issuing a fuller statement for mid February like the one issued on 11.12.2009?

Answer

Hopefully issue a fuller statement after the next COI meeting and that should be held sometime in April 2010.

  1. Does the ‘Maturity Ladder’ update at 31.1.2010 take the following into account within the £325m total still due?

· FX Gains £14.9m
· Less‘Set off’ £10.9m
· Balance £ 4.0m

· Less ‘Write offs’ £ 2.6m
· Balance £ 1.4m

Answer

Yes, the maturity ladder summary statement does take into account the above items. And the £1.m net gain was taken into account within the maturity ladder of loans still due also.

Note; This would appear to be shown again in the newly issued figures for the end of Feb 2010; Minus figure of £1.2m on loan book returns (do not understand how this can happen if overall total of £416m has not changed, and it hasn’t), a net increase thanks to FX fluctuations of £3.2m, giving an overall net increase of £2.0m. Shown in the total receipts from loan book going up between end of Jan & end of Feb from £91.9m to £93.9m.

5.a) Cash lying in ‘Dividend Accounts’ at 31.1.2010 against 31.12.2009 down by approx £0.5m.
· Is this due to paying bills?

Answer

No wrong account

· Or due to paying out dividends now agreed for unclaimed/previously unresolved claims?

Answer

I think it will be dividends that are now agreed.

This could be correct as JL said the £12m for unclaimed claims now down to around £10m and that the £82m for unresolved claims now down to less than that although he could not give a figure.

5.b) I had picked up on the info just out for end of Feb that the cashbook was down by £3.17m from end of Jan 2010. But in my haste I wrongly included my question in with 5a above, asking if they had paid out bills or dividends from Dividend account?

Answer

Answer was again no, re bills, would not come from dividend account. But because I only picked up this info late the night before did not think through that although the dividend account was up by £7m the current account was down by £10m. So JLs could have paid £3m owing for bills/costs out of current account and still transferred £7m to the dividend account.

  1. I asked with £23-£26m from loan book pushed back from 2009 into 2010, what leeway had been given for those defaulting to repay the loans/part loans still due? Are they all expected to repay what is due over a few months or the full year?

Answer

Negotiations difficult, JL agreed the JLs want to avoid foreclosure if possible. But those falling behind with repayments had not been given 12 months.

  1. I also asked re returns on the loan book; They appear to show £32m in Aug 2009, £18.65m in Sept, £21.95m in Oct, then £4.9m in Nov, £8.9m in Dec and £4.42m in Jan, with no real returns in Feb 2010. These last four months have seen extremely low returns, so did JLs see a big increase coming over the next number of months in order to meet the £50m predicted/due for 2010?

Answer

2010 is a leaner year for returns as against later years.

The answer did not appear to auger well for this year. Having said that if between £23-£26m was pushed back from 2009 and defaulters have not been given 12 months to catch up, surely that will help bring some of the cash due, back in this year.

To help meet my predicted return at end of June 2010 of 9p/£, I estimated a return of £21.361m from the loan book by end of June + £2.6m returned in interest, interesting to see what happens.

Kaupthing hf - Parental Guarantee

  1. Any word on your appeal to the Kaupthing hf ‘winding up Committee’ re ‘Parental guarantee’?

Answer

No word yet. Do not see a reply from Iceland before this summer.

2.Who signed the KSFIOM ‘Parental guarantee’ on behalf of Kaupthing hf?

Answer

JL felt the name of the signatory was recorded somewhere. The person was a member of a committee who could sign documents on behalf of Kaupthing hf. But not sure if that included signing a ‘parental guarantee’ . Name might be on public record somewhere.

Since then thanks to expat & glen07 and others it appears that Mr Aiden Doherty signed the ‘Parental guarantee’ on behalf of Kaupthing hf. Would not mind of copy of that document showing the signatories if any one can help me?

KSFUK

  1. Were KSF administrators correct to assume that the Repo agreement was not automatically terminated when KSF UK went under administration on 8th Oct 2008?

Answer

Shares issue is resolved; the shortfall is part of the unsecured claim.

