The action group for depositors in collapsed Kaupthing Singer & Friedlander (KSFIOMDAG) is 'devastated' the court will adjourn the decision of whether a Scheme of Arrangement should be used to return depositors' savings.
Its move is designed to give the Treasury more time to work out details of the scheme instead of resorting to the use of a Depositors' Compensation Scheme (DCS).
The adjournment will be granted until April 9 after the court heard the scheme would give greater security and certainty to payments than would be possible under the DCS, where payouts could be affected by any further bank collapse.
KSFIOMDAG says just 21 days ago the court decided the uncertain state depositors have been left in was unacceptable, then granted the Isle of Man government an extra 21 days.
"They failed to deliver anything until 24 hours after the court's deadline and then the little they did deliver offered nothing of substance on which to base an informed decision," says a KSFIOMDAG spokesman.
The action group has previously supported the scheme of arrangement but a spokesman told the court the group believed it to be 'dead in the water'.
Treasury officials claim the scheme will hasten payments and make sure small depositors are reimbursed first, while more than half would get their savings back completely within three months and 71% would be paid back in full within two years.
Yet doubts were expressed in court over the scheme's speed and ability to deliver better returns.
Under the DCS, £266m is expected to be returned to depositors by October while under the scheme of arrangement it would more likely be £212m in July or August.
The action group spokesman says the DCS is the "only route acceptable to all depositors caught up in what is fast developing into a financial scandal".
"We refuse to be political collateral to preserve the island's faltering reputation," he adds.IFAonline
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