SoA or not?

  • Colpep
  • 01/11/08 31/05/09
  • a depositor
  • Offline
Posted: Mon, 04/05/2009 - 20:58

As a layman I have struggled through reading and attempting to understand the SoA, and the first thing that strikes me is that the document is very one-sided i.e. it emphasises the advantages to the creditors and leaves out the advantages to the IoMG. These unmentioned advantages are obviously the reason for their putting together this scheme in the first place not their altruism. These advantages to them should be clearly stated in the SoA. If the IoMG are one-sided in putting together the SoA, one can anticipate that their future involvement in implementing the SoA will be the same.

Two points which clearly show that the SoA does not advantage all creditors as indicated, are that the additional costs of the SoA which are likely to be considerable, will be set off against the monies that are eventually due for distribution, thus disadvantaging all the creditors except those whose shortfall is fully compensated by the IoMG. The SoA needs to clearly state what costs are not going to be passed on for set-off. If the IoMG is going to stand by the statement of no creditors being disadvantaged by the SoA, then it must be prepared to accept all the costs of the SoA and not pass them on to the creditors and definitely not categorise them as first priority payments as seems to be indicated at present. This would also be an incentive for the IoMG to minimise these costs and thus help expedite the implementation of the scheme.

The second point I would like to make is that individual depositors with £50k or less should get 100% of their deposit back with the balance between the percentage due from the liquidation and the full amount of the £50k being made up by the IoMG, however any investor with more than £50k will lose out from any top-up from the IoMG. With the percentage return currently indicated (+/- 70p/£), it would seem that anyone with deposits of more than approximately £70-£80k will get absolutely no top-up at all from the IoMG. This is clearly unfair. As a very minimum I would suggest that any depositor with more than £50k should receive a top-up from the IoMG of at least an equal amount to a depositor with £50k e.g. a depositor with £50k gets 70p/£ from the liquidation i.e. £35k and the top-up from the IoMG would therefore be £15k.

These points need to be included in the SoA otherwise there is no benefit to most creditors and implementing the SoA will result in a smaller net return to these creditors. Why should creditors sign away their normal legal rights in a liquidation and receive generally less back with the dubious advantage of a possible quicker return on some of their money?

Perhaps I am cynical but with the delays experienced so far, I have doubt that we are likely to get our money any quicker through this SoA.

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