2008 Updates

19 DECEMBER 2008

General Matters

This update covers the Isle of Man Treasury’s proposals for an interim payment, internet access for accounts and confirmation regarding the issuing of statements.

Due to the Christmas period, in the absence of significant new information, the next planned update will be in the first week of January.

I would draw your attention to the conference call details posted at the end of this update.

Interim Payment from the Isle of Man Treasury

The Isle of Man Treasury has sought approval from Tynwald for making a payment to depositors of £1000. The Treasury have requested that we send a claim form to all customers on their behalf so that depositors can arrange for them to be completed and returned.

All queries relating to the Early Payment Scheme should be directed to the hotline that the Treasury is setting up for this purpose, details of which will be on the Treasury website.

Edge and online Accounts

As stated last week the Edge and online accounts in a “READ ONLY” format will go live as soon as the IT specialists have completed the necessary updates to the system. Online access will remain open until the end of February 2009.

Statements

We have begun to issue Statements. Accompanying the statements will be a letter explaining the treatment on certain accounts such as fixed term deposits, which was explained in my last update.

Together with the statements we will be sending an information sheet to customers requesting confirmation of their details, this is in addition to the form referred to above as it is to ensure that the Bank’s information is accurate. The form will also enable customers to confirm alternative bank account details for any future payments which could be made electronically.

Telephone conference dial in details

Following discussions with the Depositors Action Group I have set up a conference call which will take place on Monday 22 December 2008 at 4.00 pm GMT.

I am making the access details generally available to depositors. If you wish to listen to the call, you will need to register in advance. Please click the link to register.

https://cossprereg.btci.com/prereg/key.process?key=PM84Q9HYV

Participation will be on a listen only basis. The facility is provided by a third party and accordingly there is a cost per head for usage. Should any party register and then not attend the liquidation will be charged.

The lines are also limited and I would request that only those depositors who are able to make the call register as we will make the audio recording of the call available on the website for those of you who are unable to attend. Should depositors choose this route to listen it will significantly reduce the costs.

12 DECEMBER 2008

General Matters

Further to the previous update regarding the creditors meeting convened by the Administrators of Kaupthing Singer & Friedlander Limited (“Kaupthing UK”), I have now received the Administrators’ formal report on the outcome of the meeting which can be accessed by clicking here.

A number of depositors have questioned the constitution of the Creditors Committee which was elected at the creditors meeting. The formal report sets out the voting results at Appendix A. I put forward KSFIOM for membership of the Committee however from the split of voting you can see that there were insufficient votes cast in the Banks favour.

The Statement of Affairs of Kaupthing UK

The proposals circulated to creditors did not contain a copy of the Directors’ Statement of Affairs. The report on the meeting includes a copy of the Kaupthing UK Statement of Affairs on the back page of the report at Appendix B.

I draw your attention to the notes set out at the foot of the Directors’ Statement of Affairs.

I must stress the assets and liabilities shown on the Statement of Affairs reflect the book values only and do not represent the realisable values. I have no information on the realisable values and they may be significantly lower than the book values shown. Until I am able to obtain reliable information on the realisable values and the likely distribution from the Administrators, it will not be possible for me to provide you with a meaningful indication of the ultimate distribution to creditors of KSFIOM.

I confirm that KSFIOM lodged an indicative claim of £600 million against Kaupthing UK solely for the purposes of voting at the creditors meeting. We are continuing to work on reconciling the inter company position so that a formal claim can be lodged in the Administration of Kaupthing UK.

Edge and online Accounts

As stated last week work continues on the restoration of Edge and online accounts in a “READ ONLY” format, for customers to print copies of statements. It has been necessary to engage outside specialist to develop additional functionality for the computer software that supports the online functions and we hope they are able to complete this task imminently.

We will be sending an email to all Edge account holders once the system has been activated and will post an update on the website. The system will then be held open until the end of February 2009.

Statements

We are working towards the issuing of statements to customers before the Christmas postal deadlines. Accompanying the statements will be a letter explaining the treatment on certain accounts such as fixed term deposits, which was explained in my last update.

Interim Payments

The Isle of Man Treasury is actively exploring the possibility of making an interim payment to depositors of the Bank. We continue to assist them and hope to be in a position to provide a more detailed update next week when the details have been finalised.

05 DECEMBER 2008

General Matters

In this update I set out a report on the creditors meeting convened by the Administrators of Kaupthing Singer & Friedlander Limited (“Kaupthing UK”), issuing Statements as at 9 October 2008 and actions currently being taken re Edge accounts and other online information.

A PDF copy of the Administrators Proposals is available here.

Meeting to consider the Administrators Proposals in respect of Kaupthing UK

A meeting of creditors of Kaupthing Singer & Friedlander Limited (in Administration) (“Kaupthing UK”) was held on Monday, 1 December 2008 at 11am at Café Royal, 68 Regent Street, London. The meeting was attended by the Joint Liquidator Provisionally on behalf of KSFIOM.

