Thousands of investors face losing millions of pounds following the collapse of the Presbyterian Mutual Society, it was revealed today.
Investors in the Belfast-based society, which has been put into administration, are being given the stark choice of agreeing to get back some of their money over time, or less if it goes into liquidation.
In a statement today, the Presbyterian church said the uncertainty around how much and when investor’s money can be repaid "will cause serious concern and deep upset for the society's members".
The worth of the society, which went into administration in November after a run on its funds, has plunged by tens of millions.
The society, which has about 10,000 members, hit trouble after what was described as an unprecedented increase in requests to withdraw money when the credit crunch bit last autumn.
The administrator revealed that £21 million was paid out to investors in October, leaving only £4 million in the society’s bank account.
Between October 27th and the appointment of the administrator on November 17th, further requests for withdrawals exceeded £50 million.
The administrator has said there had been no offers to purchase or invest to date. He has written to some 9,500 investors making clear that getting back all of their investment is not an option.
He made a series of proposals which, if accepted, would see an orderly run-down of the society’s business over time through a formal arrangement allowed for under insolvency legislation.
A statement from the administrator, Arthur Boyd of Arthur Boyd & Company, said: “This would have the effect of repaying part of the members’ investments over a period to be agreed.
“If the proposals are not accepted, the society will have to be placed in liquidation with the likelihood of members receiving less money back than if they proceeded with the formal arrangement.”
Members have until January 30th to return voting papers, with a majority of more than 50 per cent needed to proceed.
Mr Boyd said in his proposal to members that he held exploratory talks with parties interested in investing in or purchasing the society so that monies could be returned to members and it could continue as a going concern. But he said it was unlikely the society in its current form could continue as a going concern.
A valuation of the commercial property portfolio commissioned by the administrator put it at around £92 million - well below the £129.5 million valuation placed on them in the society annual report 10 months ago.
The society had also advanced loans of £184 million and the administrator said he was continuing his assessment of them, including the value of property given as security.
In its statement today, the church said: "Many questions remain unanswered that only the society and the administrator can answer but it is good that shareholders will now have the opportunity to make their opinion known by voting on the various proposals put forward.
"The administrator has pointed out the ‘assets have not disappeared’ but continues that they ‘are not realisable quickly at a fair value due to current market conditions’ and his statement ‘that his proposals are designed to allow members to get a better return’ is to be welcomed."
PA