DCS Scheme Manager Correspondence to Edwin Coe 09/06/2009

DCS Scheme Manager Correspondence to Edwin Coe 09/06/2009

Dear Mr Greene,

Thank you for your email.

Regulation 16 of the Compensation of Depositors Regulations 2008 (as amended) (for link see – www.dcs.iom/Regulation.pdf ) provides as follows:-

“16(2) Despite any other provision of these Regulations, the Scheme Manager shall not pay or determine to pay a compensation sum out of the Funds in respect of a liability unless the depositor has agreed that – (a) the depositor’s existing rights in respect of that liability shall vest in the Scheme Manager;…”

The eligible protected deposit liability is the total liability of KSF to each depositor in respect of their principal with accrued interest to the 9th October 2009. It is the position of the Scheme Manager that it is obliged by the Regulations to require an assignment of the entire claim. The Scheme Manager has attempted to explain his position in the letter of the 5th June 2009 by further stating “as soon as the compensation is recovered, any additional distributions from the liquidation will be redirected to you immediately”.

Essentially therefore, for individuals with up to £50,000.00 in their accounts they will receive 100% compensation from the Scheme Manager and it will be for the Scheme Manager to recover in the liquidation; any shortfalls being borne effectively between the participating deposit takers and the Treasury.

Assuming say a 70% recovery, individuals with say £100,000.00 in their accounts would receive a £50,00.00 payment from the Scheme Manager and once dividends had exceeded 50% they would thereafter receive the balance of dividends initially from the Scheme Manager. It is the current intention of the Scheme Manager to ask for the liquidator or re-direct any future “surplus” dividends directly to individual depositors to avoid administrative duplication.

Finally, I note that you have indicated it is proposed by the DCS that each depositor will receive a full payment of £50,000.00. As I am sure you will appreciate, the £50,000.00 is only payable to those persons who meet the “individual” test set out in the DCS and therefore “non-individuals” such as companies etc, will receive a maximum of £20,000.00 compensation.

I trust this addresses your queries.

Regards

Mike Fayle
Scheme Agent

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