The purpose of the meeting was to consider the proposals of the Administrators of Kaupthing UK and to decide upon the formation of a Creditors Committee. The Administrators read from the statement of proposals to creditors which had been circulated with the notice of the meeting.

With regard to dividend prospects the Administrators indicated it was too early to give a realistic estimate or range but that they will be discussing this with the duly appointed Creditors’ Committee. It was indicated that the intention was to keep creditors informed in respect of any progress in this area and to pay an interim dividend as soon as was felt possible.

With regard to the directors Statement of Affairs, the directors of Kaupthing UK had obtained an extension in respect of the filing deadline but it was anticipated it would be filed shortly. The Administrators advised that it was likely an order would be sought from the Court under section 231 of the Insolvency Act 1986 limiting disclosure for commercial and other reasons. It was envisaged that a summary Statement of Affairs would be made available to creditors.

The Administrators had applied to Court for dispensation to release a list of creditors on the grounds it would be prejudicial to the interests of creditors for list of creditors names, addresses and amounts due to be released. The Court had duly granted an order on 13 November 2008. It was also confirmed that by Court order the documents on the Court file relating to the appointment of the Administrators were sealed and not open for inspection.

Mr Brazzill referred to the consolidated and draft unaudited balance sheet as at 7 October 2008 included in the proposals. He indicated that the position with regard to £981m of other liabilities was likely to change substantially as part of ongoing reconciliation work. He also indicated that it was believed that Kaupthing h.f. was a net debtor of the company but that work was ongoing to establish the position. It was stressed that many areas of the balance sheet were affected by the impact of set off which had the potential to change the position quite materially. It was confirmed that as at 26 November 2008, approximately £270m, €55m and US$130m was held in cash by the Administrators and that a Receipts and Payments account would be circulated in due course.

The Administrators advised that they were not in a position to calculate the total level of creditors given the substantial uncertainties relating to the balance sheet. It was confirmed that claims totalling approximately £4.7bn had been submitted for voting purposes at the meeting, including an estimated claim for £3.5bn submitted by the Financial Services Compensation Scheme (“FSCS”). It was stressed that the FSCS will stand in the shoes of depositors it pays out, i.e. as an unsecured creditor.

So as to protect the position of KSFIOM we have stated our desire to be a member of the Creditors Committee. A Committee is made up of 3 to 5 creditor members and creditors are elected by votes by value of claim. Over 40 creditors put their name forward for membership of the Committee and whilst a committee was formed KSFIOM had insufficient votes to be appointed as a member.

It was subsequently confirmed that the following had been voted onto the Creditors’ Committee:-

Financial Services Compensation Scheme

Cats Protection

Transport for London

Trustees for the Singer & Friedlander Pension Scheme

Peterborough City Council

Edge and online Accounts

We are currently working to restore the Edge and online accounts in a “READ ONLY” format so that customers can view their account information online, for a temporary period. The Bank is not able to complete this process in-house due to the Information Technology system restraints.

We will be sending an email to all Edge account holders once the system has been activated and will post an update on the website. Once the system is live it will be held open until the end of February 2009.

Statements

September statements were issued to customers however the Bank does not produce statements for Fixed Term Bonds, Online accounts or Edge accounts. We are planning to send statements to customers as at 9 October 2008.

The objective of the statements is to provide customers with the balance of the funds deposited with the Bank. As stated the Bank’s IT system does not allow the production for statements relating to fixed term bonds.

For information purposes only and so as to reflect the claims of depositors as at the 9 October 2008 the Banks system will show early maturity of fixed term deposits as at 9 October 2008. The Capital and interest accrued to date in respect of these fixed term deals will then be credited to each customer’s account. Many Customers received a statement for these accounts as at 30 September 2008 which showed a Nil balance. The Statements as at 9 October 2008 will show the receipt of these funds into their account. In the minority of cases where the deal was set up from funds from another Bank and no other KSFIOM account exists then a new account will be credited to show the balance of the fixed term deal. This has been done purely for presentational purposes to enable these balances to be included on statements and does not affect deposit terms.

We hope to issue statements to customers before the Christmas postal deadlines.

Interim Payments

The Isle of Man Treasury is investigating the possibility of making an interim payment to depositors in the Bank. We continue to provide information and assistance to them whilst they continue to investigate whether this can be achieved.

27 NOVEMBER 2008

Adjournment of winding up petition

At a hearing at the Isle of Man High Court today, before Deputy Deemster Corlett, the joint petition of the Bank and the Financial Supervision Commission was adjourned until 10am, 29 January 2009 at the request of the Isle of Man Treasury.

The Isle of Man Treasury informed the court that high level discussions were still taking place between the UK Treasury (which had confirmed that it would represent the interests of the Isle of Man) and the Icelandic Government which now owns Kaupthing Bank h.f. but that to date there had been no tangible outcome to these discussions.

Her Majesty’s Attorney General for the Isle of Man, appearing for the Treasury, informed the Court that a Committee has been established of senior Isle of Man politicians to consider alternatives to a traditional liquidation process. He also advised that the Treasury had instructed a firm of restructuring specialists to assist in this regard. In furtherance of this, the Treasury asked the Court to adjourn any further consideration of the winding up petition for a period of 60 days to allow those assisting the Treasury to investigate and consider, among other things, potential alternative routes to enable creditors to receive a dividend or payout over and above the amount the majority of creditors would receive on a straight liquidation, even with a Depositors Compensation Scheme award and potentially quicker.

