We should have a foreign currency holder representation in the DAG

  • klauseriksen
  • 10/10/08 31/05/09
  • a depositor
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Posted: Mon, 26/01/2009 - 07:55

According to the proposed SoA the exchange rate for foreign currency holders would be calculated on the 8 Oct. In a DSC scenario however Mike Simpson has stated that the exchange rate calculation would take place at the time of liquidation i.e. sometime in the future. Given the large currency fluctuations this has a significant impact on the repayments for foreign currency holders as these would lose out an additional 20% on top of the loss everyone else has on repayment if Oct 8 is used as the calculation date. It seems to me that this issue has largely been ignored and that IOM may have an interest in this which is detrimental to the foreign currency holders as their payment would be reduced if Oct 8 is used as the exchange rate calculation date.
My main contention is that the preferably the repayment should be calculated and made in the original currencies of the accounts and if this is not possible then the SoA should use the SAME date for currency conversion as Mike Simpson would be obliged to use in a DSC. Anything short of that will surely get all the foreign account holders mobilized where after the term of the SoA will be legally challenged which would then in turn lead to a delay in payments for all of the KSF IOM depositors while this legal issue is resolved.
I therefore propose that the foreign currency holders get representation on the DAG to ensure a fair and equitable solution for all.

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IoM government mind control

  • Anonymous
  • Offline
  • Fri, 27/02/2009 - 23:49

Here is a photo of the fiendish hi-tech mind-control device constructed by the IoM government to persuade us to accept their Scheme of Arrangement, at a cost of several hundred million:

http://petermccready.com/portfolio/08082001.html

Reluctant depositors are lowered into position by crane until the opening in their rear end is aligned coaxially with the beampipe and then the two halves of the device are slowly rolled together along the tracks in the floor while the beam is circulating. Depositors are then asked whether they agree to the scheme.

Your web browser might need a plugin for this to work properly. It takes a while to load and then you drag with the mouse (left hand button depressed) to move around in 3D. The beampipe can be seen in the centre of the photo.


Again I would like to know

  • Anonymous
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  • Fri, 27/02/2009 - 11:21

Again I would like to know where are you getting "According to the proposed SoA the exchange rate for foreign currency holders would be calculated on the 8 Oct."

The most current dated information I could find was from the court hearing dated 13 February 2009 with a timetable for Scheme of Arrangement that was posted at kaputhingsingers.co.uk/Pages/4061. Under Item 6 it states "Record Date (This will be the date (if applicable) at wich currency conversion will take place as well interest and set off applied.) Under the When column it was stated week commencing 11 May.

Is there something that came out after this because I couldn't find it.

To have even proposed to use 8 October 2008 as the date to use for the exchange rate scares the s**t out of me. Not only are all these fools completely incompetent it appears they think nothing of outright thievery - which would be the case if they plan to pay us back at the 8 October exchange rates.


jimg, re: SOA exchange rate conversion

  • Anonymous
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  • Fri, 27/02/2009 - 13:35

Please see David Lovett's February 13th affidavit - Page 10, Item 4.1

The clause to which I refer reads as follow-

4.1 All Scheme claims will be paid in sterling. Any Claim denominated in any other currency shall be paid in sterling. All non-sterling claims will be converted into sterling at the mid-market rate specified in the Financial Times (or such other source as the Liquidators Provisional deem appropriate) on 9th October 2008.


See Frog's posting below

  • DonaldC
  • 25/11/08 31/05/09
  • not a depositor
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  • Fri, 27/02/2009 - 13:20

Which takes you to this link:

http://chat.ksfiomdepositors.org/forum-topic/soa-and-foreign-currency-de...

You make the issue sound very clear cut, but I think you have to look at it from 3 points of view - pragmatic, equitable and legal.

Currently, currency depositors are arguing from a pragmatic point of view - i.e. they are opposed to the SoA in its current form because they will get less money.

