2010 Updates

23 DECEMBER 2010

Committee of Inspection

A conference call was held with the Committee of Inspection on 12 November 2010 and notes of the meeting are attached. These notes are necessarily abbreviated due to the sensitive nature of some of the matters which were discussed.

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 KSF C of I Minutes 12 November 2010

Depositors Compensation Scheme

The Scheme Administrator has announced that all payments from the fourth dividend have now been distributed to claimants. Claimants with queries should contact the Scheme Administrator directly on +44 1624 625 680 or info@dcs.im.

Potential Advanced Fee Fraud

The Isle of Man Financial Supervision Commission have issued a public warning relating to a website which appears to be an attempt to commit advanced fee fraud and uses information taken from a KSFUK website. Please go to www.gov.im/fsc for further details.

10 DECEMBER 2010

Fourth Distribution

The Joint Liquidators are pleased to announce that a fourth distribution of 10 pence in the £ will be paid on 15 December 2010 to all creditors whose claims have been agreed. This will bring the total distributions to date to 61.1 pence in the £.

There are some cases where payments are being held over due to queries over the amounts claimed, payment details or signatures. We will continue to work through these queries as quickly as possible so that catch-up payments can be made to the relevant creditors.

We are aware that there are a number of potential creditors who have not yet submitted a claim, either directly or through the Depositors Compensation Scheme. We invite those creditors to submit their claims to the liquidation as soon as possible so that they can receive the distributions to which they are entitled.

The Manager of the Depositors Compensation Scheme has stated that no new claims are being accepted by the DCS since 27 November 2010. Further details can be found at www.dcs.im.

08 DECEMBER 2010

Cash Position

Attached is the summary of cash balances held at 30 November 2010.

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 Cash Position

Cash balances increased by approximately £18.4 million during the month. Loan repayments and interest totalled £19.0 million, while expenses totalled £0.1 million. Catch-up dividends were paid out to creditors totalling £0.5 million.

Loan Book

Attached is the summary of the loan book position at 30 November 2010.

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 Loan Book

During November 2010 eight facilities were redeemed in full realising £18.2 million. Partial redemptions of £0.4 million were also received.

The loan book details shown have been converted to sterling using exchange rates as at 30 November 2010.

The Joint Liquidators have purchased currency options to hedge certain of the future loan receipts. Sterling options purchased to hedge future Euro receipts were matched against the relevant loans included in the summary at 30 November 2010, and we have calculated that they would add a further £2.1 million to the value of the receipts due on these loans. Sterling options purchased to hedge future US Dollar receipts were matched against the relevant loans included in the summary at 30 November 2010, and we have calculated that they would add a further £0.1 million to the value of the receipts due on these loans.

18 NOVEMBER 2010

Depositors Compensation Scheme – urgent reminder

This is a reminder that the Scheme Manager has stated that no new claims will be accepted by the DCS after 27 November 2010. Further details can be found at www.dcs.im.

Any depositors of KSFIOM who have not yet submitted a claim to the DCS and for whom it would be beneficial to do so are urged to submit their claim as soon as possible so that they can receive the payments to which they are entitled.

08 NOVEMBER 2010

Cash Position

Attached is the summary of cash balances held at 31 October 2010.

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 Cash Position

Cash balances increased by approximately £0.8 million during the month. Loan repayments and interest totalled £1.9 million, while expenses totalled £1.0 million. Catch-up dividends were paid out to creditors totalling £0.08 million.

Loan Book

Attached is the summary of the loan book position at 31 October 2010.

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 Loan Book

During October 2010 two facilities were redeemed in full realising £1.4 million. Partial redemptions of £0.3 million were also received.

The loan book details shown have been converted to sterling using exchange rates as at 29 October 2010 (being the last working day of the month).

