• IceCrusher
  • 14/10/08 25/10/11
  • a depositor
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Posted: Sat, 26/06/2010 - 07:33

Please see the attachment for fully formatted document.

In order to show the likely return of monies from the UK over the coming years I have taken the initial total of monies/assets held by KSF UK as £590.6m and calculated the following results:

Starting with this £590.6m and then subtracting the last set-off sum recorded by our JLs of £165.6m makes £425.0m This includes the £54m in Cash Deposits and the ~£2.0m ISDAs that went unmentioned in the JLs early creditor reports.

See: Report to Creditors Final 3.5.4 Certificates of Deposit 'Until such time as the CD monies are released to the Company it has a contingent claim against KSFUK for this amount although it is the JL's view that this is not an unsecured claim.'

The £54m CDs + £2m ISDAs were released to KSFIoM after the case against the building societies was won and the transfer agreed by HMT. This reduced the claim against KSF UK from £425.0m to £369.0m

Around £10.0m worth of shares were speciously withdrawn by KSF UK from the collateral account without KSFIoM’s knowledge, thereby reducing the repo shares ‘purchase value’ to £175.0m with the consequent effect of lowering the total value of assets held in the UK to around £359.0m

The repo shares were accorded a ‘default value’ of £154.0m by E&Y and released to the JLs of KSFIoM – there again reducing the capital claim against the UK down to £205.0m, which is now the sum on which we are receiving our so-called dividends.

The JLs state that they still trying to either get the value of the ‘stolen shares’ back into the pot, and/or get the ‘default value reappraised – well, that’s what they’ve been telling us for the past 20 months… In the meantime they sold the shares for just £120.5m (£33.5m less than the E&Y valuation and almost £60m less than they were repo’d for.)

Initially there was ~£349.6m in unsecured deposits; £185m secured against collateral repo shares; ~£54m of CDs and ~£2.0m ISDAs, which came to a total of £590.6m before set-off (see ‘Report to Creditors Final’) Obviously, fees, interest payments, and forex rates account for relatively small differences in these big numbers. (I’ve ‘rounded’ everything as the nominal sums are constantly changing due to these effects.)

This is particularly significant in relation to the ‘set-off’ claimed by KSF UK against KSFIoM. Although the last figure given by the JLs for this sum was £165.6, E&Y seem to think that the foreign exchange benefit is in their favour and that their set-off claim has risen to £200m! This may be ‘duff gen’ fed to their creditors to make them feel good (our JLs claim the forex is in KSFIoM’s favour) but it is something else to watch…

Actual receipts

£53.96m actual returns from CDs
+ £120.48m actual returns from sale of repo/collateral shares
+ £71.750m received in dividends so far from the unsecured deposit of £205m held in KSFUK = £246.2m total received to date from E&Y (KSFUK)
Total return presently anticipated from E&Y = 65% so, £205m x 65% = £133.3m less £71.8m already paid out = £61.50m

£246.2m + £61.5m = £307.7m which is the total sum of monies currently anticipated from E&Y (KSFUK) over the whole period of the liquidation.

The sum of £307.7m returned from the net figure of £425.0m equates to 72.4%. This assumes that the unsecured deposit of £205m is not subject to any further capital increase, but will actually produce a 65% overall minimum dividend.

If however, the higher estimate from E&Y of 78% on the unsecured loan were to be achieved then the returns would increase to:

£53.96m actual returns from CDs
+ £120.48m actual returns from repo/collateral shares
+£159.90m (£205m x 78%)

£334.3m = possible total return from E&Y (KSFUK)

A return of this amount would represent 78.6% of the post set-off sum of £425.0m (assuming a return of 65% on the £205m unsecured deposit).

If however, the JLs were to achieve their declared value of the repo/collateral shares of £137.6m (instead of E&Y’s £154m) and get the ‘stolen’ ~£10.0m back on the books, then the value of the unsecured deposit would rise to £231.4m (see below) and the dividend would increase to £150.1 at 65% and £180.5 at 78%. This in turn would bring the total return on £425m up to 76.4% and 83.5% respectively. At 83.5% this would represent an increase in monies presently estimated for return from KSF UK in excess of £20m.

Rise in unsecured deposit: The initial purchase value of the repo/collateral shares was £185m (documented in creditor reports by JLs). The valuation carried out by E&Y on 27th October 08 [almost three weeks post administration date] – was £154m. The value ascribed to the shares by the provisional liquidator on the day KSF UK went under administration was £137.6. Under international repo rules, the party of default pays the difference in the value of the shares between the initial value at purchase and the value given to them by the non-defaulting party. This happened because the provisional liquidator did not declare a default against KSF UK on the day of administration, but KSF UK subsequently declared the default against KSFIoM (documented by JLs and E&Y in their respective reports to creditors). So although E&Y claimed the default, KSF UK was still bound to pay the difference in the value of the shares, but because E&Y had secured the technical right to declare their valuation, the bank was able to assert a higher nominal value for the shares (and thereby reduce KSF UK’s liability in compensation payments). For there to be a £33.5 million difference between the E&Y declared nominal value and what they sold for, E&Y surely presented a highly speculative valuation of the shares – or the JLs grossly undersold them.