This is understandable. However - if there is a finite pot of distributable assets - sterling > 50's see their entitlement reduced by the fx rate movements, and so (all else being equal), should be pro-SoA.

Equitable - it is not as clear as you make out that the SoA is unfair. The question is whether fx exposure risk should be passed to the currency or sterling depositors. No solution benefits everyone.

Had the rates moved in the other direction, you could make an equally valid case that your entitlement should be calculated at the 8th October rates, otherwise you have suffered loss because of IOMG's delaying of a liquidation that could have happened then.

Legality - no clear answer as the SoA is not covered by insolvency law. It seeks to use the legislation as a guidance, but what should it choose as a proxy liquidation date?

The date of provisional liquidation, as currently drafted, the date of the SoA being officially approved, or an abritrarily chosen date (May 11th) as originally provided in the draft SoA?


Why not pay us all in Zimbabwean $ with 9 Oct Exchange rate

  • klauseriksen
  • 10/10/08 31/05/09
  • a depositor
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  • Thu, 05/03/2009 - 14:45

I wonder which date the Sterling account holders would vote for if the IOM decided to pay us all in Zimbabwean $ using the 9th Oct for exchange rate calculations which to me would be just as logical as being paid out in UK £ when I banked US$ and Euros in an international offshore account. This way they could easely pay us all 100% and make a hefty profit for the IOM.

Basically you say that in an SOA anything goes, including a majority voting to redistribute wealth to themselves from a minority when compared to their legal entitlements in a liquidation
If so, I ask, why not pay us ALL out in Zimbabwean $
Oh no you would say, by law they are required to pay us out in UK £.
Which law would I ask?
The liquidation law you would have to say
Ok then, but why should we then not also use the date for currency calculations that is specified in the liquidation law?

Ups, better be still now, don’t want to give the IOMG any good ideas, otherwise we will soon see the IOMG purchasing ZWD by the boat loads!


What "FX Exposure risk"?

  • kiwi38
  • 11/10/08 31/05/09
  • unspecified
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  • Fri, 27/02/2009 - 20:57

DonaldC I am afraid you are missing the point here. I have Euro and I did not take any "FX exposure risk" as you put it - I have Euros because I want Euro. I should get back Euro HOWEVER if the powers that be (either liquidator or SOA manager) enforce STG payments then I should get back the equivalent of my euros as at the date each repayment is made so there is no risk of me losing or gaining based on the rate. This also protects the STG depositors from losing if the rates go the other way over the 2/3/6/? year repayment period - i.e. I am saying the conversion rate date should not be 8 Oct, nor should it be 9 April 2009. We should get back our money in STG at the rate on the day of each payment amount.


First, I typed in the wrong

  • Anonymous
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  • Fri, 27/02/2009 - 20:05

First, I typed in the wrong court hearing date, it was actually 19 February and not 13 February 2009 which hopefully trumps out David Lovett's affidavit on 13 February.

Now to comment on the post by DonaldC:

"Equitable - it is not as clear as you make out that the SoA is unfair. The question is whether fx exposure risk should be passed to the currency or sterling depositors. No solution benefits everyone."

What the hell do you mean whether the fx exposure risk should be passed to the currency or sterling depositors? Just because the GBP has tanked since October what right does that give anyone to pay me or anyone else who held USD funds back with anything less than the value of what those funds were on 8 October?

I'd be interested to know are there any others who held sterling accounts that think the foreign currency account holders should get paid back at anything other than current exchange rates when this matter is finally settled? I'd like to see how many think like DonaldC here.

"Had the rates moved in the other direction, you could make an equally valid case that your entitlement should be calculated at the 8th October rates, otherwise you have suffered loss because of IOMG's delaying of a liquidation that could have happened then."

Hey, I only want the same value of what my USD funds were on 8 October so don't start implying this is some game of chance where on one hand you lose and on the other you win. These were fixed acounts that weren't investments that bounce up and down. I fully expected to get back whatever I put in plus agreed upon interest. The interest is gone but I damn well deserve my principal and not some reduced amount due to an exchange rate scam.