The Joint Liquidators have purchased currency options to hedge certain of the future loan receipts. Sterling options purchased to hedge future Euro receipts were matched against the relevant loans included in the summary at 31 October 2010, and we have calculated that they would add a further £1.1 million to the value of the receipts due on these loans. Sterling options purchased to hedge future US Dollar receipts were matched against the relevant loans included in the summary at 31 October 2010, and we have calculated that they would add a further £0.4 million to the value of the receipts due on these loans.

Depositors Compensation Scheme – urgent reminder

This is a reminder that the Scheme Manager has stated that no new claims will be accepted by the DCS after 27 November 2010. Further details can be found at www.dcs.im.

Any depositors of KSFIOM who have not yet submitted a claim to the DCS and for whom it would be beneficial to do so are urged to submit their claim as soon as possible so that they can receive the payments to which they are entitled.

14 OCTOBER 2010

Depositors Compensation Scheme – urgent reminder

This is a reminder that the Scheme Manager has stated that no new claims will be accepted by the DCS after 27 November 2010. Further details can be found at www.dcs.im.

Any depositors of KSFIOM who have not yet submitted a claim to the DCS and for whom it would be beneficial to do so are urged to submit their claim as soon as possible so that they can receive the payments to which they are entitled.

Website

The structure of the website has not been changed since I was originally appointed and it has become more unwieldy over time as the number of updates has increased. Over the course of the next few weeks, the website will be redesigned in order to make it easier to use. This may result in the website being offline for a short period while the changes are implemented.

07 OCTOBER 2010

Cash Position

Attached is the summary of cash balances held at 30 September 2010.

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 Cash Position

Cash balances decreased by approximately £6million during the month. Loan repayments totalled £1.9million, while catch-up dividends were paid out to creditors totalling £7.9million.

Loan Book

Attached is the summary of the loan book position at 30 September 2010.

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 Loan Book

During September 2010 one facility was redeemed in full realising £1.9million.

The loan book details shown have been converted to sterling using exchange rates as at 30 September 2010.

The Joint Liquidators have purchased currency options to hedge certain of the future loan receipts. Sterling options purchased to hedge future Euro receipts were matched against the relevant loans included in the summary at 30 September 2010, and we have calculated that they would add a further £1.2million to the value of the receipts due on these loans. Sterling options purchased to hedge future US Dollar receipts were matched against the relevant loans included in the summary at 30 September 2010, and we have calculated that they would add a further £0.2million to the value of the receipts due on these loans.

17 SEPTEMBER 2010

Agreement of creditors’ claims

The following statistics show the current position regarding the agreement of creditors’ claims:

Figures

If you compare these figures to the summary published on 22 March 2010, who will note that a further 381 claims have been agreed in the last six months with a total value of £13million. The total value of agreed claims is now £887million. Since that update, no further claims have been rejected, so the current position is that 13 claims worth a total of £11million have been wholly rejected and 40 claims have been rejected in part, the rejected portions totalling approximately £300,000.

The reduction in overall expected claims from £908m in the Report to Creditors of 30 July 2010 to £905m in the table above is due to the withdrawal of a £2.5million claim submitted by a group company as a result of the ongoing negotiations over group balances.

The increase in the number of claimants repaid in full through the Early Payment Scheme from the website update of 22 March 2010 of 1,416 to 1,458 in the table above is due to depositors advising the Joint Liquidators that they consider they were fully repaid through this Scheme and would not be submitting any additional claim in the liquidation.

The figures in the above table are stated after rejections and also after set-offs, so the current figure against which the percentage of distributions is calculated is £905million, which is the total of approved claims, claims not yet approved and claims which are expected but have not yet been received.

Depositors Compensation Scheme

This is a reminder that the Scheme Manager has stated that no new claims will be accepted by the DCS after 27 November 2010. Further details can be found at www.dcs.im.

Any depositors of KSFIOM who have not yet submitted a claim to the DCS and for whom it would be beneficial to do so are urged to submit their claim as soon as possible so that they can receive the payments to which they are entitled.

09 SEPTEMBER 2010

Cash Position

Attached is the summary of cash balances held at 31 August 2010.

