Mea Resignations

[Observer]

It looks like the prison might become an issue though eh? The population could be due to take quite a hike :-)

 

Hehehehehe.

[simon]

http://www.iomonline.co.im/ViewArticle2.as...ticleID=1064572

 

The government's external auditors KPMG have taken legal advice which suggests taking loans without telling Treasury may have been illegal.

 

If the loans were illegal - then Barclays were in on an illegal deal. And their man was at both ends of the table.

 

Maybe Barclays should write off the debt. Rather than risk the story going further.

[ian rush]

The MEA is a statutory board and although it can operate and be sued like a normal company (e.g for an employees personal injury claim), it is not clear whether it can be wound up like a normal company. As the MEA was established by statute (Statutory Boards Act 1987), it may require a statute to bring it to an end.

 

A Company can be wound up by the Court if it passes a special resolution to that effect (75% of shareholders); if it is unable to pay its debts within 321 days of demand having been made; or if the Court is of the opinion that it is just and equitable. Unlike England and Wales, there is no appointed Official Receiver in the Isle of Man so any liquidator appointed to wind up a company is deemed official receiver. A liquidator can carry on the business of a company with the sanction of the Court but his paramount duty is to wind up the affairs of the company.

 

Creditors have varying degrees of priority in a liquidation but it is almost inevitable that Barclays will be a secured creditor and have a floating charge over all of the assets of the MEA (even if as appears to be the case, a subsidiary company entered into the loan on the back of the Bond). As I see it, this means that if there is default, Barclays will take all of the assets of the MEA (including the power station and undersea cable). Although those assets would be valueless to Barclays, they have the lever that if the assets weren’t bought out at a favourable price (i.e the amount outstanding on the loan), Barclays would pull the metaphorical plug and leave the locals without power.

 

It seems implicit from the Statutory Boards Act 1987 that there will have been Tynwald members of the MEA Board. Does anyone know who was in situ from 2001 onwards?

 

In any event Schedule 2 of the Act regulates the functions of statutory boards and paragraph 3(2) says that the power to borrow money can only be exercised by the Board itself and cannot be delegated. If I remember correctly, this whole fiasco has come about because the loans were taken outside the board framework but secured against the assets of the MEA.

 

It will be interesting to see how the new board headed up by Eddie Teare deals with any claim that the former board are or ought to be liable personally. A drop in the ocean I know but it may sugar a fairly hefty and bitter pill left with the tax-payer… And if everyone refused to pay their bill, we have the comfort of knowing that the new prison is only designed to take 117.

[Ringwraith]

STORY LINK

 

Quote from above link:

 

"On Monday the MEA asked the Chancery court to rule if Tynwald could retrospectively approve the loans, to make them beyond question, and that decision is awaited. If that is not possible there could be lengthy, expensive and hugely embarrassing court action while the legality of the loans is judged.

 

If ruled illegal, government may not be able to meet the debts and, without an immediate rescue package, the MEA could run out of cash by December."

 

Retrospective approval, that's a good one. I wonder what the outcome of that will be?

 

Even if approved retrospectively I am not convinced the government can just use our money to bail them out and in this article they are only talking about paying off the interest on the loans, what happens after that?

[When Skies Are Grey]

Is it bankrupt?

<{POST_SNAPBACK}>

 

 

Its against the law to Trade while insolvent and if the MEA can not meet is costs and continue to trade at at loss is insolvent.

Ltd companies have limited liabilities, what protection to creditors have if the MEA can not pay its bills, it could force other companies to fold, thats were the insolvancy laws come in

<{POST_SNAPBACK}>

 

Surely insolvency is the carrying on of trade without the hope of meeting its liabilities. There is a continuing income stream so I doubt that it could be called insolvent.

<{POST_SNAPBACK}>

work it out for yourself

 

 

(Fixed quotes - Obs)

<{POST_SNAPBACK}>

 

I cant see any reference to the company being insolvent in the link merely the ramifications for Directors if they are insolvent. Fascinating all the same!!

[Tugger]

ian: my understanding was that the borrower was the cable-owning subsidiary. If there's no guarantee or other credit support/security offered by the MEA itself, then even if Barclays is secured it will only be able to get its hands on the cable, not the power station.

 

And even if it DOES get its hands on the power station, it's going to want to sell it as quickly as possible, because it doesn't know how to make money out of a power station (apart from by lending to its owner!).

 

The IOM internationally makes an issue of its AAA rated status with Moodys and the like, and I think that this rating does lend a certain amount of credibility to the island. But if there is no government guarantee underpinning the loan to the cable owning sub (or even the MEA itself), they can just tank the loan without risking their credit status.

[When Skies Are Grey]

And even if it DOES get its hands on the power station, it's going to want to sell it as quickly as possible, because it doesn't know how to make money out of a power station

<{POST_SNAPBACK}>

 

Neither does the MEA by the looks of it!

[joeyconcrete]

From the Hansard;

 

14. The Hon Member for Rushen (Mr Gawne) to ask the Minister for the

Treasury -

(1) How much is the Manx Electricity Authority currently spending on

advertising and promotion;

(2) what other sources of electricity do the Manx public have available to

them;

(3) is it appropriate for a financially insecure public authority to be

spending “public” money to promote its electrical goods showrooms in

direct competition with the private sector; and

(4) do the current Manx Electricity Authority showrooms’ promotional

campaigns - “buy now pay later” and “interest-free credit” - tell us

anything about other aspects of the Manx Electricity Authority’s

financial operation?

 

Now, Question 4 is pure genius

[ian rush]

ian: my understanding was that the borrower was the cable-owning subsidiary.  If there's no guarantee or other credit support/security offered by the MEA itself, then even if Barclays is secured it will only be able to get its hands on the cable, not the power station. 

 

And even if it DOES get its hands on the power station, it's going to want to sell it as quickly as possible, because it doesn't know how to make money out of a power station (apart from by lending to its owner!).

 

The IOM internationally makes an issue of its AAA rated status with Moodys and the like, and I think that this rating does lend a certain amount of credibility to the island.  But if there is no government guarantee underpinning the loan to the cable owning sub (or even the MEA itself), they can just tank the loan without risking their credit status.

<{POST_SNAPBACK}>

 

I think we're both partly right as there are a number of loans, one of which certainly was to the cable subsid. Anyway welcome on board - excuse the pun. I think you're the first person to have mentioned Moodys on the forums.

[FCMR]

And even if it DOES get its hands on the power station, it's going to want to sell it as quickly as possible, because it doesn't know how to make money out of a power station

<{POST_SNAPBACK}>

 

Neither does the MEA by the looks of it!

<{POST_SNAPBACK}>

 

The Government could get out of this mess with the Bank by offering a one off tax reduction to the Bank and at the same time it would invite more money into the Island.

[Ringwraith]

The MEA born on April 1st 1984, how appropriate.

 

MEA LINK

 

It never rains....

 

GAS PRICE INCREASE LINK

 

What fuels the new power station?

[ian rush]

Just been to an office opening, performed by the Rt Hon Allan Bell, Treasury Minister, at which he indicated that business would not bear the cost of "the well publicised problem" government is facing. ie it looks like central reserves will be hit to bail things out.

 

You heard it here first kids, even if it isn't along the lines of "A rumour is circulating...."

[simon]

Has the IOM got central reserves of £120 millions. Will there be much left?

 

Hope they aren't just planning to pay the interest (like those people who live off their credit cards).

 

It would be doubly criminal if Barclays started earning interest on their iffy loan.

[FCMR]

Increase in income tax

[kellyiom]

I'm with rog, ian rush and tugger on this- we all know what's going to happen here...