PMS savers miss out on payments

Published Friday, 12 February 2010

A judge has ruled that shareholder members of the Presbyterian Mutual Society cannot receive interim payments from a £20m financial pot because they are not creditors.

The ruling by High Court judge Mr Justice Deeny has dealt a blow to those who invested up to £20,000 in the PMS before its collapse.

His finding will also now pave the way for the Society's future administration arrangements to be resolved.

Prime Minister Gordon Brown met First Minister Peter Robinson and Deputy First Minister Martin McGuinness in London on Friday for talks on the efforts of Stormont politicians to secure government aid for the PMS.

Following the meeting, Mr Robinson said work would continue to try to secure a settlement for savers but warned the process could not be rushed.

He added that he would do what he could to assist those affected.

Nearly 10,000 Presbyterians across Northern Ireland lost access to their savings when it went into administration just over a year ago following a run on its funds.

Arthur Boyd, the administrator appointed to manage its affairs, had gone to court for a direction on who should be paid first from the £20m in assets he has realised.

Under insolvency rules this money must be distributed first to creditors.

The PMS includes two groups: those who invested up to a maximum of £20,000 in the form of shareholdings; and others, including trusts and congregations, wanting to put in larger amounts who loaned money to it.

Lawyers for the administrator stressed how the Society operated on a basis of mutuality and equality between all members.

Mr Justice Deeny heard how Mr Boyd wanted an authoritative decision on how to distribute funds between loan capital holders and share capital holders.

It was contended that all of those who are members, rather than just lenders, can be categorised as creditors.

The judge held there was a lack of definition of "creditors" in the relevant legislation, and concluded that a shareholder only qualified when they have an entitlement to receive the sum paid up on their share.

He said this would be when an application was made to the Society to withdraw shares.

At that point they would be owed money by the PMS and would become creditors.

The judge must now to decide whether the Society can continue to be run in administration for up to five more years.

Mr Boyd is seeking permission to maintain the role until 2015 should no buyer be found.

A further hearing will be held later this month.

Comments

3 Comments

David in Belfast wrote (832 days ago):

The PMS was put into administation because the governments North and South of the border underwrote their banks but would not offer the same cover to mutual societies. It is invidious that PMS savers should be discriminated against when bank savers were protected. What is sauce for Northern Rock and AIB should be sauce for PMS too. PMS Members also pay tax.

william in United Kingdom wrote (832 days ago):

I agree with the comments from moral responsibility. Further I am totally opposed to any bail out from the Local Assembly. I had the opportunity to invest money and purchased property prior to the financial meltdown, and have also lost a considerable amount of money. I do not hear any offers of help from the Executive in Stormont to Bail me Out! The investors in PMS were aware there were risks in their "Mutual" Society, and had good years of growth, did they offer some of this money back then? You have made a choice of investment, and it has failed, so accept the facts and get on with it. Like me, there are other places to invest my hard earned cash, and I make a decision and live with it.

Moral responsibility in Co.Down wrote (832 days ago):

Presbyterian congregations were encourged from the pulpit to invest money in the PMS. Presbyterian clergy are or were board directors. Rather than washing their hands of it, the Presbyterian church has a moral responsibility to their members who have lost their savings. Sell off some of their land and properties and repay the PMS members.