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 Cash Position

Cash balances increased by approximately £8million during August, primarily as a result of loan repayments. Catch up dividends were paid out totalling £1.2million.

Loan Book

Attached is the summary of the loan book position at 31 August 2010.

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 Loan Book

During August 2010, five loans were repaid in full realising £8million and there were five part payments totalling £561,000.

The loan book figures have been converted into Sterling using exchange rates as at 31 August 2010.

The Joint Liquidators have purchased currency options to hedge certain of the future loan receipts. Options purchased to hedge future Euro and US Dollar receipts were matched against the relevant loans included in the summary at 31 August 2010, and we have calculated that they would add a further £3.2million to the value of receipts due on these loans based on exchange rates at 31 August 2010.

Depositors Compensation Scheme

This is a reminder that the Scheme Manager has stated that no new claims will be accepted by the DCS after 27 November 2010. Further details can be found at www.dcs.im.

Any depositors of KSFIOM who have not yet submitted a claim to the DCS and for whom it would be beneficial to do so are urged to submit their claim as soon as possible so that they can receive the payments to which they are entitled.

18 AUGUST 2010

Cash Position

Attached is the summary of cash balances held at 31 July 2010.

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 Cash Position

The movement in cash since 30 June 2010 reflects the payment of £95.6 million in respect of the third distribution, receipt of loan repayments / interest of £13.2 million and the receipt of £20.5 million from KSFUK. The loan repayments and distribution from KSFUK were received just before the month end and had not yet been spread around the banks at which we hold accounts. This process was completed in August. Of the balance held, approximately £20.1 million is reserved for distributions to creditors whose claims have been held over or not yet received.

Loan Book

Attached is the summary of the loan book position at 31 July 2010.

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 Loan Book

During July 2010, six loans were repaid in full realising £7.1 million and three borrowers made part repayments totalling £5.2 million.

The loan book figures have been converted into Sterling using exchange rates as at 31 July 2010.

The Joint Liquidators have purchased currency options to hedge certain of the future loan receipts. Options purchased to hedge future Euro and USD receipts were matched against the relevant loans included in the summary at 31 July 2010, and we have calculated that they would add a further £2.3 million to the value of receipts due on these loans based on the exchange rates as at 31 July 2010.

Depositors Compensation Scheme

This is a reminder that the Scheme Manager has stated that no new claims will be accepted by the DCS after 27 November 2010. Further details can be found at www.dcs.im.

Any depositors of KSFIOM who have not yet submitted a claim to the DCS and for whom it would be beneficial to do so are urged to submit their claim as soon as possible so that they can receive the payments to which they are entitled.

04 AUGUST 2010

Redirection of dividends

A number of creditors have expressed a desire to redirect dividends paid out of the liquidation to a third party. With a redirection, the original creditor remains as the creditor, however the dividends are paid to another party under their direction. This is a straightforward process and redirections can be made using the attached form.

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 KSF Redirection Form

Please note that we must receive an original form – we will not act on faxed or scanned copies.

DCS claimants should note that the Scheme Manager has indicated that he will not process redirections. Further details can be found at www.dcs.im.

30 JULY 2010

Report to creditors

Attached is a Report to Creditors for the period from 27 May 2009 to 9 July 2010

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 KSF Creditors Report 30 July 2010

Depositors Compensation Scheme

This is a reminder that the Scheme Manager has stated that no new claims will be accepted by the DCS after 27 November 2010. Further details can be found at www.dcs.im.

Any depositors of KSFIOM who have not yet submitted a claim to the DCS and for whom it would be beneficial to do so are urged to submit their claim as soon as possible so that they can receive the payments to which they are entitled.

21 JULY 2010

Committee of Inspection

Minutes of the Committee of Inspection meeting held on 29 June 2010 are attached.

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 KSF COI Minutes 29 June 2010

Report to creditors

A report to creditors summarising the the progress of the liquidation up to 9 July 2010 is in the process of being finalised and will be published on this website shortly.

