1st Update from IOM Legal Advocate

1st Update from IOM Legal Advocate

1st Update from IOM Legal Representation
Dear Diver

I write to provide an update of what I have done to date.

I have obtained copies of the Petition, the supporting affidavits and the court orders. I have read the various government, FSC, Treasury and liquidator provisionally’s press releases and letters in public domain.

In preparation for the hearing I have written to the parties and the court giving notice that I act for a group of at least 250 members and with a minimum of £33 million invested and that I shall be applying for special leave to be joined as a party under the winding up rules. (Editor's note: these are just guestimated figures)

In my correspondence with the advocates for the following parties, Directors, FSC, Treasury and liquidator provisionally, I have raised a number of pertinent questions.

The replies have been as follows

  1. Parent guarantee. A copy will be provided on the usual implied undertakings as to confidentiality and only using within these proceedings once my clients are made a party
  2. There is no objection to my clients being made a party from any of the other parties
  3. No information or answer to questions will be disclosed or made prior to my clients being made parties
    This latter point is ridiculous in relation to the question about what any of the others intend doing on 27th. But they will give nothing away.

So questions about

a. actions to date and views for future regarding the KSFIOM funds in London.
b. actions to date and views for future regarding any legislation or procedures used in the UK against KSFUK
c.actions t o date by the liquidator provisionally and views for future regarding the parental guarantee and to obtain a copy of this guarantee.
d. actions to date regarding the sealed court papers in the UK. what exactly is going on in the talks between the IoM and the UK (and possibly Iceland).
e. what plans Treasury has with respect to the liquidation hearing on 27 November.
f. In the event that another adjournment is sought and looks like being granted I am instructed to request that the court agrees to the formation of a ‘provisional creditors committee’ Your views and reaction
g. There is confusion in the number of accounts, account holders and creditors being reported, can we have a total number of account holders, single and joint and a total number of accounts
h. Have any of the parties managed to obtain copies of the latest balance sheet for K UK as at date of liquidation, are they willing to share, have they compared with the quarterly figures for the last 12 months, are there any comments

Are all unanswered.

Problem is that if an order is made on 27th it is likely that they will say it is up to the liquidator and they will not respond further. It for that reason it is important to ensure that the liquidation is with a committee of inspection and that you get proper representation on that committee.

The real problem is the political intervention of the Treasury and the consequent delay in the liquidator being fully confirmed. The liquidator provisionally is not going to do much other than take advice and secure assets whilst his appointment is only provisional. The second problem is that neither Treasury, FSC or Directors are going to be advised to disclose anything which might incriminate and lead to claims being issued against them.

I will not be told of the position of Treasury until the Government Advocate stands up on Thursday and announces it. I have foreshadowed the position if there is another adjournment by asking everyone to agree to a creditors' committee provisionally.

Finally I have been asked about costs orders and trying to ensure FSC or Treasury do not get their costs awarded as part of the costs of any liquidation. I can seek such an order, but I assume you will want me to seek costs out of assets, so I have a bit of a contradiction. At present, whatever your feelings are we cannot prove that any of FSC, Treasury or Directors are in the wrong. So I feel it unlikely the court will acceded to such request but of course if it later transpires that there are causes of action the assets will be reduced by those sums and that additional loss will form part of any damages claim. In any event those costs are unlikely to be substantial in the overall picture of things, especially by comparison to those of the liquidator. There are ways of attacking costs awards, they have to be assessed and they can often be usefully reduced at that stage. Last time I opposed costs assessment by the FSC I reduced their claim by over 50% at the first review stage.

One other point, I have read the web site and forums. I am conscious how stressful this must be for some of you. I will do my utmost to assist in my legal role.

I will report again immediately after 27th and may try and report with initial advice about IOM procedures for Judicial Review before even then.


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