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Treasury Minister welcomes more time to progress KSF IOM solution 27 November 2008

TREASURY Minister Allan Bell MHK has welcomed today’s (Thursday November 27th) decision by the Isle of Man High Court to allow more time for the development of a solution for the depositors of Kaupthing Singer & Friedlander Isle of Man (KSFIOM).

The Treasury Minister said that the Isle of Man Government is looking at ways to increase payout and guarantees to depositors and creditors as well as ensuring funding arrangements are in place to expedite payments to depositors in an orderly manner. At the same time the Government wants to leave open the option to bring in a third party investor.

Amongst other considerations, the court heard an expert view that a number of options are available to the Treasury to achieve its objectives. These options range from restructuring and recapitalising part of KSF IOM to an arrangement with creditors to achieve a more managed and co-ordinated wind-down.

Following an application from the Treasury, the court agreed to adjourn consideration of a winding-up order until 29 January 2009 so that alternatives could be further explored.

The Treasury Minister commented:

‘The Government is continuing to do everything it can to reach a solution to this situation that is best for the depositors. While the potential for such a solution exists we have a duty to keep working towards it, and this the court has allowed us to do.’

He added:

‘In the meantime Government is very conscious that some depositors may suffer hardship and a scheme to make a payment on account to depositors is being worked on.’

The court heard a sworn statement from David C Lovett, managing director of the London office of AlixPartners, a global business advisory firm retained by Treasury to assess the KSF IOM situation.

Mr Lovett, an expert in business restructuring, stated that bank liquidations took time and were expensive. He was confident that if an alternative restructuring plan could be put in place, depositors would be better off than if the court simply made a traditional winding up order. In particular there was a real likelihood that depositors would receive an earlier payment than would be the case if the Depositors Compensation Scheme were to be activated.

If a plan under section 152 of the Companies Act 1931 were approved by the court, continued Mr Lovett, it would have to be voted on by the creditors before being implemented. This would give the creditors a direct and important voice in any plan recommended by Treasury.

Mr Lovett concluded by stating that promises were not possible, but he was sure that an adjournment would not be time wasted. If it was not granted, and a winding-up order was made, it would never be known if a more satisfactory solution could have been achieved.

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