Depositors Compensation Scheme

This is a reminder that the Scheme Manager has stated that no new claims will be accepted by the DCS after 27 November 2010. Further details can be found at www.dcs.im.

Any depositors of KSFIOM who have not yet submitted a claim to the DCS and for whom it would be beneficial to do so are urged to submit their claim as soon as possible so that they can receive the payments to which they are entitled.

09 JULY 2010

Cash position

Attached is the summary of cash balances held at 30 June 2010.

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 Cash summary 30 June 2010

Loan book

Attached is the summary of the loan book position at 30 June 2010.

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 Loan book summary 30 June 2010

During June 2010, three loans were repaid in full realising £1.3million.

The loan book figures have been converted into Sterling using exchange rates as at 30 June 2010.

The Joint Liquidators have purchased currency options to hedge certain of the future loan receipts. Options purchased to hedge future Euro receipts were matched against the relevant loans included in the summary at 30 June 2010, and we have calculated that they would add a further £2.6million to the value of receipts due on these loans.

Third distribution

I can confirm that the third distribution of 11.1% has been paid today to all creditors whose claims have been agreed, bringing total distributions to date to 51.1%.

06 JULY 2010

Third distribution

The Joint Liquidators are pleased to announce that a third distribution of 11.1% will be paid on 9 July 2010 to all creditors whose claims have been agreed. This will bring the total distributions to date to 51.1%.

There are some cases where payments are being held over due to queries over the amounts claimed, payment details or signatures. We will continue to work through these queries as quickly as possible so that catch-up payments can be made to the relevant creditors.

We are aware that there are a number of potential creditors who have not yet submitted a claim, either directly or through the Depositors Compensation Scheme. We invite those creditors to submit their claims as soon as possible so that they can receive the distributions to which they are entitled.

The Manager of the Depositors Compensation Scheme has stated that no new claims will be accepted by the DCS after 27 November 2010. This represents an absolute cut-off date. Further details can be found at www.dcs.im.

30 JUNE 2010

Depositors Compensation Scheme

The Isle of Man Depositors Compensation Scheme has updated its website. A new facility has been provided to allow DCS claimants to view the transactions on their claim account. This may be accessed from the appropriate link on the Claimant Summary using existing logon details.

Importantly, the Scheme Manager has stated that no new claims will be accepted by the DCS after 27 November 2010. This represents an absolute cut-off date. Further details can be found at www.dcs.im.

Any depositors of KSFIOM who have not yet submitted a claim to the DCS and for whom it would be beneficial to do so are urged to submit their claim as soon as possible so that they can receive the payments to which they are entitled.

09 JUNE 2010

Cash position

Attached is the summary of balances held at 31 May 2010.

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 Cash Position 31 May 2010

Loan Book

Attached is the summary of the loan book position at 31 May 2010.

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 Loan Book 31 May 2010

During May 2010 three facilities were redeemed in full realising £2.5m and several partial redemptions totalling £3.2m were collected, totalling £5.7m.

The loan book details shown have been converted to sterling using exchange rates as at 31 May 2010.

The Joint Liquidators have purchased currency options to hedge certain of the future loan receipts. Options purchased to hedge future Euro receipts were matched against the relevant loans included in the summary at 31 May 2010, and we have calculated that they would add a further £2.25m to the value of the receipts due on these loans.

Third distribution

I can confirm that it is our intention to pay a third distribution in July 2010. The amount of distribution is expected to be in the region of 11%. The amount will be confirmed nearer to the distribution when the amount of cash available is known.

Any creditors who have not yet submitted a claim, either directly or through the Depositors Compensation Scheme, are asked to submit their claims as soon as possible to ensure that they receive the distributions to which they are entitled.

