Page last updated at 19:37 GMT, Thursday, 29 January 2009

Plan for 10,000 payout to savers

Isle of Man Courts of Justice
A decision on the treasury's scheme of arrangement plan was postponed

Savers who lost money through the collapse of the offshore arm of an Icelandic bank could receive an initial payment of up to 10,000.

The Manx government said it planned to increase payments made to savers in Kaupthing Singer & Friedlander Isle of Man (KSFIOM) from 1,000 to 10,000.

The payment, which needs to be approved by Tynwald in a sitting on 17 February, would refund 40% of depositors in full.

A decision on the treasury's "scheme of arrangement" plans has been postponed.

A Manx High Court hearing to put the bank into liquidation has been delayed until 19 February to enable further information to be provided on a scheme of arrangement being proposed by the Isle of Man treasury as an alternative to liquidation.

Under the scheme, savers would receive scheduled repayments, jointly funded by the Isle of Man government, the banking sector and from recovered assets.

The treasury says that under the scheme 54% of all depositors would be repaid in full within three months, 65% would be repaid in full within 12 months and 71% would get all their money back within two years.

Speaking about the delayed decision, treasury minister Allan Bell MHK said depositors would be "disappointed".

'Intolerable situation'

"Treasury was encouraged, however, by the support shown for the concept of a scheme of arrangement and will therefore continue to progress plans for the scheme of arrangement so that this delay does not affect the implementation of this plan if it is approved by the court."

Policyholder action groups oppose the scheme of arrangement, preferring that the bank be placed into liquidation.

This would trigger payouts from the Isle of Man depositor protection scheme, under which savers would be eligible to receive up to 50,000 of what they have lost, plus any other money the liquidator is able to recover.

More than 840m was deposited by customers in KSF Isle of Man when it went into provisional liquidation on 9 October, according to documents lodged with the High Court.

A spokesman for the Kaupthing Singer & Friedlander Depositor Action Group welcomed the fact that the latest delay would be only 21 days.

He said: "Levels of stress and anxiety of depositors are increasing daily and the position taken by the Isle of Man government is putting many people in an intolerable situation.

"A further 60-day delay would have been unacceptable."

He added that under a scheme of arrangement, depositors would have to sign away their rights to take legal action against any third parties who may later be found to be culpable in the demise of the bank, including KSFIOM directors, the Isle of Man Government and the UK Government.

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