Observations relating to London Team Report, SoA, Liquidation, IoM Companies Act and DCS

  • Norm
  • 15/10/08 31/05/09
  • unspecified
  • Offline
Posted: Sat, 07/02/2009 - 10:38

I Hope I'm posting this in the right place? I have just read the London Team Report section headed ‘clarification of some matters’. I agree entirely with its content, particularly that ‘there is NO difference between the SoA and Liquidation when it comes to how much cash depositors will receive in the end’. My own position is that liquidation would be the best option as the rules for liquidation are enshrined in existing law. I see a SoA being fraught with legal problems, the cost of which will inevitably impact upon us.

There are a couple of observations I would like to make:

  1. The final paragraph states that ‘Remember insurance companies and institutions have a big say, as do the depositors who are not part of the DAG, so our view may not be the final agreed strategy.’ Section 152 of the IoM Companies Act 1931 states that: ‘Where a compromise or arrangement is proposed between a company and its creditors or any class of them……. a majority in number representing three-fourths in value of the creditors or class of creditors agree to any compromise or arrangement’.

Am I right in understanding that both these criteria have to be fulfilled? If so, the big insurance companies may have a majority in value, but I doubt whether they would have a majority by number - in which case the DAG may have considerable influence over the agreed final strategy.

If anyone is interested, here is the link to the IoM Companies Act
http://www.gov.im/lib/docs/fsc/comact1931amended_april04.pdf

  1. As I understand it, funding for the DCS is via the IoM Government but it is ‘covered’ by the other banks in the IoM via an annual vevy, should a fund be required as a result of a bank going into liquidation. The financial year for this annual levy ends on 31-March. If the decision to liquidate the bank drags on past this date then the current year’s funding will be lost. This may have no significance to depositors but I suppose it could impact on the IoM Governments ability to pay if say another bank went bust next year. I would prefer some money to be ‘in the pot’ sooner rather than later!
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But how are the classes going to be defined?

  • manx-person
  • 17/10/08 31/05/09
  • not a depositor
  • Offline
  • Sat, 07/02/2009 - 22:08

It will be interesting to see how the classes are defined.
in Re Sovereign Life Assurance Co. v Dodd classes of creditors were defined as "...persons whose rights are not so dissimilar as to make it possible for them to consult together with a view to their common interest..."
It will be interesting to see what partitioning is proposed.


Voting

  • Anonymous
  • Offline
  • Sat, 07/02/2009 - 19:08

Our understanding is the same:
50% by number AND 75% by value.
BUT.. as Tricky Dicky mentions, the IoMG may be gaining large numbers of voting rights of smaller depositors via the EPS.
We are seeking clarification on this from the IoM.


Voting

  • Anonymous
  • Offline
  • Sat, 07/02/2009 - 21:54

It is a good idea to clarify this with IOMG. However, as I pointed out when I first alerted Diver (and later the forum) to this issue several weeks ago, it is almost certain that the assignments required of depositors to qualify for the EPS will buy for the IOMG the right to vote in respect of the sums paid out, the only question is whether it will use it. Incidentally, I am not sure that it is confined, as you suggest, to acquiring votes from the small depositors whose deposits are exhausted by payments under the EPS or the new EPS, but also IOMG acquiring votes in respect of the sums paid out to larger depositors under those schemes, whose own value for the purposes of their votes will be reduced by the amount paid back to them.

Of course if their is no vote on the SoA then it becomes irrelevant, save that the IOMG will acquire votes as a creditor in the liquidation.


Cant see it.

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
  • Offline
  • Wed, 11/02/2009 - 02:14

I cant see any court in the country up holding any scheme of reparation that gives out 1000k or whatever in return for you signing away your rights to seek further restitution.

This would be not only immoral but criminal.


Creditor votes.. ING and Edge

  • Anonymous
  • Offline
  • Wed, 11/02/2009 - 18:31

Bellyup..
In a sense, this is what the UK government did with Kaupthing Edge accounts transferred to ING.. the FSCS gained the votes.. and kept the KSFIOM liquidator off the creditors committee..


Creditor Votes

  • Ally
  • 13/10/08 31/05/09
  • unspecified
  • Offline
  • Wed, 11/02/2009 - 20:47

However the IoMG even if it is buying up value via the EPS will have a bigger say in terms of value but it will still only carry one vote.

So on the principle that over 50% of those voting have to be in favour of the scheme the IoMG still only carries one vote, which it always has as it is a depositor in KSFIoM.

With my usual, please note this posting in no way indicates support for or against the SoA.


Observations

  • Tricky Dicky
  • 24/10/08 30/05/09
  • a depositor
  • Offline
  • Sat, 07/02/2009 - 11:16

Norm,
I believe your observations are correct. It is however more complex when it comes to the numbers of depositors. There are over 2000 members of this Group, however not all are depositors, and there are as per Mike Simpsons info, something like 10,000 'depositors' in KSFIOM. Add in the EPS, which will effectively knock out some low value depositors (this is not menat in a derogatory way, just as a means of explanation so please don't shoot me), making basically IOMG a 'creditor', so as events unfold the situation changes.