Liquidator appointed to Berehaven Credit Union

[Bronte]

Why is nobody ( Morning Ireland etc ) referencing the situation with the former inspector, Manageress and Treasurer of the CU having joint loans on foreign property ?

The Independant article from 2013 refers to the fact that some of the actions were reported to the Gardai. I wonder what the Gardai are doing, presumably investigating with a view to prosecuting. Or maybe doing nothing.

Maybe the Independant newspaper or Daily Mail will follow up on this.

 

[Brendan Burgess]

Why is nobody ( Morning Ireland etc ) referencing the situation with the former inspector, Manageress and Treasurer of the CU having joint loans on foreign property ?

.

Charlie Weston covers it in today's Indo

Documents seen by this newspaper show he obtained loans totalling €350,000 to buy foreign properties from Berehaven, which he had been charged with monitoring from 2001.
A probe into the Co Cork credit union by accountants [broken link removed] points out that the loans were not being repaid. He took out the loans jointly in the name of other members of Berehaven Credit Union, the KPMG documents state. Some of these people may not have been aware their names were on loans.
- See more at: http://www.independent.ie/irish-new...eached-law-30455945.html#sthash.64i7lqrV.dpuf

 

[WizardDr]

What is interesting from recent case law is what exactly we mean by 'insolvent'.

1st - your assets exceed your liabilities - but because your assets are illiquid - you are unable to pay your bills - then you may easily be insolvent.

Conversely - your liabilities exceed your assets - but you have large liquid asets - such as €10m in liquid investment - you might certainly be solvent.

In the case here - the only reason there would have been a run on shares so as to put a surge in demand to repay - er the Central Bank creates the panic.

I think they have mislead the High Court and have used a sledge hammer approach.

The matter about returns on investments is a different matter.

Given that this Nation pays away a lot of money by way of interest to anonymous bond holders in other countries - why then should the Credit Unions not be facilitated with the easy ability to buy bonds and lower the outflow out of the country?

Why indeed. Apparently its not in the Central Bank brief to propose solutions.

Indeed.

 

[Brendan Burgess]

Hi Wizard

Insolvency is different for a trading company than for a deposit taker.

Berehaven's members had €10m in savings. It probably did not have enough assets to pay all these savers if they wanted to withdraw the money.

So the CB was absolutely correct to shut down Berehaven to protect the savers ( and the taxpayer who effectively guarantees them)

However, the liquidation was the wrong approach. The board of Berehaven should have understood this 5 years ago and should have repaid all their members' savings under their own steam. Then there would have been no need for the expense or disruption of a liquidation.

But the CUs refuse to take any advice or direction from anyone. So maybe the CB had no option other than appointing a liquidator.