The Treasury submitted that a period of 60 days was required to enable full consideration of any alternative plan. The majority of creditors in Court supported the Treasury’s application for an adjournment and accepted that 60 days was a reasonable request. In the circumstances the Court has granted the adjournment to 29 January 2009 but ordered the Treasury to file an affidavit by no later than 15 January 2009 which must update the Court as to progress. All other parties to the winding up petition may respond to the Treasury’s affidavit by no later than 22 January 2009. The Attorney General assured the Court that should it appear that no alternative plan is feasible before these dates, the Treasury will inform the Court.

As liquidator provisionally and an officer of the court, I have a neutral role in relation to the application for a winding up order and in those circumstances my position has to be neutral with regard to the request for an adjournment. However I provided the Court with an affidavit which set out the steps taken by me as Liquidator Provisionally to date and a copy is available on this website.

The period up to 29 January 2009

It was made clear to the Court that I will continue to pursue my duty to preserve and protect the assets of the Bank. I will also continue to see parties interested in purchasing all or part of the business.

The Attorney General referred to the Treasury’s wish to assist in enabling a payment on account to be made to depositors as soon as possible. I will actively work with the Treasury to explore what may be possible in this regard, given the severe hardship I am aware some depositors are experiencing.

14 NOVEMBER 2008

General Matters

Since our update of 4 November 2008 I have continued to have discussions with various stakeholders regarding a sale of all or part of the business. Those discussions are of a confidential nature and I am not able to give more details. I appreciate that depositors would like more information regarding the current position but regrettably I am not able to provide details at this stage.

I would remind depositors that any sale will need prior approval by both the Isle of Man High Court and the Financial Supervision Commission. I am aware that high level discussions are also ongoing between other parties.

Statements

The Bank is in the process of sending statements as at 30 September 2008 to customers who would regularly receive statements. The statements will also contain a general letter to customers to update those who do not have access to the internet.

In line with the Bank’s practices we will not be issuing September statements to fixed term deposit holders but as stated in previous updates we will send the statements as at 9 October 2008 to all customers once the accounts have been reconciled.

Funds in Transit

As stated in our update of 5 November 2008 letters have now been sent to all customers who had issued instructions to transfer funds prior to the appointment and where the Bank had started to take steps to process the transactions.

Customer Correspondence

Since my appointment we have sent over 5,000 individually addressed letters to customers to answer queries regarding the position of the Bank, specific transaction queries and in answer to emails and telephone messages. This excludes the statements mentioned above. We have sought to deal with customer queries promptly and fully but given the volume of correspondence and the limited information we can currently provide regarding the future of the Bank we appreciate that this has been a frustrating process for customers.

05 NOVEMBER 2008

Funds in flight – payment requests made by customers prior to the date of my appointment

At the date of my appointment as Liquidator Provisionally of Kaupthing Singer & Friedlander (Isle of Man) Limited (“the Bank”) on 9 October 2008, there were a large number of payment transactions which had been requested by customers but which had not reached their payment destination. Over the last couple of weeks we have sought to clarify the precise position in respect of these transactions. This has involved an extensive reconciliation exercise and liaison with other Banks and with the Administrators of Kaupthing Singer & Friedlander Ltd (in administration) (“Kaupthing UK”).

This identified the following different scenarios:-a) In respect of certain of the transactions, no instructions had been issued to any of the Bank’s clearing facilities to effect an actual payment of the amount concerned.b) In respect of some transactions, whilst instructions had been issued to the clearing facilities these had not been processed due to lack of funds in the Bank’s accounts with these facilities. This was in turn due to funds not being remitted from the Bank’s accounts with Kaupthing UK which entered into Administration on 8th October 2008.c) In respect of the majority of sterling transactions, the Bank used its own account with its sister company, Kaupthing UK to process payment requests from its customers. We understand that although the Bank included a number of transactions in batches of entries sent to Kaupthing UK for processing by them out of the Bank’s account with them, these had in turn:-i) either not been processed by Kaupthing UK through its own clearing facilities with RBS at the time that company entered into administration,ii) or had been processed but not cleared before the administration appointment had the impact of freezing the Bank’s account with Kaupthing UKd) In respect of a handful of transactions an error had been made in the information provided to the clearing bank concerned and the transaction had been “bounced” back to the Bank’s account.

We have sought legal advice in respect of how all such transactions should be treated, including obtaining an opinion from leading Counsel in the UK. This advice has confirmed that following the presentation of a petition to wind up the Bank and the suspension of the Bank’s banking licence on 8 October, I (or any Liquidator if one is appointed in due course) am unfortunately not in a position to now effect the transfers requested by customers prior to the date of petition.

