Questions and Answers (updated June 2010)
Please note that previous member communications and associated documents available on this website provide a range of information that might answer some of the questions that members have.
Q. What does Administration mean?
A. Directors of a company in financial difficulty can appoint an Administrator. Administration is a legal process. It means that people owed money by a company cannot sue it in the courts for the return of their money. It therefore provides legal protection for the Society's assets and its members. The Administrator is required by the relevant legislation to rescue the company as a going concern wherever this is reasonably practicable. In those cases where it is not possible, the objective will be to provide a better result for those owed money than would be achieved in an immediate winding up and only where this is not possible will he realise assets to make a distribution to members.
Q. What stage is the Administration at?
A. The Administrator issued his most recent six monthly progress report on 15 June 2010. A first distribution of 12p in the pound was paid to creditors on 30 April 2010
Q. Who was entitled to receive the first distribution?
A. On 12th February 2010, Mr Justice Deeny held that the holders of share capital in the Society were not creditors in the administration. Therefore only loan capital holders and other creditors were entitled to the first distribution.
Q. What is the position of those who hold share capital?
A. As a result of the judge’s direction of 12th February, shareholders in the Society now rank behind the loan capital holders and other creditors of the Society in the administration. This essentially means that, while the Society is in administration, the Administrator can only make a distribution to shareholders once the amounts due to loan capital holders and other creditors have been repaid in full.
Q. How long will the Administration last?
A. The Court has extended the Administration for a period of one year until 16th May 2011 and the Administration is renewable for periods of 12 months thereafter, subject to the approval of the court. Given the nature of the Society’s assets, an extension is necessary to facilitate an orderly wind down of the Society and to maximise the return to those who are owed money. It is not possible at this stage to predict when the administration might finally end.
Q. Is there likely to be help for shareholders from the Government?
A. In April 2010 the Northern Ireland Executive outlined a proposed package of assistance for members/creditors of the Society. However, subsequent to the UK General Election it has been reported that the new Conservative-Liberal Democrat coalition government is reassessing the options. The Administrator cannot formally assess the implications of any proposal for members/creditors until the details of an approved plan are presented to him.
Q. Will there be a creditors’ committee?
A. The Administrator has addressed this in his latest six monthly progress report. He is seeking nominations from representatives within certain classes of creditors and will arrange for a postal vote so that a committee can be constituted. While shareholders are not strictly entitled to sit on the creditor's committee, the Administrator is seeking nominations from shareholders for a representative who will sit on the committee as an observer.
Q. What is the role of members of the creditors’ committee?
A. A committee member may be asked by the Administrator to attend meetings of a creditors’ committee. Alternatively, a creditors’ committee can request a meeting with the Administrator. Members of a creditors’ committee are not entitled to payment or remuneration for serving on a committee but may claim for reasonable travelling expenses incurred in attending meetings.
Rule 2.053 of the Insolvency Rules (Northern Ireland) 1991 (as amended) states that the function of a creditors’ committee is to “assist the administrator in discharging his functions, and act in relation to him in such manner as may be agreed from time to time”. In practice, a creditors’ committee in an administration does not act in a advisory capacity but as a “sounding board” for an Administrator in relation to the views of creditors. Whilst the Administrator of the Society does have to provide a creditors’ committee with information about the exercise of his functions, it is important to bear in mind that there may from time to time be other legal obligations on the Administrator which prevent him from discussing certain aspects of the administration.
Q. Can the Administrator tell me what went wrong with the Society?
A. This is dealt with in detail in the Administrator's proposals available on this website, but in general terms the Society was affected by the global financial turmoil. The Administrator was appointed because the Society had insufficient cash to meet a mounting level of applications to withdraw money. The Directors attributed the run on the Society's funds to an increasing number of members who were moving money into other financial institutions which enjoyed the protection of the UK Government's financial protection scheme for depositors. The Society did not have this protection.
Q. Can the Administrator comment or answer questions on how the Society was managed before it went into Administration?
A. The Administrator is not in a position to make public comment on these matters. He has submitted a report to the Department of Enterprise Trade and Investment (DETI) on the conduct of the directors of the Society in the period leading up to the administration. This process of reporting is a confidential one and an Administrator is not permitted to disclose his report or its contents to anyone except DETI.
Q. I need to talk to somebody urgently about my financial position or that of a relative - who do I contact?
A.
Members can contact the Society: By telephoning (028) 9031 1232, by faxing a request for a call back to (028) 9031 1441, or by emailing for a call back to pms@arthurboyd.co.uk.
You can also write to:
The Administrator
Presbyterian Mutual Society
Glengall Exchange
Glengall Street
Belfast BT12 5AB