Bank crash victims get back all their cash - and more

By by Adrian Darbyshire adrian.darbyshire@iomtoday.co.im Twitter:@iomAdrian in Business

Depositors in the island-branch of collapsed Icelandic bank Kaupthing Singer and Friedlander have not only got their money back in full - they are to receive interest on top too.

The crash of KSF (IoM) in October 2008 was one of the biggest company collapses in the island’s history.

Some 11,000 customers were faced with losing more than £840m when the island operation went under after the UK authorities pulled the plug on its sister bank in London.

But now the high court has heard that all creditors have been paid 100 pence in the pound.

And surplus assets remain in the liquidation from which interest can be paid to unsecured creditors.

KSF (IoM)’s liquidators have sought high court guidance on how much interest should be paid.

Liquidators said it was unclear whether the 1931 bankruptcy law applied and the creditors should be paid interest at 4 per cent or whether KSF was no longer classed as an insolvent company and the creditors should be paid interest calculated according to their contractual rights.

The surplus assets, however, are not sufficient to pay those contractual rights in full.

Deemster Andrew Corlett ruled that the 1931 Companies Act does still apply in this case and said he could see no justification to diverge from the usual approach in insolvency.

He therefore gave an order that statutory interest at 4 per cent per annum should be calculated and then divided pro rata among the unsecured creditors.

For many months, the Manx government tried to put in place a scheme of arrangement as an alternative to a liquidation, claiming this would give a better outcome to depositors.

But the creditors voted it down and the bank was wound up.

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Fell · 26 days ago · Report

CV not defending GB but do you have evidence to back up your statement? I thought that exceptionally poor bank risk management was the fundamental cause of the mess. GB compounded the situation but did not cause it.

Manx born (formerl CV) · 27 days ago · Report

Gordon Brown's LabourParty should pay. They caused the mess in the first place.

ET · 27 days ago · Report

Who's paying what to who here? Adrian, bless him, has failed to mention the relative sources.

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