There have been suggestions that some kind of trust claim or proprietary interest arises in favour of a customer in circumstances where (i) instructions were given by the customer, prior to the appointment of the Liquidator Provisionally, for a funds transfer to an account of the customer at another bank, and (ii) the inter-bank transactions required to effect such instructions were not completed (by the appropriate credit being made to the customer’s account at the recipient bank) prior to my appointment. Whilst customers may wish to seek their own advice upon these points, I have sought legal advice in this regard and am advised that such suggestions are incorrect and that instructions for a funds transfer give rise to no trust claim or propriety interest.

I shall accordingly be making arrangements for letters to be sent to the customers concerned and for their accounts with the Bank to be re-credited, as at the date of the initial debit entry, with the relevant amount, including any accompanying transaction charges. Following the hearing of the petition for the formal winding up of the Bank, on 27 November 2008, if a Liquidator is appointed, customers will be contacted with regard to the process for claiming monies owed to them.

04 NOVEMBER 2008

Update since the Court hearing

As you may be aware at the Court hearing on 24 October 2008, the petition for winding up of the Bank was adjourned following indications from the Isle of Man Treasury that high level discussions were taking place between the UK Treasury (representing the interests of the Isle of Man) and the Icelandic government which now owns Kaupthing Bank h.f. I am not a party to those discussions and so am unfortunately unable to provide any further update in this regard other than to say that I understand that there is an ongoing dialogue.

In the meantime we are continuing to have discussions with a number of interested parties regarding a sale of all or part of the business. This process will continue over the next few weeks but given the confidential nature of those discussions it will be difficult for me to provide updates of a more detailed nature. As agreed at the Court hearing on 24 October, any sale will need the prior approval of the both the Isle of Man High Court and the Financial Supervision Commission.

Funds in transit – deposits of new funds made by customers after the date of my appointment

Since the date of my appointment as Liquidator Provisionally of Kaupthing Singer & Friedlander (Isle of Man) Limited (“the Bank”) on 9 October 2008, I have been made aware of deposits from customers which have continued to be received into bank accounts in the name of the Bank. As the Bank had its banking licence suspended by the Financial Supervision Commission on 8 October 2008, it can no longer operate as a deposit taker in respect of new monies and as such arrangements need to be made to return these funds.

We have carried out a detailed reconciliation of the bank accounts concerned to identify those transactions which relate to new deposits from customers. This has largely been completed and in the next few days we will be making arrangements for the amounts to be returned to customers.

Funds in transit – payment requests made by customers prior to the date of my appointment

As at the date of my appointment, there were in addition a large number of payment transactions which had been requested by customers but which had not reached their payment destination. Over the last couple of weeks we have sought to clarify the precise position in respect of these transactions, including seeking legal advice. We will shortly be writing to the individual customers concerned advising them of the position, as we have been able to establish it from the information we have been provided with, and will post a separate notice on the website.

Customers with VISA cards

Following my appointment, the Bank’s agreement with VISA Europe Limited has been terminated. Accordingly customers are advised that all VISA cards issued by the Bank have been cancelled and should no longer be used as a valid form of making payments. We have written to the customers concerned requesting that the cards are destroyed.

Statements

We will shortly be issuing statements to customers as at 30 September 2008 – this has been slightly delayed due to logistical difficulties. It is intended that statements as at 9 October 2008 will be issued in due course once we have completed the exercise of making sure the statements are up to date.

24 OCTOBER 2008

Adjournment of winding up petition

At a hearing at the Isle of Man High Court today, before Deputy Deemster Corlett the joint petition of the Bank and the Financial Supervision Commission was adjourned until 10am, 27 November 2008 at the request of the Isle of Man Treasury.

The Isle of Man Treasury informed the court that high level discussions were taking place between the UK Treasury (which is representing the interests of the Isle of Man) and the Icelandic Government which now owns Kaupthing Bank hf.

As liquidator provisionally and an officer of the court, I would stress that my position was neutral with regard to the request for an adjournment. Only one creditor opposed the application for an adjournment. Deputy Deemster Corlett noted that ” the overwhelming majority of creditors supported the Treasury’s application for an adjournment”.

The period up to 27 November 2008

It was made clear to the Court that I will continue to pursue my duty to preserve and protect the assets of the Bank. I will also continue to see parties interested in purchasing all or part of the Bank’s assets.

With regard to customer queries, we are continuing to make progress in our discussions with the Administrators’ of Kaupthing Singer & Friedlander Limited in the UK and in establishing the status of certain transactions which were in transit at the date of appointment of either myself or the Administrators. This has included seeking legal advice from Counsel as to the treatment of certain transactions.

Where we have established the position with regard to specific queries, we have begun the process of responding by letter to the individual queries we have received. We anticipate that this process will speed up during the next ten days but is dependant upon us receiving both the relevant information from the UK Administrators and on us then obtaining legal advice as to the proper treatment of those transactions.

I understand there has been some suggestion that “blocked” funds have been released to customers of the Bank. I can only advise that we are not aware of any such payments.

