01 JULY 2009 (i)

Judgment delivered by Deputy Deemster Corlett in the respect of the application made by members of the KSFIOM Depositors' Action Group in respect of the costs of the Scheme of Arrangement ("the Scheme").

Deputy Deemster Corlett has delivered his judgment on 30 June 2009, in respect of the application made by members of the KSFIOM Depositors' Action Group in respect of costs of the Scheme.

The judgment amongst other matters indicates that :- 

  • That the application was considered by Deputy Deemster Corlett in the light of precedent in respect of civil litigation and that the awarding of costs was at the discretion of the Court.
  • That there is a particular rule in litigation involving winding up petitions and schemes of arrangements that there should be one set of costs for any successful group of creditors.
  • That those who present or promote a scheme will not normally be subject to an adverse order for costs unless they have been guilty of "frivolous or careless conduct" in presenting the Scheme.
  • That there was no misconduct in relation to the promotion of the Scheme
  • That it was difficult to see how it could be claimed that the Scheme was devoid of any substantial support from the general body of KSFIOM's creditors, as a majority in number (not in value) voted in favour of the Scheme.
  • That the DAG's costs in respect of the Scheme and the Winding Up Petition should be paid out of the assets of KSFIOM as a pre preferential debt, to be agreed by a costs assessor.
  • That in the Deemster's view the Joint Liquidators Provisional adopted a proper approach to the work which they had done in relation to the Scheme and there was no merit in the suggestion that their costs should be disallowed.
  • The costs of the Joint Liquidators Provisional in relation to both the Scheme and the Winding Up Petition will be paid out of the assets of KSFIOM, as a pre preferential debt.

The judgment refers to the decision of the Joint Liquidators Provisional not to make a similar claim as that made by the Depositors Action Group against the Treasury for payment of their costs in relation to the Scheme and the Winding Up Petition.

The Joint Liquidators Provisional wish to make clear that their decision in this regard was based solely on the extensive legal advice that they obtained as to the prospect of any such application being successful. In particular advice was sought from leading Queens Counsel. In the absence of any legal advice that there was a reasonable prospect of being successful in such an application, the Joint Provisional Liquidator considered that they would have been derelict in their duty to creditors if they had chosen to disregard the legal advice they had received and had pursued such an application. Indeed the judgment makes clear that as the Depositors Action Group's application for its costs to be met by the Treasury had been rejected, it follows that an application for the Joint Liquidators Provisional costs to be met by the Treasury would be rejected.

The full judgment is below and can also be found on this link:

http://www.judgments.im/content/J964.htm

PDF Judgment 30 June 09

Contacts

As previously, the best way to make contact is to write to the bank or 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