Isle of Man savers set to reject compensation offer
Savers who lost almost £1 billion in Kaupthing Singer & Friedlander (KSF), the Icelandic bank based on the Isle of Man, are set to vote against a compensation offer.
Around 10,000 depositors who lost an estimated £894 million when the Icelandic banking system faced collapse last year have been offered a scheme of arrangement that would return at least some of their savings.
But the Depositors' Action Group (DAG), who have been campaigning for compensation and represent many of the savers, believe the scheme is flawed and may reject it at a vote next week.
"Our opinion is that there are significant disadvantages in the scheme," said David Edwin, partner at Edwin and Coe, who is offering legal advice to the savers' group, at a meeting for depositors.
"If the scheme of arrangement is not accepted then the company will go into liquidation unless an amendment is made to the scheme," he added.
The Isle of Man government is thought to be keen to avoid a liquidation to avoid damage to the island's reputation.
But while UK savers affected by the Icelandic banking crisis were immediately promised full compensation beyond the £50,000 already guaranteed, savers in the Isle of Man and the Channel Islands were not offered the same protection by their own governments.
For the scheme to be rejected, a majority of voters holding more than 75 per cent of the value of the depositors' money have to vote against it.
DAG believes they have the numbers to defeat the offer but will have to wait until the votes are counted after next week's meeting.
The campaigners are concerned that not only is the offer of 70p in the pound spread over around six years insufficient, they are also worried it would force them to give up too many rights - such as the option of suing the parent bank Kaupthing Hf.
There is also a contentious clause that would allow the scheme supervisor to amend the conditions of the scheme at any time.
Instead, a liquidation would be simpler and cheaper, the DAG believes.
A market trader who lost "eight to ten years of hard labour" in savings with the bank said he was unaware of the drawbacks to the scheme before attending the campaigner's meeting and said he was unhappy with the unfavourable clauses in the offer.
"People need to be mindful of that and vote for liquidation," he said.
Another saver who lost out agreed.
"There is a strong feeling we are going to vote against it," said Hilde Bartlett.
"Unless we are offered better terms, we will be voting no, because the scheme of arrangement is a compromise, and for a compromise we need something in return.
"And we can't see anything in return."
As it stands, she would prefer to see the company liquidated.
Whether the savers decide to take the offer or not, it is likely to be several years before they get their compensation as much of the bank's cash is tied up in long-term loans.
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