14 NOVEMBER 2008

General Matters

Since our update of 4 November 2008 I have continued to have discussions with various stakeholders regarding a sale of all or part of the business. Those discussions are of a confidential nature and I am not able to give more details. I appreciate that depositors would like more information regarding the current position but regrettably I am not able to provide details at this stage.

I would remind depositors that any sale will need prior approval by both the Isle of Man High Court and the Financial Supervision Commission. I am aware that high level discussions are also ongoing between other parties.

Statements

The Bank is in the process of sending statements as at 30 September 2008 to customers who would regularly receive statements. The statements will also contain a general letter to customers to update those who do not have access to the internet.

In line with the Bank’s practices we will not be issuing September statements to fixed term deposit holders but as stated in previous updates we will send the statements as at 9 October 2008 to all customers once the accounts have been reconciled.

Funds in Transit

As stated in our update of 5 November 2008 letters have now been sent to all customers who had issued instructions to transfer funds prior to the appointment and where the Bank had started to take steps to process the transactions.

Customer Correspondence

Since my appointment we have sent over 5,000 individually addressed letters to customers to answer queries regarding the position of the Bank, specific transaction queries and in answer to emails and telephone messages. This excludes the statements mentioned above. We have sought to deal with customer queries promptly and fully but given the volume of correspondence and the limited information we can currently provide regarding the future of the Bank we appreciate that this has been a frustrating process for customers.

05 NOVEMBER 2008

Funds in flight – payment requests made by customers prior to the date of my appointment

At the date of my appointment as Liquidator Provisionally of Kaupthing Singer & Friedlander (Isle of Man) Limited (“the Bank”) on 9 October 2008, there were a large number of payment transactions which had been requested by customers but which had not reached their payment destination. Over the last couple of weeks we have sought to clarify the precise position in respect of these transactions. This has involved an extensive reconciliation exercise and liaison with other Banks and with the Administrators of Kaupthing Singer & Friedlander Ltd (in administration) (“Kaupthing UK”).

This identified the following different scenarios:-a) In respect of certain of the transactions, no instructions had been issued to any of the Bank’s clearing facilities to effect an actual payment of the amount concerned.b) In respect of some transactions, whilst instructions had been issued to the clearing facilities these had not been processed due to lack of funds in the Bank’s accounts with these facilities. This was in turn due to funds not being remitted from the Bank’s accounts with Kaupthing UK which entered into Administration on 8th October 2008.c) In respect of the majority of sterling transactions, the Bank used its own account with its sister company, Kaupthing UK to process payment requests from its customers. We understand that although the Bank included a number of transactions in batches of entries sent to Kaupthing UK for processing by them out of the Bank’s account with them, these had in turn:-i) either not been processed by Kaupthing UK through its own clearing facilities with RBS at the time that company entered into administration,ii) or had been processed but not cleared before the administration appointment had the impact of freezing the Bank’s account with Kaupthing UKd) In respect of a handful of transactions an error had been made in the information provided to the clearing bank concerned and the transaction had been “bounced” back to the Bank’s account.

We have sought legal advice in respect of how all such transactions should be treated, including obtaining an opinion from leading Counsel in the UK. This advice has confirmed that following the presentation of a petition to wind up the Bank and the suspension of the Bank’s banking licence on 8 October, I (or any Liquidator if one is appointed in due course) am unfortunately not in a position to now effect the transfers requested by customers prior to the date of petition.

There have been suggestions that some kind of trust claim or proprietary interest arises in favour of a customer in circumstances where (i) instructions were given by the customer, prior to the appointment of the Liquidator Provisionally, for a funds transfer to an account of the customer at another bank, and (ii) the inter-bank transactions required to effect such instructions were not completed (by the appropriate credit being made to the customer’s account at the recipient bank) prior to my appointment. Whilst customers may wish to seek their own advice upon these points, I have sought legal advice in this regard and am advised that such suggestions are incorrect and that instructions for a funds transfer give rise to no trust claim or propriety interest.

I shall accordingly be making arrangements for letters to be sent to the customers concerned and for their accounts with the Bank to be re-credited, as at the date of the initial debit entry, with the relevant amount, including any accompanying transaction charges. Following the hearing of the petition for the formal winding up of the Bank, on 27 November 2008, if a Liquidator is appointed, customers will be contacted with regard to the process for claiming monies owed to them.

04 NOVEMBER 2008

Update since the Court hearing

As you may be aware at the Court hearing on 24 October 2008, the petition for winding up of the Bank was adjourned following indications from the Isle of Man Treasury that high level discussions were taking place between the UK Treasury (representing the interests of the Isle of Man) and the Icelandic government which now owns Kaupthing Bank h.f. I am not a party to those discussions and so am unfortunately unable to provide any further update in this regard other than to say that I understand that there is an ongoing dialogue.

In the meantime we are continuing to have discussions with a number of interested parties regarding a sale of all or part of the business. This process will continue over the next few weeks but given the confidential nature of those discussions it will be difficult for me to provide updates of a more detailed nature. As agreed at the Court hearing on 24 October, any sale will need the prior approval of the both the Isle of Man High Court and the Financial Supervision Commission.

