A senior partner in an Isle of Man law firm says the ongoing delay in the potential winding-up of the collapsed Kaupthing bank is causing increasing concern.

Last week, a hearing adjourned a winding-up order for the third time, when Manx Treasury officials said their Scheme of Arrangement would make assured repayments more quickly than the Depositors' Compensation Scheme.

The Scheme of Arrangement would be funded by the government, the banking sector and recovered assets.

However, Jonathan Smalley, a partner in law firm Stuart Smalley & Co, suggests depositors are growing impatient.

He told Manx Radio:

"I think the government's proactive stance has received a favourable view from creditors around the world, but I think that view is starting to change, because the proactive stance has just led to substantial delay.

"I get the feeling the delay is moving onto a feeling of dismay, so that the postion may be changing.

"In particular there is this major issue of the financial year end, and the Depositors' Compensation Scheme.

"I think that people will feel very disquieted if that date is missed, and the ability to collect contributions from the banks, the scheme, in the current financial year is foregone."

Following the latest adjournment of the winding-up hearing, Treasury has 31 days to clarify issues raised in court, and if the Scheme of Arrangement is approved it will make staged repayments to bank depositors within three months.

At the same time, this month's sitting of Tynwald will be asked to approve increased payments of ?10,000 to eligible Kaupthing Singer and Friendlander Isle of Man account holders, under the Early Payments Scheme, which has already been agreed.

Such payments would see 40 per cent of eligible KSF IOM account holders repaid in full.