The security was shares and we have realised that they were worth less than expected due to the shares being worth less at the ‘strike’ date. This was due to the turmoil in all financial markets at that time and the safeguards did not cover the shortfall and we were paid out on that. The difference, KSFUK became liable for, but through the unsecured loans basis and we are being repaid through that source.

The remaining two lots of Icelandic Company shares appear worthless to the JLs at present.

  1. Re the unsecured loans at present totalling £229m according to me, (based on figures given out by JLs on 11.12.2009. Will any payment on share losses be part of the repayments based on the £229m? Or the figure shown on the same data by JLs of £233.5m?

Answer

The £229m figure you mention is not correct, but the figure that returns are based on may be higher than the £233.5m.

So although the shortfall from Repo/Collateral shares is coming back via unsecured loans, perhaps there is still some room for manoeuvre by the JLs on the final total of the unsecured loans (and therefore the total on which our returns are based). I still feel the dividend due back from E&Y as KSFUK Liquidators in April/May this year will be enlightening and if we are told the p/£ and the total given back in monetary terms we will be able to work out very quickly what the total figure E&Y are using for returns on unsecured loans and the % return also, is it still 60% or higher or lower.

Hope the above is helpful to all on the DAG. I will start to collate questions for another conference call with the JL. I am hoping he will talk to me again after the fuller statement is given out after the COI meeting that is scheduled to be held in April. I will also start revamping my Table No.8 to allow for what the JL has informed me of in our recent call. And I am going to change how I show the ‘cash updates’ by allowing for the ‘actual’ differences in the Cash in Hand updates every month, re exact changes to totals caused by either paying out back payments for dividends or costs. It should make my figure agree with theirs. What I then need is the ‘fuller update’ that shows far more figures and an update similar to that given out on 21.1.2010 that gave out data on cash held back for Habana, unclaimed, unresolved etc plus that held back for Preferential creditors, future estimated costs etc.

Although the returns for Feb 2010 re the loan book were unsatisfactory I.e. a net loss not gain if you exclude FX fluctuation gains, we did at least see a £7m increase in the cash dividend account to almost £22m and that would not include the £31m available for use ex the repo/collateral JJB/Booker share cash return from last year. So it should mean we have around £53m lying at present plus £11.45m ex KSFUK at 5p/£ due at latest by 19.5.2010 = £64.46m towards an end of June Dividend 2010 from the JLs. Plus our own returns ex KSFIOM loans plus any interest due also. I had reckoned on a 9p/£ return to us in June and at present the cash lying almost equates to 7p /£ if I am correct. So even with a slower return on the KSFIOM loan book I feel the 9p-10p/£ is achievable. Let’s hope that I am right.

Just want to finish by say a big thanks to Icecrusher who is most helpful in chatting through my thoughts and giving me his excellent advice before I post them on the DAG.

Again take care,

And god bless,

Gordon 45

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Thanks

  • Julienne
  • 16/10/08 31/08/09
  • a depositor
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  • Tue, 23/03/2010 - 14:52

Just want to publicly say THANK YOU Gordon - for all the work - and of course other people also mentioned by you that help - Ice thanks for the effort. The JL's need to know they are being watched!!


Thank you Gordon

  • chb
  • 10/10/08 15/10/09
  • a depositor
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  • Mon, 22/03/2010 - 19:56

By the way, what impact does the revelation in today's note from Mike Simpson posted on the KSF IoM website ('If you compare these figures to the summary published in November 2009, you will note that the value of agreed claims has risen from £834million to £874million.') have on things please?


To chb

  • Gordon 45
  • 22/10/08 n/a (free)
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  • Mon, 22/03/2010 - 21:44

Hi There chb,

I'm just catching up on the statement from our JL on the Bank website. I have been trying to find the £834m figure they quote being published in November. As far as I can see they only issued two statements in November, one on the 10th and one on the 25th. The second one had 4 parts and contained lots of info but it was the shorter one on the 10th that gave figures re the claims situation. On it, it said £797m approved, £82m not approved and £19m no claims received. So I do not see a figure of £834m, but happy to admit missing it if I have.

