New Q&A by the Isle of Man FSC - 20th October

  • occams razor
  • 10/10/08 31/05/09
  • a depositor
  • Offline
Posted: Mon, 20/10/2008 - 13:39

A new New Q&A document has been published by the Isle of Man FSC.
From what I can tell, it doesn't contain any major developments.

http://www.gov.im/lib/docs/fsc/PressReleases/kaupthingsingerqanda.pdf

... or see attachment below. Full text follows:

Kaupthing Singer & Friedlander (Isle of Man) Limited (“KSF (IOM)”)
Q&As as at 20 October 2008

The answers here are drafted in general terms and do not constitute legal advice as
to your situation. Events are moving rapidly and as more information becomes
available some of these answers may be superseded. The Financial Supervision
Commission (“the Commission”) will publish updates through its website
www.fsc.gov.im as more information becomes available.

What is the current status of KSF (IOM)?

On the evening of 8 October, following consultation with the Commission, the
Board of KSF (IOM) resolved that it should apply for the company to be wound up.
At that point KSF (IOM) stopped trading and the Commission suspended KSF’s
banking licence.
On the morning of 9 October, a joint petition was presented to the High Court by
KSF (IOM) and the Commission for the appointment of a “liquidator provisionally”.
Michael Simpson of Pricewaterhouse Coopers, 60 Circular Road, Douglas, Isle of
Man, IM1 1SA was appointed by the Court.

Does that mean that KSF (IOM) will be wound up?

The process is not automatic. Winding-up would require a separate order of the
Court, at which point a liquidator would be appointed. The petition for winding-up
has been adjourned to 24 October.
The process is not automatic. Winding-up would require a separate order of the
Court, at which point a liquidator would be appointed. The petition for winding-up
has been adjourned to 24 October. However, the Commission, as joint petitioner,
has not yet fully determined its position in relation to this matter and will be
considering information from relevant parties ahead of the hearing.

KSF told me that it had received a guarantee from the Icelandic parent bank
Kaupthing hf. How could it fail?

There has been extensive media comment on the status of Icelandic banks and the
state of the Icelandic economy, which may have affected Kaupthing hf’s ability to
honour the guarantee. The Chief Minister has issued a statement on this matter
which can be found on our website. The UK Government has issued an
announcement at the HM Treasury website (hm-treasury.gov.uk) dated 9 October:
http://www.hm-treasury.gov.uk/press_103_08.htm

The “liquidator provisionally” has indicated at a public meeting that there had been
expressions of interest from potential buyers for some or all of KSF’s business.
What are the prospects of this?

It is too early to tell. However, if the “liquidator provisionally” was to receive an
offer which he regarded as commercially acceptable, the Commission would of
course address its regulatory acceptability as a matter of urgency.

I gave instructions for my money to be transferred out of KSF (IOM) but it has not
arrived. How do I find out what has happened?

This is a matter for the “liquidator provisionally” to address. You should write to
Michael Simpson of Pricewaterhouse Coopers, 60 Circular Road, Douglas, Isle of
Man, IM1 1SA.

I have recently changed address and do not know if KSF(IOM) has updated its
records. To whom should I write?

You should write to the “liquidator provisionally”. Michael Simpson of
Pricewaterhouse Coopers, 60 Circular Road, Douglas, Isle of Man, IM1 1SA. It might
be helpful to enclose supporting evidence of the old and new address.

I have savings in KSF. What will happen if it is wound up?

Two main things would happen:
1. The liquidator would set out to establish who has a claim as a creditor and
continue his existing efforts (as liquidator provisionally) to recover assets.
These assets would then be used to meet the various claims (in whole or in
part);
2. 2. The Depositors Compensation Scheme (“DCS”) would take effect,
following a meeting of the Scheme Manager, which determined that an event
of default had occurred.
The Compensation of Depositors Regulations set a level of compensation for
individuals who have deposits. The current Regulations passed on 9 October and a
description of the DCS are both on the Commission’s website.
At a meeting of Tynwald on 9 October the Treasury Minister indicated that the
Regulations might be subject to amendment. The Commission is presently advised
that, if the DCS were to be triggered in respect of KSF (IOM), it would be subject to
the 9th October Regulations albeit the Commission note that these regulations may
be amended by Tynwald.
At the time of writing (10 October) an event of default has not yet been declared.
If KSF (IOM) was wound up and/or an event of default was declared, you should
expect to be contacted by the liquidator and/or the DCS manager.

Will I get my money back immediately?

There will be a delay while claims are established. Please see the description of the
DCS on the Commission’s website.

We have a joint account. Would we each have a claim on the DCS?

Joint account holders are treated separately. For more details, please see the
description of the DCS on the Commission’s website.

I also have a mortgage with KSF(IOM). What will happen?

The Depositors’ Compensation Scheme provides for a process of netting-off
between loans and deposits. The liquidator provisionally made the following
statement on 13 October:
“The purpose of the Liquidation Order is to seek to ensure the best long term
solution can be adopted for customers and creditors. KS&FIOM will continue to
manage its current loan book and the Liquidator Provisionally will be seeking to find
purchasers for KS&FIOM’s business and loan book to maximise recovery for
customers and creditors. The existing mortgage/loan agreements of borrowers
remain in place, the repayment profile of your mortgage/loans is not being changed
and you are not being expected to refinance elsewhere. Borrowers should continue
to make payments in the usual way.”

I have a unit linked long term insurance policy underwritten by an Isle of Man
authorised insurer. The value of my policy is linked to assets which include deposits
in KSF(IOM); what is my position?

The legal owner of any deposit placed with KSF(IOM) by an Isle of Man authorised
insurer would ordinarily be the insurance company and not the individual
policyholder. As a unit linked policy the value of your policy will depend on the
valuation of the underlying assets including those held in KSF(IOM). It is the role of
the liquidator to determine any amount ultimately payable to the insurance company
in settlement of the deposits held by the company in KSF(IOM).

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