03 JUNE 2010

Bank of England case

The Court of Appeal has handed down its judgment in respect of the above case. The judgment has gone against us – the Court has overturned the original judgment regarding the interpretation of the words “deposit” and “customer”, so that KSFIOM and other group companies and financial institutions will not be able to share in the Trust Account proceeds. This is obviously disappointing but is not unexpected. A copy of the judgment is attached:

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 Bank of England judgment

The meaning of the word “deposit” is considered in paragraphs 53 to 56.

Based on the legal advice we have obtained in respect of this judgment, we do not intend to lodge an appeal.

Agreement of creditors’ claims

Any creditors who have not yet submitted a claim, either directly or through the Depositors Compensation Scheme, are asked to submit their claims as soon as possible to ensure that they receive the distributions to which they are entitled.

24 MAY 2010

Claim against Kaupthing hf

It has been confirmed to us that the company’s claim against Kaupthing hf has been referred to the District Court of Reykjavik for a decision. Our claim is one of the first to be referred to Court by the Winding Up Committee, however, we understand that the claim processes for the two other main Icelandic banks, Glitnir and Landsbanki, are running ahead of Kaupthing, so the Courts already have a large number of claims to hear. We have not yet been notified of a date for the hearing, nor have we been notified of the date by which our submission should be filed. However, in the meantime we are continuing to accumulate evidence to support our claim, which will be pursued vigorously in Court. It has been indicated to us that it is likely to be late 2010 or early 2011 before the Court issues its decision on our claim. Both sides will have the right of appeal to the Supreme Court of Iceland, the timetable for such an appeal is not clear but, if an appeal were made, it could easily be another year before a final decision would be handed down.

The Winding Up Committee has received over 27,000 claims, of which only 417 have been agreed so far. Approximately 3,400 claims have been wholly or partially rejected (including ours), 13,000 are in dispute as to the priority of claim and a decision has been held over on a further 9,500. They have so far received 297 objections to their decisions.

The Winding Up Committee have indicated that they will not be in a position to make any distributions until substantially all cases referred to Court have been decided upon. This is frustrating, however it does make sense given the high volume of claims which are in dispute either over the amount of claim or the level of priority. The Chairman of the Winding Up Committee stated that this could take “three to four years” before the first distributions are made to creditors.

Agreement of creditors’ claims

Any creditors who have not yet submitted a claim, either directly or through the Depositors Compensation Scheme, are asked to submit their claims as soon as possible to ensure that they receive the distributions to which they are entitled.

10 MAY 2010

Cash position

Attached is the summary of balances held at 30 April 2010.

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 Cash summary 30 April 2010

Loan book

Attached is the summary of the loan book at 30 April 2010.

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 Loan book summary 30 April 2010

We have purchased currency options to hedge certain of the future foreign currency loan receipts. Due to the weakening of sterling during April, options purchased to hedge Euro receipts were ‘in the money’ at 30 April 2010, protecting the value of the company’s future receipts to the extent of approximately £1.2million.

Claim against KSFUK

Negotiations continue with the Administrators of KSFUK regarding the agreement of our claim. The amount of £205million has currently been agreed, however, we are in discussions in order to agree a higher amount.

The Administrators of KSFUK have so far paid us three distributions totalling £71,750,000, being 35% of the agreed portion of our claim. They have also indicated their intention to pay a fourth distribution in July 2010 of not less than 5%. If we are able to agree our claim at a higher amount, we will receive a catch up payment for the balance.

Next distribution

After 31 May, funds which we have had to retain following the sale of shares last year become unrestricted. In early June, we will review the cash position with a view to declaring a third distribution for unsecured creditors, to be paid in early July. We anticipate the distribution will be at least 10%, however the exact amount will depend upon the level of cash receipts during the intervening period.

13 APRIL 2010

Cash position

Attached is the summary of balances held at 31 March 2010.

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  Cash position 31 March 2010

The primary reason for the large reduction in cash during March is the payment of approximately £25 million in catch up distributions to creditors, the majority of whose claims had previously been held over.

Loan book

Attached is the summary of the loan book as at 31 March 2010.

