In a statement, the Kaupthing depositors’ group said it "naturally" welcomed the decision, but went on to reiterate previous criticism of the “institutions and authorities” that it said had failed in their duty to protect depositors in the first place, and called for implementation of a plan it proposes to reimburse depositors immediately which would be funded by the IoM and UK governments.
As envisioned by the depositors’ group, the proposed UK and Isle of Man Government Sponsored Loan Trust would immediately recover the full balance of their savings, while the two governments would get paid eventually once their actual money was released by the KSF(IoM) liquidator, which estimates say is expected before 2017.
However, the Isle of Man said today that the proposal was "impractical on a number of levels and would result in very high costs and poor value for [IoM] taxpayers".
In a statement, the Isle of Man Government said that instead of agreeing to the depositors’ plan it remained "committed to working with the liquidator of KSF(IoM) and [the] depositor compensation scheme administrator to recover and distribute assets from the liquidation".
"Approximately 75% of depositors with KFS(IoM) Ltd have been fully compensated through the Early Payment and Depositor Compensation Schemes," the Isle of Man government statement added.
"All other depositors and creditors with approved claims have received at least 73.6p in the pound from the liquidation, and this is expected to rise to between 91.4p and 97.7p when final dividends are paid."
It noted that the depositors’Loan Trust proposal would "take a significant amount of time to set up and incur substantial additional costs", while also failing to take into consideration "other creditors and depositors who ‘may well feel aggrieved and challenge the equity and legality of the proposal".
Nevertheless,Treasury Minister Anne Craine said, "The Isle of Man Government has always been fully committed to assisting the depositors of KFS (IoM) Ltd."
Depositors want their money now
In their statement, the KSF(IoM) depositors’ group argued that over the18 months since the Icelandic parent bank gave its guarantee to its Isle of Man subsidiary, the island’s authorities "had sought to play down the potential value to creditors of the contested guarantee which, on their own admission, they did nothing to verify when it was put in place and widely advertised in promotional literature," even though they now argued that it could "eventually be worth 6 to 8 p/£ to creditors (assuming a pay-out of around 25% from Kaupthing)".
The statement added: “Eighteen months after KSFIOM’s claim under the guarantee given by its Icelandic parent bank, Kaupthing hf, was first rejected by the Kaupthing Winding Up Committee, a decision upheld by the Reykjavik court of first instance earlier this year, justice has finally been handed down – by an Icelandic court.
“All the more reason for the IOM and UK governments to step in now with a (fully recoverable) loan, thus allowing hard-pressed depositors to recover their funds sooner rather than later.”
A response from the UK authorities was not immediately available.
The Icelandic Supreme Court judgment may be viewed here.
