Revived GKCC makes third phase repayment to over 1200 depositors
The defunct Golden Key Credit Card Company (GK) revived by the Central Bank (CB) on a Supreme Court order has made repayments as low as Rs 48 and high as Rs.100,000 under phase 3 to 1204 security deposit holders with security deposits up to Rs.1 million, an official said.
According to the plan of action prepared by the CB, the repayment was based on 41 per cent of the security deposit balance outstanding as per the computer system and auditor’s report of the GK, the newly appointed GK CEO, Central Banker – Migara
File photo shows GK depositors protesting
Handunge said
Many depositors were confused and perturbed by the apparently low repayment as the two previous payouts they received was Rs.100,000 each under the Watawala committee supervision, Malcolm de Silva, spokesman for the depositors said adding that the hopes of depositors were shattered as they were paid different payments based on the 41 percent yardstick.
He added that phase 3 of the repayment was made after deduction of their current and previous payments and also rebate/ interests received as well as credit card outstanding, loan balances and Sarana fund payments.
But Mr. Handunge said that the GK has spent Rs. 73 million to make repayments for 1204 security deposit holders calculating 41 percent of their net balance and all the depositors were informed about this process.
“It is unfair for them to demand a flat rate of Rs. 100,000 as their net balances should be more than Rs. 487, 805 to get a repayment under the phase 3 in accordance with the action plan,” he noted.
According to the new action plan, around 2000 security deposit holders whose balances amounted to Rs. 487,805 before setting off the rebate would now be deemed to have been settled in full since payments of up to Rs. 200,000 have already been made. The security deposit holders (investors) who had already been paid 41 per cent or more of their outstanding balances will be considered as fully settled under this plan.
Around 3000 depositors who have individual balances amounting to around Rs. 1.22 billion will be left with the outstanding balance of Rs. 300,000 (each).
Mr. Handunge noted that the company has made an over payment of a sum of Rs. 48 million by paying Rs. 100,000 each in two previous occasions to 8052 and 7060 depositors and the total amount was Rs.1.47 billion.
The balance payable to an estimated 6,254 security deposit holders was Rs.7.82 billion, he added.
The Board of Directors is working on a medium term repayment plan to settle the next tranche of these depositors which require the realising of assets to the value of Rs.575 million.
He added that the required money cannot be raised by selling assets of GK and its subsidiaries and therefore the task force appointed to identify assets including shares and bank accounts of former directors of GK is now working towards this end. However, Mr. de Silva noted that the security deposit amounts have come down from Rs. 26.1 billion to Rs.9.1 billion and also the number of depositors has come down from 9054 to 6254.
“Surely there are enough assets to at least settle 50 per cent of the capital leaving out the interest,” he said. The CB is offering a share per each Rs. 100 deposit and no one knows if one could sell a share at even Rs.1, Mr. de Silva said.
Meanwhile President of the GK Depositors Hope and Solidarity Organisation Jude Marco Perera noted that justice could be done to all of them by deducting the rebate considering the total balance outstanding of each and every deposit holder without cutting 59 per cent from the deposit as a flat rate.
On the other hand, the security deposits actually outstanding were not 41 per cent of the value of security deposits but 49.27 as per the computer system and the auditors’ report of the GK, he added.
Therefore the actual deduction should be 50.73 per cent and this shows the inaccuracy of the CB’s Action Plan, he revealed.
According to the Ernst & Young Report the value of security deposits of 9187 depositors at the time of the closure of the company was Rs. 26 billion.
The value of the net balance amount of 8171 depositors who made requests for repayment from the CB after deducting loan balances and Sarana Fund payments was Rs. 25.3 billion.
He said that he has filed an affidavit at the Supreme Court urging the judiciary to restrain the implementation of the action plan as its methodology is unjustifiable and misleading. He told the Business Times that in addition to reducing the rebate, the CB’s action plan has cut an additional sum of around Rs. 3.3 billion from their deposits.
Mr. Perera disclosed that credit card outstanding, loan balances and Sarana Fund payments of 6268 non depositors with GK credit cards amounting to Rs. 1.15 billion had been deducted from the total value of security deposits.
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