Myners' Interim Report: A design for Modern Co-op Governance?

Yesterday, the Interim Progress Report from the Myners Review was published. It answers many of the issues I raised yesterday about what was reported to have been agreed in principle by the Group Board earlier this week.

The Myners Interim Report is a carefully thought out but blunt piece of work that faces up to a lot of realities to improve the existing system. As Ed Mayo tweeted, no punches were pulled.

Let's look at its recommendations one by one:

"The creation of a new Group Board made up of an independent chair with no previous association or involvement with the Group, six to seven independent non-executive directors, and two executive directors. The non-executive directors would have the skills and experience of NEDs sitting on the boards of The Co-operative Group's primary competitors. This new, far smaller Board would replace the existing 20-strong elected Board; it would be responsible for all commercial and financial matters and would have full power and responsibility for the operation and management of the Society."

This would ensure director competence and the accountability of executives to people with commercial experience but what about member control, including election by members, and other mechanisms for members to influence their society? The answers are found (to some extent) in later recommendations. To understand those we need to see the next recommendation - a National Members' Council (NMC).

"The establishment of a National Membership Council (NMC) of around 100 individuals, including provision for representation of around 20 employees. This new Council would have powers to ensure that the Group adheres to co-operative values and principles, and that these are reflected in its corporate vision, strategy and operating practices. The NMC would elect from its membership an Executive Committee of 12 which would also include corporate representation from independent societies."

This representative body is not the same as, for example, the old CRS Council which had no powers. It can propose people to the Nominations Committee for Board approved nomination in the Board Elections (below). It protects the Group from demutualisation by being able to veto certain rule changes, and it oversees the social programme, holds the board to account on ethics, stewardship, strategic leadership and operational performance. Much will turn on the precise roles and responsibilities of the NMC, and the powers underpinning those roles and responsibilities; but clearly a radical new constitutional settlement between commercial competence and democratic representativeness is needed, and this proposal has real credibility.  There is an important and necessary tension between those two elements of member-based governance, and any new settlement must capture that tension.  Importantly, it is proposed that the NMC has a secretariat of its own, and this needs careful thought.

"Group Board directors would be subject to annual election/re-election by all members. Vacancies would be openly advertised and candidates would be appointed on merit against clear criteria of skills and experience. A Nominations Committee of the Group Board would be established on which two members of the NMC would serve. The Nominations Committee would also be responsible for commissioning an annual review of board effectiveness and reporting to the Annual General Meeting in light of this review.

The NMC would be encouraged to propose Co-operative Group members possessing the requisite competence to the Nominations Committee for consideration as Group Board candidates."

This would combine an electoral process with a system designed to vet competence. It is similar to the one used in building societies but there are member reps on the Nominations Committee. If people pass the nomination process they are Board recommended candidates in annual elections in which all members participate. I assume that there would also be a rule allowing other nominations from the membership but only those vetted would be "Board Candidates". They would probably stand a better chance of winning as in the building society model but there would also be member input to the Board nomination process. There will be much debate about whether this approach preserves ultimate member control, but assuming that nomination to the board by members as well as by the board would be possible then in electoral terms it is clearly arguable.

The Nomination Committee's annual review of board effectiveness gives genuine feedback to all members through the annual general meeting on how the board is doing. The NMC could presumably comment on that report and it could be debated both there and at the AGM.

One Member One Vote – both to the Board and the NMC – is fully preserved and indeed extended fully within the Co-op Group for the first time - currently it is mediated through the sales proportions of regions and the area committee and regional board system.

Elections to the Group Board and the NMC would be conducted on the principle of “one member, one vote”. NMC members would be elected by all members for a term of three years. Detailed voting arrangements, including the structure of regional/national constituencies and the method of voting would be the subject of analysis and consultation in Phase 2. Once the proposed arrangements were approved, the present membership architecture would be disbanded and transitional arrangements put in place. A revised remit and role would be developed for Area Committees."

The detail on the fuller role of the NMC then follows. I have referred to parts of it above.

The NMC would have two primary roles: first, as guardian of the values and principles of the Group's constitution. The NMC would protect the Group‟s position as a member owned organisation. In this capacity it would hold certain powers to veto further changes in the revised constitution; nothing would be done to increase the vulnerability of the Group to takeover or demutualisation. The NMC would also hold the Group Board to account on ethical matters and oversee the Group‟s social goals programme.

That answers the classic building society problem of demutualisation by bribing members with shares in the PLC it will become as the elected NMC stands in the way of that. It therefore helps to secure the co-operative structure while giving all members a voice through OMOV.

The second primary role of the NMC would be to hold the Group Board to account for its stewardship and strategic leadership of the organisation and for the operational performance of the Group. In this capacity, the NMC or its Executive Committee would have the right to be consulted on key strategic and operational initiatives along with any aspects of the management of the Group. A “significant transaction rule" would be introduced, giving the entire membership a vote on large deals which can currently be approved by the Group Board alone."

If the point about a "significant transaction rule" finds its way into the new constitution, it will give co-op members, for the first time, the same legal rights  as PLC shareholders to decide on major transactions instead of a more watered  down "consultation meeting" as the Co-operative Code  for consumer societies currently recommends (see paragraphs 22 to 24 on page 8) but most society rules do not require. That boosts democratic control.  However, here again the details of the roles and responsibilities of the NMC will be important.  The “right to be consulted” may need to be developed further if member control is to be firmly established.  Holding the Board to account for its strategic leadership will be of limited value if the Board has unfettered powers to determine strategy.

