Some Thoughts on the SL's '6 Monthly' Progress Report (9.7.2016)

  • Gordon 45
  • 22/10/08 n/a (free)
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Posted: Mon, 08/08/2016 - 21:59

Hi Folks,

Some thoughts on the SL’s ‘6 Monthly’ Progress Report (9.7.2016).

Having read the latest report I now detail my thoughts on it below. This post contains what I think are the main points in the July 2016 Progress Report. Again I could have missed points or disregarded some points that are important to others. More movement on the PG, now only one loan left (it appears repayment of this loan is now Feb 2017), and the ‘Unresolved’/Unclaimed appear to have stayed the same as last time.

Page 7 & 11 – Dividends & Dividend Range – It is all about interest now as we received 100% of our capital back. Based on current cash balances and hoped for future returns from the KSFIOM Loan book the SL expects to pay some interest on claims in respect of each class of interest. A full repayment of £4.6m is expected on the last loan by the SL. And a further £0.7m equivalent is expected from the Kaupthing hf WuC in the form of Shares and Convertible Notes.

Any more returns will be by way of interest we have lost. Creditors entitled to contractual interest in excess of 5% would receive the amount due in excess of 5% up to the 8.10.2008. Around £3.5m required for this.

Creditors not entitled to contractual interest would receive 4% on amounts owed up to 8.10.2008. The amount required for this would be small.

Once the above two steps have been completed all creditors will have received interest entitlements up to 8.10.2008. In respect of further interest payments however, the rules for calculating interest in an Isle of Man insolvent liquidation are not straightforward and the Liquidator has applied to the Isle of Man High Court for directions. The Court has ordered that the Liquidator should circulate the unsecured creditors of KSFIOM whose proofs of debt have been admitted and advise them of the methodology proposed by the Liquidator and also the two further options which have been put forward for the calculation of interest.

Creditors are not being invited to vote on the alternatives, however they will have until 23 September 2016 to reply asking to be a party to the Application. The Application will then be heard on 12 October 2016. The letter and attachments will be sent to creditors shortly and will also be posted on the website.

Page 6 - It is intended that one further dividend will be paid to creditors in respect of each class of interest. Timing and amount will depend on realisation of remaining assets. To me that means Loan Book, ‘Unresolved’, PG and Litigation.

We can expect a further ‘6 monthly’ update dated 9.1.2017 (Page 6).

Returns from KSFIOM loan book are currently 94.6% (page 2) – estimated returns have moved up from previous 94.6% - 94.8% (by deduction) to 95.628% (by deduction), (Page 7 chart). Loan book, page 11 shows £4.6m still due. In currency terms this last loan is in Euros.

‘Write – offs’ now £16.4m (3.942%) - very low. No more cash in from loans would mean an end figure of around 5.411% loss on the loan book. That would be a fantastic achievement by the SL. Remaining Loans – pages 11/12 – 1 loan still due worth £4.6m.

Page 14 re Unresolved & Unclaimed. SL still showing £2.5m Unresolved and £1.5m Unclaimed. Keep hoping SL will finalise ‘Unresolved’ claims. ‘Unclaimed’ has to wait until the end of the Liquidation Process.

Page 12 – Parental Guarantee – SL had agreed a figure of £3.2m with the WuC of Kaupthing hf. The agreement consists of a payment of 30% of that amount = £960k. It is a mixture of cash, convertible notes and shares in Kaupthing.The cash amount of £297k has been received by the SL and is included in the figures. It is expected that the convertible notes and Shares will be sold by the SL.

Page 12 - Investigation – This is in relation to the Bank’s Directors re the ‘winding up order’. A report on the investigation and potential follow up actions was put to the COI on 12th November 2010. End of story as SL cannot disclose any more due to risk of prejudicing further proceedings – we await what happens next or does not happen next – so no change yet again.

Page 13 – To assist Life Companies and their Policyholders, the SL approached and received approval from the IOMC to accept assignments from Life Companies on behalf of their Policyholders without the need for a costly Court Order. Hopefully this will help lower or stop ongoing charges taken by Life Companies from their Policyholders.

Liquidation costs – Page 15 total paid so far inc VAT is £25.836m, might go up to £26.7m. Total on Page 15 does not include VAT - a spend of £24.5m compared to the previously estimated overall total of £24.3m. SL stated previously that he could no longer estimate future costs for the Liquidation. Worth noting if no more cash comes in, that cash balance we hold at present will go down as future costs are paid out. Although SL obviously still hopeful that a further £5.3m will be recovered from the loan book/WuC of Kaupthing hf.

So, good news all round and SL is now hopeful there will be an end to the Liquidation within the next 12 months, not 6 months as previously hoped. But as SL says it is difficult to predict due to the uncertainty of recovery from balance of loans/PG claim etc.

The continuing down bits are;

· 1 Loan not finalised - £4.6m (due by Feb 2017)
· Still balance of £2.5m Unresolved – to be resolved + £1.5m Unclaimed =£4.0m
· The Investigation into the circumstances leading up to the Directors decision to seek a winding up order in respect of KSFIOM – no further forward
· Still to get Shares/Convertible Notes from Kaupthing hf WuC worth equiv of £0.7m
· Could now be 12 months until Liquidation finalised

The above are the comments I felt were worth making. I will update parts of my background data in readiness for the SL’s Quarterly Update due at end of September 2016. Based on the current cash total of £14.936m I think there is now £10.936m net available for payments (inc the approx £3.5m for Contractual Interest). This takes no account of further costs/expenses.

