KSFIOM Liquidators 26 Feb 2015: Progress Report to Creditors

Category: Newsflash
The Joint Liquidators' Report to creditors for the period 10 July 2014 to 9 January 2015 is available here

Highlights at 9 January 2015

- 100p in the £ dividends paid to creditors
- £930.2m of assets recovered
- 92.3% of loan book recovered
- KSFUK claim sold for £18.5m

Extracts re Interest and On-going strategy:

3.2 As set out in Section 3.1 above, the JLs have achieved a return of 100p in the £ with the payment of the tenth dividend on 28 November 2014 based on
the claims accepted in the liquidation. This will now allow the JLs to pay some interest on the claims. However, the rules for calculating interest in an
Isle of Man insolvent liquidation are not straightforward and rely on the application of the 1892 Bankruptcy Code and the 1934 Winding Up Rules.
Creditors who were due contractual interest up to 8 October 2008 have had it applied to their claims (as it was applied to their bank accounts),
capped at 5%. The sequence from then on is as follows:
 
Creditors who were entitled to contractual interest in excess of 5% per annum would receive the amount due in excess of 5% per annum up to
8 October 2008 (Bankruptcy Code Sec 23(3)). This amounts to around £3.5m.
Creditors who were not entitled to contractual interest would receive 4% per annum on amounts owed to 8 October 2008 (Winding Up Rules,
Rule 78). This amount would be small as the relevant creditors are typically trade creditors, the total value of such claims is low and trade
creditors were not generally outstanding for long before 8 October 2008.
Once the above two steps have been completed, all creditors will have received all their interest entitlements up to 8 October 2008. In respect of
further interest payments, we will shortly be applying to court to seek directions on the calculation methodology.
 
3.3 It is intended that one further dividend will be paid to creditors in respect of each class of interest, the timing and amount of which will depend upon the realisation of the remaining assets.
 

11. On-going strategy for the liquidation and other matters
 
The JLs intend to concentrate on the following areas going forward:
 
Continuing to oversee the collection of the loan book
Pursuing a claim against KHF under the parental guarantee
Declaration and payment of subsequent dividends when funds are available
Considering further actions against parties identified by the ongoing investigation
Consulting with the Committee
Reporting important information to creditors via website updates
 
It is difficult to predict when the liquidation will be concluded. Whilst the level of input required has reduced significantly, we are dependent on the
progress of the insolvency process for KHF and the timing of payments therefrom. The Winding-up Committee of KHF have not given any indication
of when they anticipate their processes to be completed.
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