Pres­by­te­rian Mu­tual res­cue mis­sion is likely to fall short

Belfast Telegraph - Business Telegraph - - News - with John Simp­son @bel­tel_busi­ness

The Pres­by­te­rian Mu­tual So­ci­ety (PMS) faced a cri­sis where its mem­bers could have lost a large part of their sav­ings de­posits in 2008 when the value of the so­ci­ety’s as­sets fell sharply be­cause of the fall in prop­erty prices. An un­tidy and un­com­fort­able wind-up looked likely as mem­bers tried to re­deem their funds faster than as­sets could be re­alised.

A scheme of ar­range­ment emerged where PMS re­ceived loans from the North­ern Ire­land Gov­ern­ment (£225m) and from the Pres­by­te­rian Church (£1m). This scheme fa­cil­i­tated pay­ment in 2011 of £232m to so­ci­ety mem­bers and cred­i­tors.

Pend­ing the evo­lu­tion of the fund­ing po­si­tion in a 10-year pe­riod, so­ci­ety mem­bers, partly by the com­pul­sory de­fer­ment rules for the scheme and partly through vol­un­tary de­fer­ment of re­pay­ments, post­poned seek­ing re­pay­ments of nearly £48m of their sav­ings or share­hold­ings.

Of the £225m lent by Gov­ern­ment, £175m is grad­u­ally, with in­ter­est, be­ing re­paid as a first call on money avail­able as as­sets are re­alised.

The other £50m, from Gov­ern­ment, is at the end of the list of cred­i­tor pri­or­i­ties and is de­pen­dent on there be­ing any sur­pluses af­ter other cred­i­tors were paid.

The loan from the Pres­by­te­rian Church ranks equally with the last £25m of the gov­ern­ment loans.

The ac­counts of the PMS have now been reg­is­tered for the year ended March 31, 2018, nearly eight years into the agreed 10 year wind-up pe­riod.

These ac­counts show an or­derly evo­lu­tion of the scheme of ad­min­is­tra­tion. In March 2018, of the £175m pre­ferred cred­i­tor type loan from Gov­ern­ment, re­payable on de­mand, nearly £64m has been re­paid along with an­nual in­ter­est at 2.02% of £18.5m.

If re­pay­ments con­tinue for a fur­ther three years at about the amounts in 201718, there might be a short­fall in the funds avail­able to re­pay the £175m of pos­si­bly £65m-£70m. The ac­tual out­come can­not yet be fi­nalised, but could dif­fer sub­stan­tially.

If there is a short­fall in funds to re­pay the pre­ferred cred­i­tor loan, then all the other cred­i­tors would re­ceive no pay­ments.

In that even­tu­al­ity, the po­ten­tial li­a­bil­i­ties would be:

Mem­bers’ loan sav­ings £27.8m

Mem­bers’ share funds £19.1m

Pres­by­te­rian Church £1m

Re­main­ing Gov­ern­ment loan £50m

These po­ten­tial li­a­bil­i­ties, or funds which might not be re­paid, to­tal just un­der £98m. Just over half of the pos­si­ble fi­nal de­fi­ciency would, on these fig­ures, fall on Gov­ern­ment, but a large amount will not be avail­able for mem­bers of PMS.

The to­tal cost of wind­ing up PMS would be a loss of about £47m to mem­bers of PMS.

The ac­counts for PMS at March 31, 2018 are, of course, not ca­pa­ble of be­ing used to fore­cast the likely out­come in 2021-22.

If the re­main­ing as­sets are liq­ui­dated at mar­ket prices which fluc­tu­ate sig­nif­i­cantly the fi­nal ac­counts could look com­pletely dif­fer­ent. If prop­erty val­ues rise, the ul­ti­mate deficit may be smaller.

How­ever, with less than three years to go, a dra­matic re­cov­ery is prob­lem­atic.

As the years progress, the in­ter­est in the fi­nal out­come will in­crease.