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 Loan book summary 31 March 2010

01 APRIL 2010

Committee of Inspection

The Committee of Inspection have continued to be active in pursuit of avenues which may lead to a better return for creditors. To this end, the Committee have written a letter of complaint to the EFTA Surveillance Authority, a copy of which is attached below. Also attached is a copy of the initial response from the Authority.

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 Letter COI to EFTA 16 march 2010

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 Letter EFTA to COI 26 march 2010

24 MARCH 2010

Habana legal case

The Staff of Government Division (the Isle of Man’s Court of Appeal) has handed down its judgment today in respect of the appeal made by Du Preez Limited (formerly Habana Limited) against the original judgment which went against them. The case concerned an “in flight transfer” for which the appellant sought payment in full, however their appeal has been dismissed. It remains to be seen whether the appellant will seek to lodge a further appeal.

22 MARCH 2010

Agreement of creditors’ claims

The following statistics show the current position regarding the agreement of creditors’ claims:

Figures

If you compare these figures to the summary published on 10 November 2009, you will note that the value of agreed claims has risen from £797million to £874million. You will also note that the number of claims listed as being paid in full by the Early Payment Scheme has reduced from 1,489 to 1,416 – this is as a result of a data clean up exercise which matched up EPS claimants to their other accounts.

A total of 13 claims with a value of £11million have been rejected in full, and 40 claims have been rejected in part, the rejected portions totalling approximately £300,000.

Any creditors who have not yet submitted a claim are asked to submit their claims as soon as possible to ensure that they receive the distributions to which they are entitled.

Claim against Kaupthing hf

We are continuing to press for agreement of our claim against Kaupthing hf through our lawyers in Iceland, however, there is no progress to report at present and the Winding Up Committee still maintain that they are not bound by the parental guarantee. It is becoming increasingly likely that the claim will be referred to the Court in Reykjavik for a decision. As previously noted, we will continue to pursue our claim vigorously in order to obtain the best return for creditors.

04 MARCH 2010

Cash position

Attached is the summary of balances held at 28 February 2010.

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 Balance 28 February 2010

Loan book

Attached is the summary of the loan book as at 28 February 2010.

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 Loan Book 28 February 2010

19 FEBRUARY 2010

KSFUK

We are aware that the joint administrators of KSF UK have published their intention to declare a dividend, however we have no further information at this stage. We will keep the situation under review and will communicate any relevant information to creditors via the normal channels as soon as it is received.

19 FEBRUARY 2010

KSFUK

We are aware that the joint administrators of KSF UK have published their intention to declare a dividend, however we have no further information at this stage. We will keep the situation under review and will communicate any relevant information to creditors via the normal channels as soon as it is received.

15 FEBRUARY 2010

Cash position

Attached is the summary of balances held at 31 January 2010.

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 Balance 31 January 2010

Loan book

Attached is the summary of the loan book as at 31 January 2010.

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 Loan Book 31 January 2010

08 FEBRUARY 2010

Committee of Inspection meeting on 4 February 2010

A meeting of the Committee of Inspection was held by telephone at 2.30pm on Thursday 4 February 2010 to continue discussions regarding the rejection of our claim under the parental guarantee.

The Liquidators confirmed that the objection to the rejection of the company’s claim against Kaupthing hf had been lodged with the Winding Up Committee in advance of the Creditors’ Meeting as required and updated the Committee on discussions with the Winding Up Committee on the matter. The Liquidators’ Icelandic lawyers explained the objection process and the legal issues which need to be addressed. The primary focus is now on gathering all available documentary evidence to support our assertion that the parental guarantee was properly authorised by Kaupthing hf. This assertion will be pursued vigorously. Alternative strategies to maximise the return for creditors were also discussed for pursuit in the event that our objection fails. If the matter cannot be agreed with the Winding Up Committee, it will go to Court in Reykjavik for a decision. Preliminary indications are that the Court process would take several months and it is possible that a decision would not be reached until 2011.

Further updates will be released on this matter as information becomes available, however, it is likely to be some months before it is resolved.

