General Matters

In this update I set out a report on the creditors meeting convened by the Administrators of Kaupthing Singer & Friedlander Limited ("Kaupthing UK"), issuing Statements as at 9 October 2008 and actions currently being taken re Edge accounts and other online information.

A PDF copy of the Administrators Proposals is available here.

Meeting to consider the Administrators Proposals in respect of Kaupthing UK

A meeting of creditors of Kaupthing Singer & Friedlander Limited (in Administration) ("Kaupthing UK") was held on Monday, 1 December 2008 at 11am at Café Royal, 68 Regent Street, London. The meeting was attended by the Joint Liquidator Provisionally on behalf of KSFIOM.

The purpose of the meeting was to consider the proposals of the Administrators of Kaupthing UK and to decide upon the formation of a Creditors Committee. The Administrators read from the statement of proposals to creditors which had been circulated with the notice of the meeting.

With regard to dividend prospects the Administrators indicated it was too early to give a realistic estimate or range but that they will be discussing this with the duly appointed Creditors' Committee. It was indicated that the intention was to keep creditors informed in respect of any progress in this area and to pay an interim dividend as soon as was felt possible.

With regard to the directors Statement of Affairs, the directors of Kaupthing UK had obtained an extension in respect of the filing deadline but it was anticipated it would be filed shortly. The Administrators advised that it was likely an order would be sought from the Court under section 231 of the Insolvency Act 1986 limiting disclosure for commercial and other reasons. It was envisaged that a summary Statement of Affairs would be made available to creditors.

The Administrators had applied to Court for dispensation to release a list of creditors on the grounds it would be prejudicial to the interests of creditors for list of creditors names, addresses and amounts due to be released. The Court had duly granted an order on 13 November 2008. It was also confirmed that by Court order the documents on the Court file relating to the appointment of the Administrators were sealed and not open for inspection.

Mr Brazzill referred to the consolidated and draft unaudited balance sheet as at 7 October 2008 included in the proposals. He indicated that the position with regard to £981m of other liabilities was likely to change substantially as part of ongoing reconciliation work. He also indicated that it was believed that Kaupthing h.f. was a net debtor of the company but that work was ongoing to establish the position. It was stressed that many areas of the balance sheet were affected by the impact of set off which had the potential to change the position quite materially. It was confirmed that as at 26 November 2008, approximately £270m, €55m and US$130m was held in cash by the Administrators and that a Receipts and Payments account would be circulated in due course.

The Administrators advised that they were not in a position to calculate the total level of creditors given the substantial uncertainties relating to the balance sheet. It was confirmed that claims totalling approximately £4.7bn had been submitted for voting purposes at the meeting, including an estimated claim for £3.5bn submitted by the Financial Services Compensation Scheme ("FSCS"). It was stressed that the FSCS will stand in the shoes of depositors it pays out, i.e. as an unsecured creditor.

So as to protect the position of KSFIOM we have stated our desire to be a member of the Creditors Committee. A Committee is made up of 3 to 5 creditor members and creditors are elected by votes by value of claim. Over 40 creditors put their name forward for membership of the Committee and whilst a committee was formed KSFIOM had insufficient votes to be appointed as a member.

It was subsequently confirmed that the following had been voted onto the Creditors' Committee:-

Financial Services Compensation Scheme

Cats Protection

Transport for London

Trustees for the Singer & Friedlander Pension Scheme

Peterborough City Council

Edge and online Accounts

We are currently working to restore the Edge and online accounts in a "READ ONLY" format so that customers can view their account information online, for a temporary period. The Bank is not able to complete this process in-house due to the Information Technology system restraints.

We will be sending an email to all Edge account holders once the system has been activated and will post an update on the website. Once the system is live it will be held open until the end of February 2009.

Statements

September statements were issued to customers however the Bank does not produce statements for Fixed Term Bonds, Online accounts or Edge accounts. We are planning to send statements to customers as at 9 October 2008.

The objective of the statements is to provide customers with the balance of the funds deposited with the Bank. As stated the Bank's IT system does not allow the production for statements relating to fixed term bonds.

For information purposes only and so as to reflect the claims of depositors as at the 9 October 2008 the Banks system will show early maturity of fixed term deposits as at 9 October 2008. The Capital and interest accrued to date in respect of these fixed term deals will then be credited to each customer's account. Many Customers received a statement for these accounts as at 30 September 2008 which showed a Nil balance. The Statements as at 9 October 2008 will show the receipt of these funds into their account. In the minority of cases where the deal was set up from funds from another Bank and no other KSFIOM account exists then a new account will be credited to show the balance of the fixed term deal. This has been done purely for presentational purposes to enable these balances to be included on statements and does not affect deposit terms.

We hope to issue statements to customers before the Christmas postal deadlines.

Interim Payments

The Isle of Man Treasury is investigating the possibility of making an interim payment to depositors in the Bank. We continue to provide information and assistance to them whilst they continue to investigate whether this can be achieved.

Contacts

As previously, the best way to make contact is to write to the bank or to email branch@singers.co.im. If you need to telephone the bank, please use the main switchboard number +44 1624 699222.

Mike Simpson

Joint Liquidator Provisionally