Kaupthing Singer and Friedlander Isle of Man will be liquidated following a vote by depositors rejecting the Scheme of Arrangement proposed by the Isle of Man Government.
To be approved, the Scheme of Arrangement required at least 50% support by number of votes, and 75% by cash value, in all three classes of creditors. The majority of votes overall were in support of the proposal and depositors with claims of under ?50,000 were overwhelmingly in favour of it. But amongst larger depositors and unsecured creditors the Scheme of Arrangement failed to gain the required level of support for it to be approved.
Split by class:
Small depositor class: approx 84% by number representing 85% by value in favour.
Large depositor class: approx 47% by number representing 65% by value in favour.
Non-protected class: approx 93% by number representing 9% by value in favour. Accordingly, the necessary statutory majorities were not met in the second and third class and the Scheme of Arrangement was not approved.
Treasury Minister Allan Bell MHK has responded to the outcome saying: ‘The majority who clearly supported the Scheme of Arrangement, including the vast majority of small depositors, will be disappointed that it has been vetoed, in effect, by the minority of larger depositors and unsecured creditors.'
‘However, we must respect the outcome of the voting, which leaves no alternative but liquidation of the bank and activation of the Depositors Compensation Scheme.’
‘The Isle of Man Government will now work to support the liquidation and DCS process with a view to expediting the repayment of depositors. We will seek to achieve a similar outcome for creditors with claims under ?50,000 as would have been achieved under the Scheme of Arrangement, to respond to the clear preference expressed by them in voting for the Scheme.’
Mr Bell went on: ‘In the particular circumstances of KSF IOM there was clearly potential for a tailored solution that would be better for depositors than conventional liquidation. Government had a duty to pursue that option and put in a huge amount of work doing so. We continue to believe that developing the Scheme of Arrangement provided the creditors with a viable alternative and was in the best interests of all of the depositors.‘
Isleofman.com understands that it is expected that the bank will be formally placed into liquidation at a sitting of the High Court in Douglas next Wednesday May 27. The Scheme Manager of the Depositors Compensation Scheme, the Financial Supervision Commission, will then meet to trigger activation of the Scheme and issue further information for depositors.
