Presbyterian Mutual rescue mission is likely to fall short
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]thingtonslaw.co.uk or telephone 028 91811538 for a consultation with one of our family law specialists.