26 JANUARY 2010

Committee of Inspection meeting on 25 January 2010

A meeting of the Committee of Inspection was held by telephone at 3pm on Monday 25 January 2010 to discuss the rejection of our claim under the parental guarantee, and the announcement by the Administrators of KSFUK that they intend to sell off their loan book.

  • Claim against Kaupthing hf

It was noted that the claim made by the Joint Liquidators to the Winding Up Committee has been rejected in full. It is understood that the opinion of the Winding Up Committee is that they are not bound by the guarantee. Although unconfirmed, the Joint Liquidators believe that this is a reference to the WUC questioning whether the guarantee is legally binding on Kaupthing hf on the basis that the signatory to the guarantee was not a member of Kaupthing hf’s Board. The Joint Liquidators will be robustly asserting the validity of the guarantee and confirm that an objection to the claim’s rejection will be filed in advance of the creditors’ meeting on 29 January 2010. In the meantime they are attempting to establish the detailed rationale for the rejection of the claim. The Joint Liquidators, in conjunction with the Committee of Inspection, are considering a range of strategies and will pursue the claim most vigorously in order to obtain the best return for creditors.

  • Sale of KSFUK loan book

It was reported in the UK press at the weekend that the Administrators of KSFUK are intending to sell their loan book. Understandably, this has generated a number of questions from creditors. It is not yet possible to assess the impact of such a sale, if it happens, on the return to creditors or the timing of that return. The Joint Liquidators continue to manage KSFIOM’s loan book as it remains their current view that this will realise the best return for creditors. However, all options are open in respect of the realisation of the loan book and the market is being monitored to determine whether conditions are improving which may cause the Joint Liquidators to alter their current view.

22 JANUARY 2010

Claim against Kaupthing hf

We have been informed that the Winding Up Committee of Kaupthing hf has rejected our claim in its entirety. We are in the process of lodging our objection, which will be filed in advance of the creditors meeting on 29 January 2010. If our objection is not upheld, the matter will go to Court in Iceland for a decision. We have no further information at this stage, however, we will issue a further update when more details become available.

21 JANUARY 2010

Claim against Kaupthing hf

As previously notified, the Joint Liquidators have lodged a claim with the Winding Up Committee of Kaupthing hf. We have been registered for the creditors meeting which will be held in Reykjavik on 29 January. We understand that some depositors who submitted personal claims directly to the Winding Up Committee have received letters advising that their claims have not yet been recognised and that they will be determined at a later date. The Winding Up Committee received approximately 29,000 claims and we do not know whether creditors who have received such letters are more likely to have their claims rejected, or whether it is purely as a result of logistical issues due to the large number of claims. Creditors who have made direct claims will receive information directly from the Winding Up Committee and not from us. We will keep creditors updated as to the progress of our claim, however, we have been warned that it could be several months before the determination of our claim is finalised.

Cash balances

We have received a number of queries regarding the level of cash balances held, as creditors are understandably concerned that available cash is distributed to them on a timely basis. Cash held at the moment is approximately £130 million. Of this amount, £75 million represents first and second distributions in respect of claims which have not yet been agreed and other claims which are anticipated but have not yet been made. A further £31 million is the rump of cash received from the sale of shares during 2009, which cannot be made available for distribution until June 2010. Of the remaining balance, £2 million is due to preferential creditors, and £11 million is reserved to meet future liquidation and running costs. This leaves £11 million which would currently be available for distribution. It is currently intended that the payment of a further distribution will be considered in June when the money from the sale of shares becomes available.

13 JANUARY 2010

Cash position

Attached is the summary of balances held at 31 December 2009.

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 Cash Position 31 December 2009

Loan book

Attached is the summary of the loan book as at 31 December 2009.

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 Loan Book 31 December 2009

Creditors who have not yet submited a claim

Any creditors who have not yet submitted a claim are requested to do so as soon as possible to ensure they receive the distributions to which there are entitled.