There is more I'd like to say on this but I'll save it for another day.


Hang on JIMG and kiwi38

  • DonaldC
  • 25/11/08 31/05/09
  • not a depositor
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  • Mon, 02/03/2009 - 09:49

Currency depositors have been making their case very forcibly on this forum, and I'm only balancing out the issue with a few facts on the specific issue of the choice of conversion rate dates under an SoA and their implications.

The phrase "FX exposure" refers to the company - I'm not implying that currency depositors are speculators. If KSFIoM was fully hedged (USD/EUR assets = USD/EUR liabilities) then there is no issue.

If it was not, then the growth in the value of currency deposits means that money will have to be transferred from the pot "funds to repay sterling depositors" to the pot "funds to repay currency depositors".

I suspect many/most sterling depositors would be happy to accept this, particularly given that they presumably outnumber the currency depositors and therefore would suffer significantly less. However, I fail to see what is wrong with pointing this out.


"I suspect many/most sterling

  • Anonymous
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  • Thu, 05/03/2009 - 11:08

"I suspect many/most sterling depositors would be happy to accept this, particularly given that they presumably outnumber the currency depositors and therefore would suffer significantly less."

Just to be clear, are you saying you think most of the UK group with sterling accounts would be fine with the foreign currency account holders getting screwed by getting paid back in depreciated sterling currency if it would benefit them?

Looking forward to some replies.


DonaldC, No one should be worse off in an SOA

  • klauseriksen
  • 10/10/08 31/05/09
  • a depositor
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  • Thu, 05/03/2009 - 10:33

You can argue all you want but the fact of the matter is that the liquidator would be required to use the date of liquidation for his currency calculations.
The fundamental principle of any SOA is that ALL depositors should be the SAME or BETTER off as in a liquidation. Otherwise their legal rights which are very well established are infringed and the SOA will run into a lot of legal suits and delays. This view point is also expressed by the liquidator in his latest affidavit.
I personally don't have any problems with an SOA that seeks to protect the small local UK Sterling depositors of which the majority is no doubt made up of the local electerate on the IOM. However this should only be done if the rest of us are no worse off than we would be in a liquidation as this is the benchmark for the SOA. I am therefore insisting that the SOA should use the same date as the liquidator would by law be obliged to use and I can assure you that if the IOM in the end try to shaft us with this then the SOA will endure very long delays due to litigation before anyone can benefit from payouts


We should have a foreign currency holder representation in the D

  • Anonymous
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  • Wed, 11/02/2009 - 18:55

Believe me.. you do!
Diver and I both have currency accounts at stake.
We are trying to clarify the situation and taking it up with Edwin Coe in case we should lodge a pre-emptive complaint under the provsions of the IoM Companies Act..

We are trying to cover all the angles.. whether our own savings are involved or not. We also have a bondholder on the team.


<£50k depositors

  • Anonymous
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  • Wed, 11/02/2009 - 19:26

Do "smaller savers" (<£50k) currently have representation in the London Team or DAG informal committee ?

<£50k depositors accounted (prior to £1,000 EPS payouts) for 69.5% of all depositors, by number.

This forum, at least, appears to cater for the 'medium to large' retail depositor and the 'medium to large' bondholder.


Some may actually get less from the SoA than the DSC

  • klauseriksen
  • 10/10/08 31/05/09
  • a depositor
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  • Mon, 26/01/2009 - 08:15

You can actually end up with some foreign currency holders getting LESS in an SoA than a DSC. For example, a depositor with say 65,000 Euros could actually end up getting less from the SoA than he or she would get from the DSC depending on the repaymenyt percentage of the SoA.
In a DSC this depositor would receive roughly 50,000 pounds using the approximate exchange rate of 1.3 on the 8 Oct. Whereas in an SoA if we use the approximate current exchange rate of 1.07 and a guessed repayment of 65p to the pound of the balance he would get 65000Euros / 1.07*0.65=39000 pounds.
Hence the SoA would be significantly worse for such an account holder and thus does NOT give everyone the same or more than the FSC.
Clearly from the above example the ONLY way to fairly implement an SoA is to use the exact SAME date and method as Mike Simpson would be obliged to use in a DSC scenario.
For clarity, I am generally for the SoA and I have significantly more Euros and US $ trapped in KSF than the above example.


