BELFAST BRIEFING:There is a change in mood among the once- united community of the Presbyterian Mutual, writes FRANCESS McDONNELL

IT MAY technically be the season of goodwill but there is very little of it in evidence among the 10,000 former savers and shareholders of the failed Presbyterian Mutual Society – particularly given the latest twist in the saga of the former mutual society which once had assets valued at £300 million.

The latest “progress report” from the administrator of the Presbyterian Mutual Society (PMS) shows that former members will not receive the much-prayed-for interim payout before Christmas.

There had been some anticipation among former savers and shareholders, who have been unable to access their accounts since November of last year, that they might have received a small payment from the administrator this month.

It would have been desperately welcomed by many former PMS members, particularly those who are elderly and have suffered great hardship since the society collapsed.

The latest report from administrator Arthur Boyd, however, has dampened hopes that there could be a breakthrough in the situation before the end of this year.

Not only has Boyd revealed that it will be at least January before he can “make a distribution”, he has also disclosed that he will have to apply to the High Court to obtain permission to make the payment and to ascertain whether all former PMS members, savers and shareholders are eligible for it.

The longer the PMS crisis continues, the more likely the chances are that it is going to create a devastating chasm in some Presbyterian communities.

It has emerged that some former members do not want everyone to be treated equally by the administrator – at least when it comes to payouts.

When Presbyterians – the society was exclusive to Presbyterians – initially put money into the PMS, its rules dictated that any sum over £20,000 had to be treated as a loan to the society. Therefore that member was a loan holder. Any member who had less than £20,000 was deemed to be a shareholder.

The rules of the PMS treated everyone as an equal whether they were a share or loan capital holder.

Under the UK’s insolvency laws, though, which are designed for companies rather than mutual societies, only loan capital holders are treated as creditors and as such would receive preferential treatment in any payouts over shareholders.

When the full extent of the PMS catastrophe first began to unravel, there was an overwhelming sense of community spirit among former members who last January voted in favour of dealing with the issue as a group rather than as loan capital holders or shareholders.

However, nearly one year on and the administrator has disclosed that there is less goodwill among former PMS members than had been previously thought. In his latest six-month report which has just been published, Boyd outlines the change in mood among the former PMS community.

“On the basis of the soundings taken from the larger loan capital holders, it transpired that a number of loan capital holders would find it difficult (for legal or other reasons) to support an arrangement which treated share and loan capital holders equally.”

So it would appear that, regardless of the religious context under which the PMS was founded in 1982, there is a more material approach taking shape when it comes to trying to recover individual investments.

The PMS was set up “to promote thrift among members of the Presbyterian Church and to create a source of credit for the benefit of its members at a fair and reasonable rate of interest”.

It is not difficult to understand the frustrations of former PMS members who may have a lot of money tied up in the failed society, but both the society and some of its members appear at some time to have moved light years away from its original mission statement.

If anything, the defunct PMS symbolises for Northern Ireland the return to reality following a short-lived local property boom and the excesses enjoyed in a period of easy never ending credit.

The latest administrator’s report contains details of how the society advanced money to members secured on the basis of buy-to-let properties, commercial property and development land. It reveals that out of a £176 million advanced by the society, including advances to congregations, only an estimated £102 million is now believed to be recoverable.

The society’s own investment portfolio has also taken a hammering. It was valued this month at £97 million – a 26 per cent plunge compared to the original purchase cost.

Boyd has confirmed that because of the ongoing economic climate, many former PMS borrowers are now unable to “meet their obligations and arrears are rising”.

On top of this, the administrator has informed former PMS members that some borrowers are themselves at risk of insolvency proceedings.

Three in particular have already entered insolvency proceedings and he has to protect the society’s interests in these instances.

According to Boyd a “small number of legal actions” have been started against borrowers who have defaulted in repayments of their loans. It is an unhappy situation for all involved and it is not going to get resolved any time soon.

Boyd intends to apply to extend the period of the administration which is currently due to close on May 16th, 2010.

There may be many legal and financial hurdles to overcome if a solution is to be found to the PMS debacle and many still unanswered questions as to who is really to blame for what is simply an awful mess at the moment.

There are thousands of people though who will suffer yet another very painful Christmas because of its failure and it is these people who at the very least deserve whatever goodwill this time of year can deliver.