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An initial payment of up to £10,000 is set to be given to the savers who lost money when an offshore arm of an Icelandic bank collapsed.
Financed by the Isle of Man government, savers in Kaupthing Singer & Friedlander Isle of Man (KSFIOM) are expected to see an increase in the early payments made from £1,000 to £10,000.
If approved by the Tynwald, 40% of depositors will be refunded in full.
The proposed payment announcement came as a High Court hearing in Douglas to put the bank into liquidation was adjourned until February 19 so that further information could be provided on a Scheme of Arrangement being proposed by the Isle of Man treasury as an alternative to liquidation.
The scheme would see savers get scheduled repayments, funded jointly by the Isle of Man government, the banking sector and any recovered assets.
The treasury claims that under the scheme 54% of all depositors would be repaid in full within three months, with 65% repaid in full within 12 months, and 71% receiving all their money back within two years.
The remaining 29% of people would receive between 65% and 100% of their cash, depending on the level of assets recovered.
But policyholder action groups oppose the scheme of arrangement and instead want the bank to be placed into liquidation.
This would trigger payouts from the Isle of Man depositor protection scheme, under which they would receive up to £50,000 of what they had lost, plus anything else the liquidator was able to recover in due course.
Around 10,000 savers collectively have £840 million deposited with KSFIOM, which was placed in provisional liquidation on October 9.
Copyright © Press Association 2009
