LEGAL ACTION is to be taken against a number of members of the collapsed Presbyterian Mutual Society who have defaulted on loans, its administrator has revealed.
Arthur Boyd said an increasing number of borrowers are having difficulty in “meeting their obligations” to the society, which was exclusive to members of the Presbyterian Church.
It has also emerged that there could be a £72 million shortfall in the loan book as a result of the crash in property values. According to recent valuations and current balances on advances made by the Belfast society, the loan book currently stands at £179 million. This includes advances totalling £85 million secured on building sites and development land.
Mr Boyd said property advisers have informed him that millions of pounds have since been wiped off the value of these advances.
He believes the collapsed society will be unable to recover the full value of its advances and the total “estimated recovery” could be in the region of £107 million.
The significant drop in property values is yet another setback for the mutual society’s 9,500 members. The society, which was started in 1982, went into administration last November with millions of pounds of its members’ money in the balance.
Its members have been unable to access their assets since its collapse.
Earlier this year the Belfast society’s members agreed to “an orderly run-down” of the business on the understanding that they may not get a full return on all of their investments. But the latest progress report from the administrator suggests that the circumstances the members now find themselves in may be worse than originally anticipated.
Mr Boyd said that, due to the “significant drop in property values”, he has been advised to make a provision of at least 40 per cent on the value of property provided as security to the Presbyterian Mutual Society during 2005 to 2007.
“The estimated recovery figures suggest that the directors’ initial assessment in their statement of affairs of realisable value of the society’s secured loans may have been too cautious,” the administrator has warned.
Mr Boyd said the collapsed society has also suffered a 32 per cent drop in the value of its investment portfolio. The portfolio, which includes 13 properties, has seen its value fall from £93 million in December 2008 to an estimated £89 million.
In the period since the mutual society went into administration, three tenants of these properties – Woolworths, Principles and Rosberys – have also gone into administration, which has led to a considerable dent in the society’s overall rental income.
However Mr Boyd has disclosed that there may be some glimmer of hope for the collapsed society’s members.
He said he was in contact with two parties that have expressed an ongoing interest in the assets of the society, which could potentially deliver a return for its members.
Peter Robinson, the First Minister, was yesterday expected to raise the plight of members of the collapsed society with British prime minister Gordon Brown during a meeting in London.