Funds in transit – deposits of new funds made by customers after the date of my appointment

Since the date of my appointment as Liquidator Provisionally of Kaupthing Singer & Friedlander (Isle of Man) Limited (“the Bank”) on 9 October 2008, I have been made aware of deposits from customers which have continued to be received into bank accounts in the name of the Bank. As the Bank had its banking licence suspended by the Financial Supervision Commission on 8 October 2008, it can no longer operate as a deposit taker in respect of new monies and as such arrangements need to be made to return these funds.

We have carried out a detailed reconciliation of the bank accounts concerned to identify those transactions which relate to new deposits from customers. This has largely been completed and in the next few days we will be making arrangements for the amounts to be returned to customers.

Funds in transit – payment requests made by customers prior to the date of my appointment

As at the date of my appointment, there were in addition a large number of payment transactions which had been requested by customers but which had not reached their payment destination. Over the last couple of weeks we have sought to clarify the precise position in respect of these transactions, including seeking legal advice. We will shortly be writing to the individual customers concerned advising them of the position, as we have been able to establish it from the information we have been provided with, and will post a separate notice on the website.

Customers with VISA cards

Following my appointment, the Bank’s agreement with VISA Europe Limited has been terminated. Accordingly customers are advised that all VISA cards issued by the Bank have been cancelled and should no longer be used as a valid form of making payments. We have written to the customers concerned requesting that the cards are destroyed.

Statements

We will shortly be issuing statements to customers as at 30 September 2008 – this has been slightly delayed due to logistical difficulties. It is intended that statements as at 9 October 2008 will be issued in due course once we have completed the exercise of making sure the statements are up to date.

24 OCTOBER 2008

Adjournment of winding up petition

At a hearing at the Isle of Man High Court today, before Deputy Deemster Corlett the joint petition of the Bank and the Financial Supervision Commission was adjourned until 10am, 27 November 2008 at the request of the Isle of Man Treasury.

The Isle of Man Treasury informed the court that high level discussions were taking place between the UK Treasury (which is representing the interests of the Isle of Man) and the Icelandic Government which now owns Kaupthing Bank hf.

As liquidator provisionally and an officer of the court, I would stress that my position was neutral with regard to the request for an adjournment. Only one creditor opposed the application for an adjournment. Deputy Deemster Corlett noted that ” the overwhelming majority of creditors supported the Treasury’s application for an adjournment”.

The period up to 27 November 2008

It was made clear to the Court that I will continue to pursue my duty to preserve and protect the assets of the Bank. I will also continue to see parties interested in purchasing all or part of the Bank’s assets.

With regard to customer queries, we are continuing to make progress in our discussions with the Administrators’ of Kaupthing Singer & Friedlander Limited in the UK and in establishing the status of certain transactions which were in transit at the date of appointment of either myself or the Administrators. This has included seeking legal advice from Counsel as to the treatment of certain transactions.

Where we have established the position with regard to specific queries, we have begun the process of responding by letter to the individual queries we have received. We anticipate that this process will speed up during the next ten days but is dependant upon us receiving both the relevant information from the UK Administrators and on us then obtaining legal advice as to the proper treatment of those transactions.

I understand there has been some suggestion that “blocked” funds have been released to customers of the Bank. I can only advise that we are not aware of any such payments.

20 OCTOBER 2008

Since the previous update, my primary focus has continued to be on trying to take control of and safeguard the assets of the company. I have also been involved in a number of discussions with parties who have expressed an interest in parts of the business.

Communication

The telephone system at the bank has been up and running since Monday 13 October and a team of bank staff are answering calls between 9am and 5pm. If you are unable to get through, please bear with us and try again later. Staff are also continuing to work through the backlog of emails, faxes and letters which have been received by the bank, PwC and the FSC. I apologise to those of you who have sent me emails directly and not yet had a response, but due to the volume it is taking time to work through them.

Going forward, 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.

Assets

On Friday 17 October 2008, I went to London and held meetings with:

• The team in PwC London who are working for me

• The UK lawyers I have appointed to act on my behalf to protect the company’s assets

• Ernst & Young, the Administrators of KSF in the UK

 The meeting with the Administrators was very useful as we now have an agreed point of contact with them. They agreed to help us to reconcile the asset positions which we believe are held with them and to help determine the contractual arrangements. However, it was very clear that their sole priority, as per the Court Order appointing them, is the transfer of the UK bank’s retail deposits to ING, and anything else is currently of secondary importance. I will post a copy of their Court Order on the website when I receive a certified copy. Meanwhile, it is interesting to note that the Court papers relating to their appointment are sealed, which means we cannot examine them to determine the reasons for their appointment or any other related matters.

Potential purchasers of assets

I have continued to receive enquiries from parties interested in parts of the business, and have met with some of them. Finding a buyer for the company’s assets is a priority and a lot of time has been spent in the last few days examining the company’s records and preparing analyses for potential purchasers. This will continue to be a key focus over the next week.