£185m was the purchase value of the shares so in E&Y’s case: £185m less £154m = £31m.
In the JLs’ case the value on the 8th October 2008 was £137.6, so £185m less £137.6 = £47.4m. Because £10.0m was allegedly removed from the share account, the £31m dropped to £21m and is still subject to ‘discussion’.

The unsecured KSFIoM deposit remaining in KSF UK was around £184m to which E&Y add the ‘repo compensation’ sum of £21.0m. This is how we have ended up with a declared unsecured sum of £205m in the UK.

Our JLs claim that the repo deal should have automatically terminated the day the UK bank went under administration and therefore the compensation sum should rightly be £184m plus £47.4m = £231.4m. The discussion of this subject has continued for the past 20 months without conclusion. What is even more galling is that the compensation sum under repo rules should be paid in full, but because the UK bank is under administration, E&Y are adding the (partial) sum to the unsecured deposit and then paying only dividends upon it. At the moment they have got away with paying just 35% of of that £21m instead of 35% of £47.4m.

If the final UK returns do indeed increase to 78% then the difference is quite considerable. The JLs talk of increasing the capital sum of £205m – but it never happens. The JLs simply steer away from this subject and even though Simpson has admitted receiving my extensive email on the subject through official PwC channels, neither he nor Spratt have answered that letter – not even to deny my assertions...

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Attachments - info

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
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  • Thu, 22/07/2010 - 03:45

Don't forget that unless you 'log-in' you won't even see the attachments that some of us upload to our comments. Once you're logged-in you can see and download them!

The clearest statement yet! Thanks IceCrusher

  • VikingRaider
  • 10/10/08 31/05/09
  • unspecified
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  • Mon, 12/07/2010 - 12:42

As a leading shop steward of the National Association of Bumpkins, I am unanimous in finding IceCrusher's data the clearest exposition of potential KSFIoM assets I have seen thus far. Seems there may be more money in the pot than I believed possible.

CoI Minutes: Even more £ than I thought!

  • IceCrusher
  • 14/10/08 25/10/11
  • a depositor
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  • Wed, 21/07/2010 - 19:13

If the sum of the capital owed to KSFIoM by KSF UK increases to £254M - an extra £49M above which E&Y have been paying 'dividends' to date - then that would exceed even my expectations.

It looks as though the JLs are finally getting E&Y to see things our way and this is very good news indeed. I know that I've gone on ad infinitum about this particular aspect, but at last it looks like the corner has been turned and more money is quite rightfully coming back to us.

Simple Sums

  • Stunned Mullet
  • 17/10/08 n/a (free)
  • a depositor
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  • Sun, 27/06/2010 - 02:21

I keep reading that the matter of the repro/collateral shares is the subject of "discussion" between the JLs. I believe the word "discussion" is a misnomer. What the heck are "discussions"??? My guess would be that the Simpsons (they seem to have the same acumen as Homer) have sent a letter and received an "on your bike" response. That's likely what they term a discussion. We continue to be abused.

@stunned mullet

  • IceCrusher
  • 14/10/08 25/10/11
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  • Sun, 27/06/2010 - 04:19

i think we are all looking to the next complete statement by the JLs - this has been deferred from April until July. Perhaps they will come good this time, but I cannot help but think that the JLs keep putting time between events with the hope that people's memories and/or understanding is short and forgetful.

It is beyond comprehension to know why it would take two sets of liquidators so long to decide and calculate each party's proper share of the distribution. A couple of hours on a spreadsheet would cover all possible eventualities and outcomes so 'simple sums' cannot be the reason for this procrastination. I tend to think that our JLs screwed up big time and PwC would wish to keep the lid on it, but with E&Y continuing to post their reports to their creditors, we can see where the other side are coming from.

Storming: What the hell are the CoI doing?

  • follow_the_tao
  • 11/10/08 31/05/09
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  • Sat, 26/06/2010 - 09:01

With my reduced funds I'm just about to but a small-holding.

Leaving that aside.
I buggered if I can see any appropriate response from the COI.
I'm going to be looking for Gavin's address.

Yes, we all know we live in nests of vipers. From the IoMG to PWC to UK (Eton Ltd).

But for Christs sake what the hell are the CoI doing.

And the question that strikes me is how this can be used against the IoMG. Yes I know the IoMG is basically vapour-ware and (was) run by the UK banks hoovering offshore.

I was cynical before I got shafted to this extent. I'm incredulous now.

What are they? Frightened of contempt?
I've suggested this before: sacrifice somebody.
No pain, no gain.
Make a scene!

Let me remind you: PWC cut my lines into their machine and a PA Senior partner threatened publicly to blow my legs off. Those that think the consultancies and big accountancies are not worse than the banksters need their head examined.


Somebody give me Gavins data. And I'll talk with him. If he isn't arrested for pumping one of these clowns before he's finished he hasn't done his job. Yes Stuart, I think you are being to sweet to the prefects.

Once again: Awesome Icecrusher.

P.S. Whilst I'm here...

Confidentiality Agreement

  • bellyup
  • 10/10/08 09/01/10
  • a depositor
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  • Sat, 26/06/2010 - 17:42

You may have forgotton that the CoI are constrained by the confidentiality agreement.
They are in the same position as ourselves in this situation so i feel sure that they will do the utmost for us all.