THE PRESBYTERIAN Church in Ireland is bracing itself for a legal challenge from investors who have lost millions of pounds in the Presbyterian Mutual Society now in administration.
The Presbyterian Mutual Society was a separate legal entity with which the church had no executive or administrative involvement. However, it is understood that a group of former investors in the mutual society are exploring potential legal avenues to sue the church because of its close relationship with the society.
The mutual society was started by Presbyterians in 1982 for the benefit of Presbyterians. Membership was confined to members of the Presbyterian Church.
It started as a modest society, offering investors the opportunity to buy up to £20,000 in shares.
Financial accounts from 2003 showed the monetary value of individual investments in the mutual society ranged from £100 to more than £500,000, with the average being several thousand pounds. By 2008 the society had nearly 10,000 members from across the island of Ireland and £300 million in assets.
Last November, Presbyterian Mutual went into administration because it could no longer meet the demands from its members to withdraw their money. Investors had tried to withdraw their money after it emerged the society was not covered by the UK government’s financial guarantee.
Arthur Boyd, administrator of the mutual society, has revealed that £21 million had been paid out to members in October 2008, leaving just £4 million in its bank account.
Earlier this month Mr Boyd wrote to the society’s members with a series of proposals which, if accepted, would “see an orderly run-down of its business over time”. He said this could facilitate the opportunity to repay “part of the members’ investments over a period to be agreed”.
But he has also warned that 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 proceed with the formal arrangement.
Members have until 12pm on January 30th to return their voting papers. More than 50 per cent of members must approve a resolution.
First Minister Peter Robinson and Deputy First Minister Martin McGuinness have requested a meeting with British prime minister Gordon Brown to discuss the possibility of providing financial support for former investors in the mutual society.