FSC vs SoA payback for foreign currency holders

  • klauseriksen
  • 10/10/08 31/05/09
  • a depositor
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  • Tue, 27/01/2009 - 07:23

Actually I used the wrong rates in the above example. Here is the correct ones
For an account holder with 50000 Euros in the bank the calculation will look as follows:
Exchange rate Euro Pound FSC: 1.08 (at liquidation) or SoA 1.3 (8 Oct as proposed by IOM), payback percentage SoA: 65%
FSC: 50000 Euros / 1.08 = 46729 pounds compensation
SoA: 50000 Euros / 1.30 / = 38461 pounds compensation (payback percentage 100% as amount is < 50000 pounds)
Hence the SoA would only give a much less the payback of the FSC for this account holder. For foreign account holders with much larger amounts there is also a major flaw in the SoA as these instead of a payback of 65% for UK £ account holders would only get 65 * 1.08 / 1.3 = 54% payback with the current SoA proposal.
In other words, the only way to ensure a fair and equitable distribution in the SoA is to use the exact same exchange rate calculation date/method as Mike Simpson would have to use in the FSC which is at the date of liquidation sometime in the future


payback for foreign currency holders

  • simple
  • 26/01/09 31/05/09
  • a depositor
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  • Thu, 26/02/2009 - 18:56

For the majority of us with foreign currency deposits, any proposal paying out using the conversion as on 9.10.08 would be detrimental. This probably on top of the loss resulting from a capped limit.

This is also assuming that the pool will only contain sterling. What has happened to our deposits in foreign currencies? Surely these were held in the respective currency. The recovery of these currency funds should then be distributed and the depositor can then have the option of converting to whatever currency they choose.


I don't know if you noticed

  • frog
  • 10/10/08 13/09/09
  • a depositor
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  • Wed, 18/02/2009 - 10:54

I don't know if you noticed (see: http://chat.ksfiomdepositors.org/forum-topic/soa-and-foreign-currency-de...)

The original SoA proposal would have taken rates as of the week of May 11th (the Record Date) - This is then similar to the liquidation option.

This new one is quite different.


I have posted on this

  • expat
  • 10/10/08 31/05/09
  • unspecified
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  • Mon, 26/01/2009 - 16:20

I have posted on this earlier, ut for your info I had a face face meeting on the IOM with Alan Bell last week, This was one of a number of issues i raised. As diver has posted there is no Manx legislation dealing with this, the UK legislation is what pople seem to be quoting. I can only say that the point was firmly made, I also confirmed it in writing.

It was clearly understood and will be looked into, it may or may not need a legislation change, I cannot comment. However, what was positive is that the matter ws recieved well by Alan Bell.

I also met one of the major companies in this and they are also raising this issue after our talk.

Can't say any more because thats the current position, other than I am told the DAG legal team are following this as well.


Thanks Steve, Good to hear

  • mikepapa
  • 10/10/08 n/a (free)
  • a depositor
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  • Mon, 26/01/2009 - 19:49

Thanks Steve,

Good to hear that the fate of Forex holders has not yet been completely decided!

Kind rehards,

Mike


Unfortunate timing

  • mrken30
  • 10/10/08 31/05/09
  • unspecified
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  • Wed, 11/02/2009 - 21:32

I'm one of the unlucky ones, that got my account frozen just before changing into dollars. I emmigrated the last week in September and was just setting up an account to transfer the money into. the value of the £ have dived against the $ and probably lost atleast 20% plus interest