Some Thoughts on the SL's '6 Monthly' Progress Report (9.7.2016)
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.
And God Bless