The pos­si­bil­ity that the Gov­ern­ment loan to the PMS would not be fully re­paid is an as­sump­tion by some ob­servers. This pos­si­bil­ity points to­wards pos­si­ble next steps.

While the mem­bers of the PMS will still bear a sig­nif­i­cant part of any deficit in the fi­nal bal­anc­ing of the books, they should record the ben­e­fit that an even larger de­val­u­a­tion of mem­bers’ funds was avoided.

Mem­bers (not equally) should re­ceive a re­turn of about 80% of their sav­ings.

A fur­ther crit­i­cal ques­tion is whether the de­ci­sion by Gov­ern­ment, with per­mis­sion from HM Trea­sury, to pro­vide the emer­gency loans, to­gether with re­pay­ment terms, was ap­pro­pri­ate.

In de­fence of the Gov­ern­ment ac­tions, the case can be made that, dur­ing the same pe­riod, banks were res­cued and de­pos­i­tors were pro­tected.

In more crit­i­cal vein, no or­gan­i­sa­tion such as a credit union called for and mer­ited Gov­ern­ment as­sis­tance. Has Gov­ern­ment set a dan­ger­ous prece­dent? How will the Gov­ern­ment Au­di­tor re­spond?

When a re­la­tion­ship breaks down, the par­ties in­volved can of­ten feel over­whelmed by the mul­ti­tude of is­sues that need to be ad­dressed and it is of­ten dif­fi­cult to know what to do. Le­gal ex­perts in fam­ily and mat­ri­mo­nial law are trained to deal with the many prob­lems which arise when this hap­pens.

Here are my top tips for min­imis­ing the stress and ten­sion at what can be a daunt­ing time. 1. Think of the chil­dren

Mar­riage break­downs can be stress­ful for ev­ery­one in­volved. Where there are young chil­dren to con­sider, it can be dif­fi­cult to pro­tect them from the emo­tional fall­out, es­pe­cially if is­sues arise over where they chil­dren should live and who pays for what. It is es­sen­tial to do your best to pro­tect chil­dren from the adult is­sues.

Avoid in­volv­ing them in petty dis­putes, don’t talk neg­a­tively about your other half in front of them and don’t use them as lever­age to get what you want. If you pri­ori­tise the needs of your chil­dren over ev­ery­thing else and strive to make de­ci­sions based on what is in their best in­ter­ests, you will not go far wrong. 2. Don’t make rash de­ci­sions

It can be dif­fi­cult in such an emo­tive sit­u­a­tion to think clearly and log­i­cally, es­pe­cially if the sep­a­ra­tion has come as a shock, or as a re­sult of some­thing your part­ner has done, as op­posed to it be­ing your own de­ci­sion. It is im­por­tant not to do any­thing that you may later re­gret or that could be detri­men­tal to your sit­u­a­tion.

With­draw­ing or spend­ing sig­nif­i­cant sums of money, for ex­am­ple, is not nor­mally a sen­si­ble thing to do, un­less you are con­cerned that the other party is likely to do some­thing rash and you need to take ur­gent ac­tion to pro­tect as­sets. Con­tin­u­ing to op­er­ate your fi­nances as you did dur­ing the mar­riage is gen­er­ally the best way of avoid­ing any fi­nan­cial crises, as long as you are not leav­ing your­self in a fi­nan­cially pre­car­i­ous sit­u­a­tion by do­ing so.

And as long as there are no safety is­sues, it is not usu­ally ad­vis­able to move out of the fam­ily home, es­pe­cially with chil­dren. Try­ing to en­sure that their lives re­main as sta­ble as pos­si­ble should be a pri­or­ity and plan­ning and agree­ing who the chil­dren will stay with and when is likely to help avoid con­tested and ex­pen­sive court pro­ceed­ings to re­solve such is­sues down the line. 3. Con­sider coun­selling and/or me­di­a­tion

If you are ex­pe­ri­enc­ing mar­riage dif­fi­cul­ties, it may be that there are is­sues which you can dis­cuss and re­solve that could pre­vent the mar­riage break­down be­com­ing a per­ma­nent sep­a­ra­tion.