Transfers in transit

The matter of transfers in transit was also discussed with Ernst & Young on Friday. It now appears that banks were told to cease processing transactions for Icelandic owned banks on 6 October, but did not tell KSF that this was happening. We do not know why this happened, but it would be consistent with the anti tipping-off provisions which are contained in anti terrorist legislation. Ernst & Young have agreed to assist us in identifying and locating transfers in transit.

I have had contact from a number of you who are concerned about my motives for trying to unfreeze the clearing system to enable these transfers to move. Firstly, let me make it clear that I have absolutely no interest in trying to claw back transfers which should legally continue to their intended destinations. If I did, I am sure that the Court would not permit me to do so. However if, for whatever reason, any transfers did not successfully leave the control of KSF IOM, then I would be legally obliged to seek to recover them. This is not a straightforward area of the law, and I am taking legal advice to make sure that transfers are treated appropriately. Some of you have forwarded copies of relevant legal cases which I have made my lawyers aware of.

Court Hearing

The winding up petition is due to be considered in Court on Friday 24 October. If this goes ahead and the petition is approved by the Deemster, a winding up order will be issued appointing me as Provisional Liquidator and Deemed Official Receiver. Directions will also be made, either at that hearing or shortly thereafter, regarding the timing of the creditors meeting. Following this, notices will be issued as required to depositors and other creditors and proof of debt forms will also be issued.

A significant number of depositors have emailed me in the last few days suggesting that the issuance of the winding up order should be delayed in the hope that the high level political negotiations which are taking place may, along with international financial aid for Iceland, result in the parental guarantee being fully honoured with the financial support of the Icelandic Government.

Whilst I also very much hope that the current negotiations lead to a speedy resolution of the company’s financial problems and full backing for your deposits, I must point out that the winding up petition and order are matters for the Isle of Man High Court, and as I am not a petitioner, I have no influence over the outcome of the Court Hearing. Those of you who have views regarding the timing of the winding up order should contact the Isle of Man Financial Supervision Commission, who are a petitioner and may therefore be in a position to influence the timing.

Finally, I want to mention that, once the winding up order is issued, I will be applying to Court for the appointment of a Joint Liquidator. The speed with which the winding up petition was required meant that there was not enough time to identify a candidate at that stage. However it will be beneficial to have a joint liquidator who will be well placed to recover assets in the UK.

20 OCTOBER 2008

Since the previous update, my primary focus has continued to be on trying to take control of and safeguard the assets of the company. I have also been involved in a number of discussions with parties who have expressed an interest in parts of the business.

Communication

The telephone system at the bank has been up and running since Monday 13 October and a team of bank staff are answering calls between 9am and 5pm. If you are unable to get through, please bear with us and try again later. Staff are also continuing to work through the backlog of emails, faxes and letters which have been received by the bank, PwC and the FSC. I apologise to those of you who have sent me emails directly and not yet had a response, but due to the volume it is taking time to work through them.

Going forward, 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.

Assets

On Friday 17 October 2008, I went to London and held meetings with:

• The team in PwC London who are working for me

• The UK lawyers I have appointed to act on my behalf to protect the company’s assets

• Ernst & Young, the Administrators of KSF in the UK

 The meeting with the Administrators was very useful as we now have an agreed point of contact with them. They agreed to help us to reconcile the asset positions which we believe are held with them and to help determine the contractual arrangements. However, it was very clear that their sole priority, as per the Court Order appointing them, is the transfer of the UK bank’s retail deposits to ING, and anything else is currently of secondary importance. I will post a copy of their Court Order on the website when I receive a certified copy. Meanwhile, it is interesting to note that the Court papers relating to their appointment are sealed, which means we cannot examine them to determine the reasons for their appointment or any other related matters.

Potential purchasers of assets

I have continued to receive enquiries from parties interested in parts of the business, and have met with some of them. Finding a buyer for the company’s assets is a priority and a lot of time has been spent in the last few days examining the company’s records and preparing analyses for potential purchasers. This will continue to be a key focus over the next week.

Transfers in transit

The matter of transfers in transit was also discussed with Ernst & Young on Friday. It now appears that banks were told to cease processing transactions for Icelandic owned banks on 6 October, but did not tell KSF that this was happening. We do not know why this happened, but it would be consistent with the anti tipping-off provisions which are contained in anti terrorist legislation. Ernst & Young have agreed to assist us in identifying and locating transfers in transit.

I have had contact from a number of you who are concerned about my motives for trying to unfreeze the clearing system to enable these transfers to move. Firstly, let me make it clear that I have absolutely no interest in trying to claw back transfers which should legally continue to their intended destinations. If I did, I am sure that the Court would not permit me to do so. However if, for whatever reason, any transfers did not successfully leave the control of KSF IOM, then I would be legally obliged to seek to recover them. This is not a straightforward area of the law, and I am taking legal advice to make sure that transfers are treated appropriately. Some of you have forwarded copies of relevant legal cases which I have made my lawyers aware of.

Court Hearing

The winding up petition is due to be considered in Court on Friday 24 October. If this goes ahead and the petition is approved by the Deemster, a winding up order will be issued appointing me as Provisional Liquidator and Deemed Official Receiver. Directions will also be made, either at that hearing or shortly thereafter, regarding the timing of the creditors meeting. Following this, notices will be issued as required to depositors and other creditors and proof of debt forms will also be issued.