Secondly if you take the totals given out on 10th November 2009, the grand total comes to £898m which is around £11m short of the £909m total we were informed of. I subsequently asked one of the JLs if they had taken the £10.9m 'set off' into account to get the lower figure. I was informed no - he said it was due to Letters of Credit expiring, contingency liabilities now up - sounded great, but here we are today - and if you total the agreed ££874m, the the not approved £25m and the 'not yet claimed' £9m you surprisingly get £908m once again. Just one more question to ask if they deem to talk with me again.

Anyway, back to you question re what effect will this higher figure of £874m against £834m have on things. In my opinion, assuming it is right, it will make no difference to our next dividend (I think hopefully in June this year). Remember the £75m held back at the time of the 2nd dividend included 40% (our total payout at that time) of the £70m Habanna, the 12m unclaimed, the £82m unresolved and a further 23.5m unknown - may cover other 'in flight' transfers and whatever else the JLs are not disclosing at this time). Because if you pro rata the £75m at 40% to 100% the total overall not agreed is £187.5m which is £23.5m more than the £164m.

But as said the JLs were allowing for the 40% not resolved or unclaimed prior to the 2nd dividend. If you were to go to my Table No.8 you will see in my ongoing estimations of returns that when I guessed at 9p/£ for the 3rd dividend this June (total of 49p/£ back) I was allowing for a 49% 'hold back' to cover the £187.5m I.e. £91.875m. So whether or not the JLs pay out the 3rd dividend on £874m or whatever it will make no difference to all of us as they either pay out on that amount and therefore are required to keep back less as the £12m unclaimed is now £9m, the £82m unresolved is now down to 25m and the Habana claim will still be based on £70m (unless the appeal decision is out in April as expected) and I presume the unknown £23.5m will stay the same unless something takes place that will alter it. So right now if the JLs pay out on £874m I would expect a 'hold back' percentage wise based on £9m unclaimed, £25m unresolved, £70m Habana and £23.5m unknown = £127.5m

So in essence the JLS would pay out say 9p/£ based on my guestimate on the £874m and would hold back a total of 49% of £127.5m = £ 62.475m, so it should all equate.

Our short term problem is if Habana win their appeal I presume they would be paid out in full and that would mean they would get the £28m held back in their name as at 2nd dividend and would also get the full balance of £42m at the 3rd dividend plus perhaps a further £7.8m in interest ( my thoughts only - could well be wrong). But if I am right it would mean between £42m and say £50m less for us at the 3rd dividend but would mean I think that the full £70m would come off total owed to creditors, so if you use the £874m quoted today it would go down by £70m thus becoming £804m for dividend 4 onwards so we would catch up on that £42m over the next 2/3 years - again all my assumptions only.

Hope the above helps to answer your questions plus the possible variables,

Take care,

Gordon 45


Gordon, Although I don't

  • barrona
  • 17/11/08 31/05/09
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  • Mon, 22/03/2010 - 10:56

Gordon,

Although I don't often post, a big thank you for all your hard work. It is imporant that someone with appropriate expertise keeps on top of what the JL's are doing.


Thank you Gordon

  • jenren
  • 10/10/08 31/05/09
  • unspecified
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  • Sun, 21/03/2010 - 22:29

As always a MASSIVE thank you for your hard work. Also to all the others that may help you out.
It is so appreciated.

Best regards

Jenny


Thanks again, Gordon

  • uptight61
  • 14/10/08 n/a (free)
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  • Sun, 21/03/2010 - 21:45

Thanks again for the further update. Good to see that the JL's attempted to answer your questions.


Gordon 45 - re PG

  • anrigaut
  • 19/10/08 30/10/09
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  • Sat, 20/03/2010 - 12:48

Hi Gordon,

In response to your question "... it appears that Mr Aiden Doherty signed the ‘Parental guarantee’ on behalf of Kaupthing hf. Would not mind of copy of that document showing the signatories if any one can help me?"

The Parental Guarantee can be found here:
http://www.ksfiomdag.com/index.php?option=com_kb&task=article&article=6&...

As you will see, it was signed on behalf of Khf on 17th September 2007 by Ingolfur Helgason, CEO, Kaupthing Bank Iceland, "authorised signatory".


To anrigaut

  • Gordon 45
  • 22/10/08 n/a (free)
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  • Sat, 20/03/2010 - 18:39

Thanks so much for the info,

Gordon 45