Con­sider con­tact­ing a rep­utable mar­riage guid­ance coun­sel­lor, such as Re­late NI, to as­sist you in talk­ing through the is­sues that you are hav­ing. Your so­lic­i­tor is not a coun­sel­lor and us­ing them as such will take up valu­able time that would be bet­ter spent fo­cus­ing on the le­gal is­sues. This will save you time and money in the long run and may as­sist in a more am­i­ca­ble sep­a­ra­tion. You may also want to con­sider whether me­di­a­tion may be ap­pro­pri­ate to help you re­solve prac­ti­cal and le­gal is­sues as a means of keep­ing costs and ac­ri­mony to a min­i­mum. 4. Seek le­gal ad­vice early

Get in touch with a spe­cial­ist fam­ily lawyer and set up a faceto-face meet­ing to dis­cuss the var­i­ous im­pli­ca­tions of your sit­u­a­tion as soon as you feel ready to do so. Many mat­ri­mo­nial solic­i­tors will of­fer a free time-lim­ited ini­tial con­sul­ta­tion to give you gen­eral ad­vice on the is­sues that you need to think about and talk you through the var­i­ous op­tions open to you, and the as­so­ci­ated costs of what may lie ahead. 5. Get your af­fairs in or­der

When a mar­riage breaks down, of­ten there are fi­nan­cial is­sues which need to be ad­dressed, in­clud­ing prop­erty own­er­ship, pen­sion di­vi­sion, spousal and child main­te­nance and di­vi­sion of other as­sets, such as in­her­ited as­sets or per­sonal in­jury claims.

In or­der to be able to fully ad­vise on a fi­nan­cial set­tle­ment, your so­lic­i­tor will need to know the value of the as­sets and ex­tent of any debt. You do not nor­mally need to have all of this doc­u­men­ta­tion with you for an ini­tial con­sul­ta­tion, but it is cer­tainly help­ful for you to have a clear idea of what the fi­nan­cial is­sues are. To re­solve a fi­nan­cial set­tle­ment, you will both be asked to pro­vide proofs of your own fi­nan­cial in­ter­ests to your re­spec­tive solic­i­tors, as a key com­po­nent of a fi­nan­cial set­tle­ment is full and proper fi­nan­cial dis­clo­sure. There­fore keep­ing your doc­u­men­ta­tion, such as mort­gage and bank state­ments, payslips and pen­sion state­ments, in good or­der will as­sist in speed­ing up this part of the process. You will also be asked to pro­vide your orig­i­nal mar­riage cer­tifi­cate and chil­dren’s birth cer­tifi­cates in the event of a di­vorce be­ing sought. 6. Keep your­self and the chil­dren safe

Un­for­tu­nately some sep­a­ra­tions are far from am­i­ca­ble and can in­volve is­sues of do­mes­tic vi­o­lence. If this is the case, you should take ad­vice straight away about how best to keep your­self and your chil­dren safe. Where ap­pro­pri­ate, con­tact the po­lice to re­port any in­ci­dents and get in touch with a spe­cial­ist fam­ily so­lic­i­tor as soon as pos­si­ble to see what steps can be taken to help you. In cer­tain sit­u­a­tions, you may be en­ti­tled to seek the as­sis­tance of the court to ob­tain emer­gency in­junc­tions and/or other or­ders that can help to pre­vent on­go­ing vi­o­lence or ha­rass­ment and deal with the oc­cu­pa­tion of your home, where the be­hav­iour of one party may be suf­fi­cient to merit ex­clu­sion from a prop­erty to keep you and your fam­ily safe.

Clare Cur­ran is a part­ner with Wor­thing­tons Solic­i­tors and is head of the Fam­ily and Mat­ri­mo­nial Depart­ment. Wor­thing­tons Solic­i­tors have of­fices in Belfast and New­tow­nards. For fur­ther in­for­ma­tion email Clare at [email protected]­thing­ton­ or tele­phone 028 91811538 for a con­sul­ta­tion with one of our fam­ily law spe­cial­ists.

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