The Isle of Man Treasury will today present a finalised Scheme of Arrangement (SoA) to the high court hearing into the collapsed Kaupthing Friedlander & Singer Isle of Man (KSFIOM) bank.
An agreed SoA would guarantee payments for depositors with 'trapped' cash in the beleaguered bank.
However, the high court may instead opt for a Depositors' Compensation Scheme (DCS), which means payments may be hit by further details of the bank's collapse.
The last hearing into the liquidation of the bank and SoA was postponed on 19 February, giving the Isle of Man government more time to finalise its presentation in favour of an SoA.
At a previous hearing, the court heard the SoA could pay out over half of depositors in full over three months and approximately 70% in full over 24 months.
However, action group KSFIOMDAG's advocate, John Wright, who previously backed an SoA agreement, has called for KSFIOM to go into liquidation, automatically triggering DCS instead. The group says there are still no concrete details of the SoA, adding the delays in finalising the scheme and its implementation has meant hardship for depositors short of cash.
Angry depositors are expected to demonstrate outside the courthouse in Douglas prior to the hearing, according to local reports.
Meanwhile, Treasury minister, Allan Bell, urged depositors and the court to get behind the scheme as it will "deliver speedier and potentially higher returns for depositors, giving them greater certainty".
"We have worked tirelessly to develop this bespoke scheme of arrangement in full so that we can get the best possible results for depositors as there is no alternative that can offer depositors the same certainty and expediency of payments," he says.
"The government committed a further £30m on March 17, on top of the £150m already committed to the scheme to ensure that depositors can be assured of what they will receive and by when from the scheme."
However, if the SoA proposal is rejected, Bell says the government will respect depositors' wishes and support the bank's liquidation and triggering of the DCS.
"Whilst the government is not responsible for the collapse of KSF (IoM), we feel it only appropriate that we try to assist those affected, which is why we have developed this alternative option for creditors," he says.
If the SoA is approved by the court, it must be approved in a vote by two groups of depositors- one which is eligible for DCS compensation and one which is not, before money is released from government reserves.
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