09 APRIL 2009

Court Hearing of 9 April 2009

Following the Court hearing of 9 April 2009, the Court has issued an order to convene meetings of the creditors of Kaupthing Singer & Friedlander (Isle of Man) Limited In Liquidation Provisionally ("the Bank", "KSFIOM" or "the Company") for considering and, if seen fit, approving a Scheme of Arrangement ("the Scheme") to be entered into between the Company and its Scheme Creditors (which are defined in the Scheme documents).

The purpose of this ruling is to allow the Joint Liquidators Provisionally and the Treasury to present and outline the proposed Scheme to the Scheme Creditors of the Bank. The implementation of the proposed Scheme is subject to the approval of the Scheme Creditors. For purposes of clarification, if the Scheme is not approved then the Company will be placed into liquidation.

We will be making several documents available to the Scheme Creditors to allow them to assess the proposed Scheme and make an informed decision as to whether the Scheme provides an equal if not better return to Scheme Creditors than would otherwise be achieved under a normal liquidation process.

Information for Scheme Creditors

The Joint Liquidators Provisionally will be making the following documents ("Scheme Documents") available to Scheme Creditors: 

  • The Second Affidavit of Michael Simpson;
  • The Scheme of Arrangement; and
  • Explanatory Statement to the Scheme of Arrangement (including notices of meetings).

Timetable

Post the Court hearing of 9 April 2009, the Joint Liquidators Provisionally are required to adhere to the following timetable:

  • The various Scheme Documents are required to be issued to creditors within 10 days of the Court Hearing. This information will be sent to creditors in various forms. The Joint Liquidators Provisionally endeavour to issue this information through website updates as well as by post, by email, and through newspapers published internationally.
  • A Scheme Meeting will be held 28 days post the initial 10 day period. It is proposed that the Scheme Meeting will be held on 19 May 2009 at Villa Marina, Harris Promenade, DOUGLAS, Isle of Man, IM1 2XP. At this Scheme Meeting those Scheme Creditors attending will be asked to vote on the Scheme. Those wishing to vote need to ensure that they are present or if voting by proxy need to ensure that the Form of Voting and Proxy is returned as soon as possible, and in any event, received by 5p.m. on 15 May 2009 by the Provisional Liquidator at Kaupthing Singer & Friedlander (Isle of Man) Limited, PO Box 197, Samuel Harris House, 5-11 St. Georges Street, Douglas, Isle of Man, IM99 1SN. Further detail is provided in the Scheme Documents. There will be three classes of creditors voting: Fully Protected Creditors, Partially Protected Creditors and Unprotected Creditors, which are defined in the body of the Scheme Documents. Of those creditors voting, there is a requirement for the Scheme to receive the approval of 75 percent in value and 50 percent in number of those creditors attending (or alternatively by proxy).
  • If the Scheme is given approval by the creditors, the Scheme will be sanctioned by the Courts on 27 May 2009 and at that point become effective. This will be the Effective Date of the Scheme.
  • At this point the proposed time frame for payments to Scheme Creditors will be initiated with the First Dividend Payment to Scheme Creditors expected to be paid in 90 - 100 days from the Scheme Effective Date. This is estimated to be at the end of August 2009.
  • The Second Dividend Payment will be paid on the first anniversary of the Scheme Effective Date and the Third Dividend Payment will be paid on the second anniversary of the Scheme Effective Date.

Key Aspects of the Scheme

The key aspects of the Scheme are such that the Isle of Man Treasury has agreed to join the Scheme and be bound by its terms. The Treasury will:

  • Provide funding to enable Top-Up Payments to be made to Protected Depositors. A Fully Protected Depositor is any person with a deposit with the Company who would be entitled to receive payment under the Financial Services Act 2008 Compensation of Depositors Regulations 2008 for the full amount of the deposit held. A Partially Protected Depositor is any person with a deposit with the Company who would be entitled to receive payment for part of their deposit, up to £50,000, under the Financial Services Act 2008 Compensation Regulations 2008. The Top-Up Payments made by the Treasury will ensure that by the second anniversary of the Scheme becoming effective, each Protected Depositor will receive an amount which is at least equal to the amount which that Protected Depositor would have received pursuant to the Depositors Compensation Scheme ("DCS") Regulations had the Company been placed into liquidation on 9 April 2009.
  • Subordinate its pre-winding up petition unsecured claim against the Company (of approximately £2,800,000).

Other key features of the Scheme are:

  • the Provisional Liquidation will continue throughout the term of the Scheme;
  • the Joint Provisional Liquidator will also act as the Scheme Supervisor;
  • the Joint Provisional Liquidator will continue to collect in and realise the assets of the Company;
  • the Scheme Supervisor will be responsible for distributing the assets of the Company to its creditors;
  • that each Scheme Creditor will, as a minimum, receive the same amount that it would have received had the Company been placed into liquidation, and compensation had been paid under the Isle of Man Treasury Depositor Compensation Scheme;
  • that any creditor who receives Top-Up Payment (as defined in the Scheme Documents) will assign its Protected Scheme Claim to the Treasury;
  • the Top-Up Payment mechanism also benefits other Scheme Creditors as the Treasury will agree in accordance with the Scheme to defer its right to receive payment on the claims assigned to it as a result of the making of the Top-Up Payments until such time when all Scheme Creditors have received a distribution of 60 pence in the pound of their Scheme Claims.

 

Notice of Termination of access to Edge and online Accounts

As you will be aware from previous website updates in December and January, the joint Liquidators Provisionally outlined that online access to Edge and online Accounts would be available in "READ ONLY" format and that these would remain open until the end of February. To accommodate creditors an extension was provided through March, however, going forward this service will now be terminated.

Contacts

As previously, the best way to make contact is to write to the bank or to email branch@singers.co.im. If you need to telephone the bank, please use the main switchboard number +44 1624 699222.

 

Mike Simpson

Joint Liquidator Provisionally