Friday will be payout day for savers hit by the collapse of Kaupthing Singer & Friedlander (Isle of Man).
That is now the day when the island’s Depositors’ Compensation Scheme (DCS) is due to begin to make payments, after originally having been set for the first of September.
As reported here last week, the bank’s liquidators have also announced that the first dividend, equal to 22.1p in the £1, is to go out on the same day.
This is the payout that will matter for those depositors who had more than £50,000 on deposit when the Icelandic bank collapsed, as amounts of more than £50,000 are not covered under the DCS. It is also the payout that matters most to those investors with savings in insurance products that were held in KSF(IoM).
The DCS payout was moved back to coincide with that of the liquidators, according to John Spellman, director of Isle of Man Finance.
The DCS payments will be made either by cheque or electronic transfer, according to the instructions given by each depositor, according to a statement on a website for KSF(IoM) depositors that was set up by the Isle of Man government, www.dcs.im.
“The claims broadly fall into three categories,” the statement added. These include:
• Claims that have been validated, which will be included in the first batch of payments to be issued on Friday;
• claims received prior to 4 July that have issues which either the liquidator or scheme manager feel need to be addressed; and
• claims claims received after 4 July, which are still going through the validation process.
Details as to how those claims that have been flagged for further investigation by the liquidator or scheme manager are being handled may be found on the website.
Relief for thousands
News of the payouts means that relief is in sight for thousands of long-suffering depositors whose savings were caught up in the failure of KSF(IoM) last October.
Spellman could not say how much would be paid out by the DCS, but said he understood that the claims totalled more than £130m.
£85m had already been paid to depositors under an early repayment scheme that gave as much as £10,000 to individual depositors.
“Further cash” from liquidation
As previously reported, liquidators PricewaterhouseCoopers said that the distribution to those depositors who had more than £50,000 on deposit in KSF(IoM) is expected to increase, pending “further material receipts of cash” that are anticipated “during the course of the next two weeks”.
“In order to ensure that the first distribution is as large as possible, it has been agreed with the Committee of Inspection that the distribution will be paid on Friday 4 September 2009,” the announcement said.
“A further update on the progress of the liquidation will be made on this website in the next few days.”
DCS activated in May
Kaupthing Singer & Friedlander was placed into liquidation on 27 May and the DCS activated after a so-called Scheme of Arrangement, proposed by the government as an alternative to the DCS, was voted down by the bank’s depositors.
The current Depositors Compensation Scheme is subject to a ‘sunset clause’ which means that its provisions are due to expire on October 23 this year, but officials have said it would be extended as needed to allow for full consultation on a planned successor scheme.
