UPDATE AND ACTIONS FROM THE LONDON LEGAL TEAM

  • Anonymous
  • unspecified
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Posted: Thu, 22/01/2009 - 20:33

In the past couple of days we have been in further detailed conversations with the IoM authorities and will be having further discussions tomorrow afternoon.

These discussions have centred on the SoA v DCS argument and the information (or lack thereof) emanating from Alix Partners. It is important for you all to know that WE ARE seeing information that we are not passing on to you and there are two very good reasons for this:

  1. We are parties to a confidentiality agreement so we are not at liberty to discuss numbers.
  2. The numbers we are being shown continue to be plucked from out of the air with no visible hard evidence to back them up.

So, unlike some, we do not have the luxury of hiding behind internet anonymity and we have to play by the rules we agreed to at the outset. Also, we believe it is highly unfair to discuss possible payback percentages when there is still no evidence of how these numbers were arrived at – they could be vastly optimistic or highly pessimistic…either way depositors could be given impressions that were simply not true.

It is still very obvious that there is a ‘hard sell’ going on as far as any SoA is concerned but, whilst there is a possibility that an SoA may be the best way forward, we simply do not have the information we all will need to make an informed decision. This is the message we are continually banging home to the IoM.

All the information being supplied by the IoM is being passed to our legal team here in London and they are also very much of the opinion that there is nothing, as yet available, on which depositors can make a decision.

The problem is that Alix Partners appear to refuse to stick their necks out even a tiny bit as evidenced by the huge stream of disclaimers at the front of their latest document. Quite simply they effectively say "here are possible outcomes of a SoA or liquidation but if they turn out to be entirely wrong we bear no responsibility for them". This is not good enough and this message has been sent to the IoM in no uncertain terms.

Our primary position with regards any SoA is this:

Firstly, the wording of any SoA would have to include clauses giving depositors the same legal rights and recourses as liquidation as well as the rights a liquidator would hold under liquidation. Depositors should not have to surrender any potential legal remedies by opting for a SoA.

Secondly, we will need a document that is crystal clear on how a SoA will pay out the sub £50k depositors sooner and quicker than the DCS scheme.

Thirdly, we will need documentation from Alix Partners giving detailed information on how they intend to maximise returns over and above what the DCS would pay out to higher end depositors. This document will need to be more than a set of 'beliefs' - facts will be required.

Lastly, the information supplied to satisfy the conditions above will need to pass the scrutiny of our Legal team before we can pass judgement or comment.
The last condition is a particularly important one. None of us are SoA experts whereas our opponents in this (Alix Partners) are, apparently. We should not be agreeing to anything that our legal representatives haven’t given the green light on.

We are reasonably confident that our second request (re. sub £50k depositors) will be met quite easily but the stumbling block at the moment is the request for ‘facts’ on how the higher end depositors will fare better under a SoA. Discussions we will be having tomorrow with the IoM authorities together with further info due imminently from Alix Partners should reveal how close we are to our objective.

ACTIONS

We understand that there can be quite a build up of frustration as we approach the 29th especially as the information from the IoM doesn’t seem to be flowing as readily as we would all like. So there are a number of things we as individuals can do:

  1. In all your correspondence with the IoM authorities, concentrate on asking that they provide clear, unambiguous documentation clearly showing the differences between any SoA and the DCS and explaining that we cannot possibly make a decision with the limited information so far offered. I would ask that you refrain from any personal attacks in these communications as, although completely understandable, they may have the effect of backfiring at the last moment.
  2. In all your correspondence with UK MPs and other UK authorities please point out the issues we are having as a result of the ‘transfer order’ enacted by the UK government with regards KSFUK. Quite simply, the legislation the UK government introduced put in place something called an ‘overriding objective’ for the administrators of KSFUK.

This legislation instructs Ernst & Young to ignore standard administration procedures in favour of procedures put in place by HM Treasury. Specifically, this states that for the first 6 months of administration the administrators must concentrate on dealing with all issues surrounding the movement of accounts to ING before dealing with any other creditor issues.

The result of this is that our Liquidator Provisional had no real information from London as to the potential recovery he can expect from our assets in KSFUK and as such, any parties showing an interest in purchasing KSFIOM are faced with a large hole in the balance sheet of unknown size. This has resulted in any offers from 3rd parties for our bank being of a derisory nature.

We will continue to report back as and when we have information that we believe is reliable and of use to you. There are those amongst us that will have you believe that all is not as it seems and that deals are being done behind closed doors without your knowledge. Once again I will reiterate that we do not have the power to make any such deals and that these stories are categorically untrue. We have placed our heads above the parapet and our identities are out there for all to see. I would ask those who so enjoy casting doubt on our intentions and morals to at least have the decency to do the same…at least then depositors can make a truly informed decision on whom to believe and trust.

The objective remains the 100% return of funds to all depositors.

Thanks

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thanks

  • Anonymous
  • Offline
  • Thu, 22/01/2009 - 20:42

diver
thanks for this timely forthright update. its greatly appreciated


The conversion to Sterling at

  • Anonymous
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  • Thu, 22/01/2009 - 22:18

The conversion to Sterling at the rate of 9th Oct was mentioned in your last published discussions with the IOM Government. There is no mention today. Has this changed? This is a significant fact because it makes all non Sterling holders about 15% worse off than if the liquidation goes ahead.

The bank holds multicurrencies (whether in loans or cash or CDs) , so should either be able to pay out in that currency or should pick a rate close to the proposed activation of the SoA.

I for one am concerned that if the 9th Oct rate stands, the non-Sterling account holders could be penalised to benefit the majority Sterling holders. This difference is huge enough for me to consider the SoA as unacceptable.


Hardly a good reason to

  • Anonymous
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  • Fri, 23/01/2009 - 04:07

Hardly a good reason to reject the SoA

Whilst I agree that the subject of currency needs to be well considered, whether the bank is in liquidation or controlled under the SoA, the decision is going to be the same.

There have to be some basic ground rules that the SoA abides with, one of which will be the pro-rata distribution of funds in accordance with normal liquidation procedure.

I have discussed elsewhere, what will you do if you agree to a rate for example at the date of adoption of SoA (Court Order), then the dollar drops through the floor as is predicted? It cannot be changed every time the rate changes, but then again you should not be disadvantaged.
Simpson needs to confirm the value of dollar holdings he has, together with advances that were made as mortgages etc in dollars, and if he expects to receive redemption of these loans in dollars.


US dollars

  • markH
  • 12/10/08 n/a (free)
  • a depositor
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  • Fri, 23/01/2009 - 03:11

I'd just like to reiterate Frog's comments above. I have a US dollar account and if the exchange rates are set at 9 October, I will be hammered on the exchange rate on top of everything else.