In the High Court today, Deputy Deemster Andrew Corlett granted a winding up order on the grounds that the bank is unable to pay its debts as they fall due.

The move follows the failure of the government's scheme of arrangement, proposed as an alternative to liquidation, to win sufficient votes of creditors.

>> KSF depositors reject scheme of arrangement
22 May 2009

In the court today it emerged that the Depositors' Action Group, which had opposed the scheme of arrangement, was seeking costs against the Treasury.

Deputy Deemster Corlett granted with 'great reluctance' a Treasury application to adjourn the costs hearing to June 23, insisting he did not want the already considerable costs of the case to increase further.

He also noted there had been 'considerable concern' that a number of depositors had complained they not received their voting forms in time for last week's ballot.

Advocate Seth Caine, for the provisional liquidator said packs had been sent out to more than 11,200 people around the world and every effort had been made to ensure they had received them.

>> KSF (IoM) depositors claim vote fiasco
19 May 2009

He said he was not in a position to explain why people had not received them although it may have been due to the 'vagaries' of postal services in other countries.

But he insisted that the number of late or amended votes had not affected the final outcome of the ballot.

A meeting of creditors will be held within six weeks when they will be asked to approve the appointment of the liquidator.

Joint provisional liquidator Mike Simpson, of PricewaterhouseCoopers, who is now deemed official receiver, said KSF (IoM) cash recovered so far totalled some £160 million and creditors could expect an initial dividend of 14.5 per cent.

The bank collapsed on October 8 last year, leaving thousands of depositors owed more than £840 million.

SHOULD MANX TAXPAYERS PICK UP THE BILL FOR THE DEPOSITORS' ACTION GROUP?
Send your comments to newsviews@newsiom.co.im

YOUR COMMENTS

I was under the impression that no investment is ever completely safe. Even in banks there must be a small element of risk. These people have ended up on the wrong end of that risk which is bad luck, but the way they're going on at the moment is the equivalent of going to a casino, blowing all your money and demanding it back when you leave. So in short: No – I definitely don't think that the taxpayer should have to bail these people out in any way, shape or form. Something about eggs and baskets?
IRATE BLOKE

If only the IOM Government had negotiated with the UK government at the beginning of this debacle it could have been a better outcome for all. The insistance by IOMG to stand alone has left them in a hole - the SOA was badly drawn and a complete waste of time and money for everyone. If the IOMG insist on going it alone then they have to face the consequences. The DAG were forced to fight the action in the best interests of the depositors and why should the costs not be awarded?
The IOMG and the FSC have failed the deopsitors and need to show that they are serious in resolving this issue. The real problem started in the UK but the IOMG are too scared? to seek help. Why, oh why will they not seek assistance??
CODPEACE

Dear Sir, I am a depositor with KSF IOM. The question you ask at the end of your article today about whether taxpayers should fund the DAG's legal costs hardly seems impartial. What should happen is that the due legal process should be followed. I am not a lawyer but I understand that it is normal for the successful party in a legal action to be awarded some or all of the cost of having to take on board legal advisors to be fairly represented in the proceedings. The court should not be influenced by whether the public generally sympathise with the party making the application nor by the burden on the taxpayer. It should decide what is right based on the law of the Isle of Man and it should be consistent with what happens in other similar court cases on the island. I was surprised that the Deemster chose not to make a ruling on costs today, but not surprised that the Treasury saw fit to delay and draw out the proceedings as this seems to have been their custom since the beginning of this sad episode. It is remarkable that they can claim to have been surprised by a straightforward costs application. However, in seeking an adjournment on this issue they will have increased the costs which have to be borne by the IOM taxpayer because both sets of legal representatives will have to appear again before the Deemster in June. The legal costs for the Depositor's Action Group will likely be pale in comparison to the money already spent by the Treasury in pursuing its ill-conceived and poorly executed Scheme of Arrangement which the depositors had every right to contest. The Treasury should cut their losses. They should not be the cause of further delay in allowing the depositors to start getting their money back. And the court should simply do what is right in the eyes of the law. Yours Faithfully,
DAVID LAPISH


Sir Your question :- SHOULD MANX TAXPAYERS PICK UP THE BILL FOR THE DEPOSITORS' ACTION GROUP? Is pretty irrelevant since the government of the IOM could have avoided this situation had they acted with honour at the outset and negotiated with the UK government to secure the speedy return of KSF's depositors money. The IOM government chose the route of a scheme of arrangement with terms and conditions that from the conception would not be acceptable to anyone with a high deposit at risk. They have tried to act independently, in a global world where everything is intertwined, this is just not possible. The taxpayers of the IOM will, unfortunately for them, have to pick up the bill for their governments misconduct. The scheme of arrangement went to court and was defeated by the opposition (the depositors) I thought costs are usually awarded to the winning side. If the scheme had been significantly better in it's make up it would NOT have been defeated, simple. The politicians of the IOM are out to cover their own bottoms and seem unable to put themselves in anyone else's shoes otherwise they would have realised they were not offering anything better than a liquidation and depositors would reject it, a fact admitted by the provisional liquidators panel at their road show meetings. The costs associated with it need not have been incurred it is a farce. My suggestion to the taxpayers of the IOM is to vote your government out but to make sure their next set of politicians are not there for their own ends.
JULIENNE