The SL whilst waiting on repayment of this last loan has to move on re the remnant part of the PG, the ‘Unresolved/Unclaimed’ and any Litigation.

But again, have to say hopefully, things are still moving forwards in this last phase of the Liquidation.

Take care,

And God Bless

Gordon 45

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Interest to Unsecured Creditors etc

  • Gordon 45
  • 22/10/08 n/a (free)
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  • Mon, 15/08/2016 - 19:23

Hi Folks,

I see the SL has issued all the info concerning interest to Unsecured Creditors etc on the 9.8.2016 both by post and/or E-mail plus posted the info on the Website. The data includes - Letter to Unsecured Creditors; Info contained in the Court Order and points to note; The Application Notice to the Court; And the Witness Statement of Mike Simpson.

So presumably they now await any replies from those who wish to be 'a party to the Application'. And then hopefully the Application will be heard on 12.10.2016 as stated by the SL in his July '6 monthly Progress Report.

So another stage reached in this end phase of the Liquidation.

Gordon 45


Absolutely excellent news

  • sambururob
  • 10/10/08 n/a (free)
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  • Tue, 09/08/2016 - 15:16

Absolutely excellent news and, as always, thanks to Gordon, our chief interpreter and reader of the runes.
Have a good day all and here is hoping for good news by the end of Feb 2017.
Rob and Wendy


Surplus amount breakdown?

  • golightly
  • 14/10/08 28/08/09
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  • Tue, 16/08/2016 - 09:25

My thanks to Gordon for keeping us all abrest of progress; and to the Liqidator for having recovered far more than we thought back in the dark days of 2008.
The Liquidator has given an approximate surplus for the final distribution. Can anyone do the maths and tell me what this equates to as pence in the pound of our proof of debt figure? Will the alternative arguments make any difference to the final dividend?


Re surplus amount breakdown

  • anrigaut
  • 19/10/08 30/10/09
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  • Wed, 17/08/2016 - 19:13

Golightly,

Having returned from an internet-free holiday only yesterday, I am only now beginning to get to grips with the various documents posted on the bank site on 9 Aug. Meanwhile, to attempt to answer your questions:

The table provided in paragraph 20 of Mike Simpsons's witness statement dated 20 June suggests that, under his preferred scenario (KSFIOM remains insolvent and post 8 Oct 2008 interest is calculated on a day-by-day basis until the surplus runs out), we could expect to receive between about 1.24 p/£ and 1.39 p/£ (in addition to any deferred pre 8 0ct 2008 interest that resulted from the 5% cap that was applied to uncapitalised interest, which is payable in priority and will differ between depositors). However, in the Letter of 9 August, it is stated that, due to recent exchange rate fluctuations following the Brexit vote, the likely surplus is now estimated at around £15m (compared with the previous estimate of between £11.2m & £12.6m). If confirmed, this would suggest we might receive around 1.65 p/£.

It is clear, however, that should the Court rule that KSFIOM should now be treated as solvent (which seems crazy to me, but Manx law on this is a mess and who knows what will be decided), the cost of dealing with the much more complex issues arising "will inevitably reduce the amount of the surplus assets available for its creditors" (see points 16 & 17 of the witness statement).

It seems to me, although I think it is not explicitly stated, that the other alternative - that KSFIOM remains insolvent but interest is calculated over the whole period since the liquidation began and then distributed pro-rata - would also be likely to incur a certain (though smaller) additional cost, thus reducing to a lesser extent the available surplus and thus the outcome for unsecured creditors (to no-one's benefit since, for a fixed total sum available for distribution, the p/£ would - unless I am much mistaken - be no different from the first alternative).

I have however other concerns regarding the position of the DCS (or rather the FSC as Scheme Manager) & the IOM Treasury in all this, as I suspect they may be defending the latter alternative in order to be able to claim a share of the interest that they will receive in relation to the rights that were assigned to them (paragraph 10 of the witness statement) - to the obvious detriment of DCS claimants. I expect to have more to say on this when I have had a little more time to reflect.

Update: I have now created a specific forum for issues around the calculation and payment of post October 2008 interest and suggest that any further comments specific to this topic should preferably be made there: http://chat.ksfiomdepositors.org/forum-topic/post-8-oct-2008-interest-is...


IOM Government liable if KSFIOM solvent?

  • D RAM
  • 13/10/08 01/08/14
  • unspecified
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  • Mon, 22/08/2016 - 04:53

If I recall correctly it was the IOM government that initiated putting KSFIOM into liquidation? If so, and if the court decides that KSFIOM was always solvent (and hence presumably should not have been put into liquidation) then is there a case for suing the IOM government (and/or the directors of KSFIOM), not least for recovery of the JL's fees and other costs associated with the liquidation ? These could then be distributed to the depositors.


More in hope than

  • sambururob
  • 10/10/08 n/a (free)
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  • Mon, 22/08/2016 - 10:52

More in hope than expectation!!! Don't hold your breath D Ram. :)


Hit Them

  • D RAM
  • 13/10/08 01/08/14
  • unspecified
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  • Mon, 22/08/2016 - 13:29

My posting was somewhat tongue in cheek but wouldn't it be poetic justice if the IOM government (and/or the directors of KSFIOM) ended up paying for having put us through hell over the last 8 years?


Surplus amount breakdown

  • golightly
  • 14/10/08 28/08/09
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  • Fri, 19/08/2016 - 07:36

Thanks Anrigaut,

But in the light of your concerns expressed in the penultimate paragraph we better not spend it yet!

Best regards, Golightly.