Questions from the KSFIOM DAG Legal Representative

Questions from the KSFIOM DAG Legal Representative

The following questions have been asked, by DAG legal advocate, John Wright, to relevant parties

a. actions to date and views and proposed actions for future regarding the KSFIOM funds in London. This question is for the FSC and Treasury and the liquidator. It is important because it will tell us what has been done and what is sought to be done, in broadest terms.

b. actions to date and views and proposed actions for future regarding any legislation or procedures used in the UK by HMG against KSFUK This is important because it may be that the subordinate legislation of the UK has fundamentally altered the usual banking relationships. If so there may be a case by the liquidator for judicial review in UK, the limitation period may be as early as on or before 8 January 2009.

c. action to date by the liquidator provisionally and views for future regarding the parental guarantee. This is important in view of some statements as to its worth, what are the views of the parties.

d. actions to date and views and proposed actions regarding the sealed court papers in the UK. Without full knowledge of the UK case it appears that the parties are fighting with one hand tied behind their back.

e. what exactly has gone on in the talks between the IoM and the UK (and possibly Iceland). Views of progress to date and views on future discussions and actions (Treasury only). As open a report as political expediency allows. This is important as it appears that fears for the liquidity of K Iceland and the actions of UK to protect its banking system may have prejudiced the IOM, yet Iceland has agreed to make payments to K subsidiaries elsewhere, why not IOM.

f. There is confusion in the different 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 and value.

g. 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. Surely needed to read along with uksi20082674 to try and understand how the priorities will work and analyse if anyone has been preferred over KSF IOM so as justify judicial review.

h. Query regarding the joint liquidator appointment and the secretive way it was done. There was no notice on the web site and the parties were only served on 24 and 25 November after the event.

i. The current estimate of the likely shortfall for unsecured creditors at Kaupthing. In the absence of such an estimate, no plan to reconstruct or run off Kaupthing can have any credibility as those proposing or considering it do not have an estimate of the size of the problem. This should include some estimate of the size of the foreign exchange exposure at Kaupthing, as the moving sterling liabilities are volatile in the current foreign exchange markets.

j. Whether any proposal will trigger the Depositors Compensation Scheme, so that a large number of small depositors can be paid out. This will tend to reduce the 'noise' as larger creditors will be much readier to understand a work out that will produce a better return. Details of the advance payment scheme as soon as possible so we may comment before it is put to Tynwald.

k. Whether any proposal will involve a change of control and, if so, whether such a change of control would affect the guarantee given by Kaupthing Bank Hf.

l. Whether any scheme to reconstruct or run off Kaupthing would involve the government introducing special reconstruction legislation for Kaupthing. This might be especially valuable in enabling Kaupthing to run off its loan book rather than sell it at a discount.

m. Better dissemination of information and updates,

n. Appointing a second IOM liquidator from outside the current liquidators firm


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