A significant number of depositors have emailed me in the last few days suggesting that the issuance of the winding up order should be delayed in the hope that the high level political negotiations which are taking place may, along with international financial aid for Iceland, result in the parental guarantee being fully honoured with the financial support of the Icelandic Government.

Whilst I also very much hope that the current negotiations lead to a speedy resolution of the company’s financial problems and full backing for your deposits, I must point out that the winding up petition and order are matters for the Isle of Man High Court, and as I am not a petitioner, I have no influence over the outcome of the Court Hearing. Those of you who have views regarding the timing of the winding up order should contact the Isle of Man Financial Supervision Commission, who are a petitioner and may therefore be in a position to influence the timing.

Finally, I want to mention that, once the winding up order is issued, I will be applying to Court for the appointment of a Joint Liquidator. The speed with which the winding up petition was required meant that there was not enough time to identify a candidate at that stage. However it will be beneficial to have a joint liquidator who will be well placed to recover assets in the UK.

15 OCTOBER 2008

Since I was appointed Liquidator Provisionally on 9 October 2008, my primary focus has been on trying to take control of and safeguard the assets of the company.

Communication

I know that all depositors are very worried about the status of their deposits. The bank, the Financial Supervision Commission and my office have been swamped with telephone calls, emails, faxes and mail seeking information. This has created serious practical difficulties, and I know that many of you were not able to get through on the telephone and/or have not yet had replies to your queries. I am sorry that this was the case, however, the number of telephone calls particularly has been unprecedented. The telephone system at the bank is now up and running and a team of bank staff are answering calls between 9am and 5pm. If you are unable to get through, please bear with us and try again later. Staff are also working through the backlog of emails, faxes and letters.

Going forward, 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.

Assets

My main responsibility as Liquidator Provisionally is to try and assume control of the company’s assets. To this end I have:• Taken control of bank balances totalling approximately £103,000,000 which are held with banks outside the group• Contacted the Administrators of Kaupthing Singer & Friedlander Limited (the UK bank) with the purpose of recovering the assets which are with them. I have also instructed UK lawyers to assist me if necessary• Instructed lawyers in Iceland with a view to enforcing the parental guarantee

Potential purchasers of assets

I have received a number of enquiries from parties who have expressed an interest in purchasing parts of the business. Some have expressed an interest in the customer deposits, however, the main interest has been in the loan book. I have already met with five of these parties and will be meeting more over the course of the next few days. It is still very early days and expressions of interest are a long way from making an offer. However I am pursuing these expressions of interest as a matter of great urgency.

Transfers in transit

There are a large number of transfers which left the bank but which have not reached their intended destinations as they have been frozen in the clearing system. I am in the process of trying to determine where they are in the system in an attempt to unfreeze them. I will advise further as soon as I am able.

I understand that this situation is most distressing for depositors and I will use this website to update depositors periodically on the progress of the liquidation. However, please be patient as some matters such as commercial negotiations will necessarily have to take place in private.

13 OCTOBER 2008

What has happened?

On 9 October 2008 the Isle of Man Court made an Provisional Liquidation Order in relation to Kaupthing Singer and Friedlander (Isle of Man) Limited (“KS&FIOM”). Michael Simpson of PricewaterhouseCoopers was appointed as Liquidator Provisonally of KS&FIOM. 

Suspension of banking licence

On 8 October 2008, The Isle of Man Financial Supervision Commission suspended KS&FIOM’s banking licence, accordingly KS&FIOM has ceased to trade as a bank. The provisional liquidation is necessary because of KS&FIOM’s financial position and to ensure that the best interests of customers and creditors are served.

I will continue to keep you updated on this website with developments in respect of KS&FIOM and notify you if any changes are proposed to be made which will affect your current position. 

Operations

The purpose of the Liquidation Order is to seek to ensure the best long term solution can be adopted for customers and creditors. KS&FIOM will continue to manage its current loan book and the Liquidator Provisionally will be seeking to find purchasers for KS&FIOM’s business and loan book to maximise recovery for customers and creditors. The existing mortgage/loan agreements of borrowers remain in place, the repayment profile of your mortgage/loans is not being changed and you are not being expected to refinance elsewhere. Borrowers should continue to make payments in the usual way.

The directors are still the directors of KS&FIOM, however the Liquidator Provisionally is ultimately responsible for KS&FIOM. However, the directors and existing management structure will remain in place and the directors and their existing management team will be assisting the Liquidator Provisionally with the day-to-day operations.

I will be working closely with management and my key objective achieving the best result for customers and creditors and to achieve this I will require your support during this process. As reported at the meeting held in the Isle of Man on 9 October 2008, I have entered preliminary negotiations with parties intereested in purchasing parts of the business, and have instructed lawyers in London and Iceland to assist me in attempting to receive assets of the bank currently held in those locations.

I shall keep you as fully informed of the situation via this website as I am able as matters progress.

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