credit the Account with a cash amount greater or equal to the value of any subsequent deposits accepted.
KSF was responsible for administering the Account and the Joint Administrators of KSF (the Joint Administrators) took over this role in their capacity as agent of KSF. At the time of the administration, the Account held over £147 million.
The FSA initially required the notice to be kept confidential for the purpose of assisting in the smooth administration of KSF. For this reason, the Joint Administrators were not able to provide information about the Account to creditors at an early stage. The Joint Administrators informed the creditors' committee of the Account as soon as they were able to do so after the confidentiality restrictions were lifted and they have continued to keep the creditors' committee informed of any developments.
In February 2009, the Joint Administrators applied to the court for directions on how the funds in the Account should be distributed. A number of parties were appointed to represent various categories of account holder with different interests. The Financial Services Compensation Scheme (FSCS) and Her Majesty's Treasury were also joined, as those parties wished to argue that they had an entitlement to the funds in the Account because they had funded the transfer of certain KSF customer accounts - known as Edge accounts - to ING Direct NV, as required by the Kaupthing Singer & Friedlander Limited Transfer of Certain Rights and Liabilities Order 2008.
The hearing in the Companies Court was heard in May 2009 and judgment was handed down on 10 July 2009. Each of the parties (other than the Joint Administrators) appealed that decision and the appeal was heard in March 2010. Judgment of the Court of Appeal was handed down on 27 May 2010.
The words 'deposit' and 'customer' in the FSA Supervisory Notice bore their statutory meaning from theFinancial Services and Markets Act 2000 (Regulated Activities Order) 2001. The money held in the Account was held on trust for 'customers' that had made a 'deposit' (as both terms were defined in the order).
Where an account holder had deposited funds and KSF had made a matching payment to the Account, but should not have done so because either the customer or the deposit did not fall within the respective definition in the order, KSF obtained an interest in the Account in respect of that payment, provided that all beneficiaries of the trust other than KSF have received their entitlement in full.
Where an account holder had deposited funds, KSF had made a matching payment to the Account and the account holder had later withdrawn funds, KSF was entitled to reimbursement from the funds in the Account in respect of the moneys used to fund the withdrawal, provided that all beneficiaries of the trust other than KSF have received their entitlement in full.
If a shortfall in the trust arose from the fact that KSF had not transferred funds in respect of all deposits received from customers during the period, all persons with an interest in the moneys in the Account were entitled topro ratashare in those moneys and KSF would receive no funds in respect of withdrawals or other payments.
Any interest that Edge account holders held in the Account was assigned to the FSCS by reason of theKaupthing Singer & Friedlander Limited Transfer of Certain Rights and Liabilities Order. The judge stated that he would not have upheld an alternative argument made by Her Majesty's Treasury and the FSCS based on subrogation, which would have achieved the same result as a transfer of the Edge account holders' interests. Lord Justices Sedley and Thomas agreed with the judgment, but chose not to express a view on the subrogation argument.
The Joint Administrators, in conjunction with KSF staff, carried out a reconciliation process in respect of deposits made during the period to ascertain persons who were entitled to payment from the Account and the amount to which they were entitled. This process was concluded in June 2011 and the Joint Administrators have subsequently contacted those persons who were entitled to payment from the Account, in accordance with the directions of the Court.
The reconciliation identified that the Account was overfunded in the amount of approximately £13 million. Accordingly, these funds were repaid to KSF.
The significant majority of the remainder of the funds have been distributed to those parties identified as having an entitlement to payment from the Account.
The majority of parties identified as being entitled to payment from the Account had submitted non-preferential claims in the administration in respect of their entitlement and had been paid dividends on their claim. Accordingly, prior to providing those parties with the full amount of their claim to funds in the Account, it was necessary to deduct an amount representing dividends previously received by those parties in respect of their claim to funds in the Account. Those amounts were deducted and repaid to the estate of KSF. The total amount paid to KSF from the Trust account in this respect was approximately £81 million.
If you consider that you have an entitlement to the funds held in the Account but have not received notification from the Joint Administrators you should contact them directly.