"To facilitate its work, the NMC and its Executive Committee would be supported by a secretariat. Arrangements would be put in place to safeguard confidentiality of information shared by the Group Board and Executive with NMC members."

This provides the back up needed to do the NMC's job effectively across the whole business. The regional structure has always had the problem that, while it made sense in a delegate based democratic structure, it bore no relation to the way the nationally controlled businesses were managed.

"Independent societies would cease to sit on the Group Board and a new enhanced structure would be established to promote trade and protect interests in common between the Group and these independent societies. The independent societies have a high and necessary dependence on a viable, efficient and competitive Co-operative Group.

Independent societies would cease to sit on the Group Board and a new enhanced structure would be established to promote trade and protect interests in common between the Group and these independent societies. The independent societies have a high and necessary dependence on a viable, efficient and competitive Co-operative Group."

The Group’s structures need to support the current business and business relationships, including with corporate members.  This proposal completes the process of removing independent societies from positions of major influence, in a society which was founded and for more than a century controlled by independent societies.  Whilst this is logical in the context of the proposals as a whole, its acceptance by independent societies will depend upon the “new enhanced structure” referred to, and upon any changes to the current capital owning arrangements.

 "All rule changes would contain a so-called “sunset clause”, under which the constitution of The Co-operative Group would return to the current status quo after a period of four to five years without a member vote to retain the new structure"

This gives members a chance to revert to the present system if they don't vote to support the new one after five years. So even voting through these changes in May is intended not to be irrevocable.

So this is the outline of a new governance structure to address the problems of the old one.  The outline of the overall architecture is becoming clear, though the shape and functions of the annual members meeting will be an important part of this.

Many will find this Interim Report painful reading.  Whilst much detail needs to be worked out – some of which will be in stage 2 –these proposals have the makings of a practical and democratic structure for a large 21st century co-operative.  The absolute priority for all of us is to secure a basis for the survival of the Co-operative Group as a co-operative.  This means engaging with the process and supporting the development of detailed arrangements which will be fit for purpose; fit for purpose for a business of this scale, but also fit for purpose to provide an even stronger basis from which to challenge conventional investor-owned businesses.

That is the prize. For the sake of the future of UK Co-operation, we must all do what we can to help the Group to win it.

© Ian Snaith 2014 

 

This work is licensed under a Creative Commons Attribution-ShareAlike 2.0 UK: England & Wales License.

Last Minute Change to Co-op Bank Plan? Aurelius sell Stake to Perry Capital?

Hedge Fund Cock Up?

More news on the Co-op bank Recapitalisation Scheme today.

This morning's Times carried this enigmatic piece on page 56:

"Co-operative Bank: Hedge funds planning to take control of the lender have been left with a potentially expensive loophole. At issue is £125 million of new capital that lower tier bondholders, led by the funds Aurelius Capital and Silver Point plan to inject."

This afternoon the FT explains what has happened thus:

"A group representing the hedge funds and other lower tier two investors on Thursday pledged its support for the restructuring, after asking the Co-op to make a last-minute amendment to the terms.

The change is intended to close a loophole that was providing an opportunity for brokers and traders to undermine the new equity issuance by submitting claims for larger numbers of shares than they were entitled to. This could have meant that the LT2 group ended up with a smaller equity stake than they expected.

“The LT2 Group confirms its support for the recapitalisation of the Co-op Bank and . . . is fully supportive of the new management team for the bank,” it said"

The detail of the new announcement on the Co-op Group website reveals that the Bank may apply to court to modify the Scheme of Arrangement. Some of the holders of LT2 bonds have requested that and the Bank is considering whether or not to make the application. The statement says that  no slippage in the timing of the deal beyond 31.12.13. would be permitted. That is a PRA deadline on the capital. The legal obligation of some of the holders of these securities to support the Scheme (the "lock in agreement") would stay in place whether the Scheme is modified or not.

Here's the change the announcement outlines. Under the existing Scheme as proposed these holders get:

"a combination of:

• £100 million of 11 per cent. Subordinated Notes due 2023 to be issued by the Bank (“Bank T2 Notes”); and

• 112,500,000 new ordinary shares in the Bank (“New Ordinary Shares”) representing 45 per cent. of the total issued share capital of the Bank following completion of the LME.

The holders of the Dated Notes will also be entitled to subscribe for 62,500,000 additional new ordinary shares in the Bank (the “Additional New Ordinary Shares”) at a price of £2.00 per new ordinary share representing 25 per cent. of the total issued share capital of the Bank following completion of the LME, for an aggregate consideration equal to £125 million, pursuant to, and on the terms of, the Scheme with such subscription being underwritten by certain persons who were holders of Dated Notes as at 4 November 2013. The Scheme provides that any holder of Dated Notes is entitled to elect to subscribe for between a minimum election of 50,000 (for an aggregate subscription price of £100,000) and a maximum election of 62,500,000 Additional New Ordinary Shares."

If the Co-op Bank made an application to court and the court agreed the modification they would get:

"a combination of:

• £100 million of Bank T2 Notes; and

• 141,666,666 new ordinary shares in the Bank representing 56.67 per cent. of the total issued share capital of the Bank following completion of the LME.

The holders of the Dated Notes would also be entitled to subscribe for 33,333,334 additional new ordinary shares in the Bank at a price of £3.75 per new ordinary share representing 13.33 per cent. of the total issued share capital of the Bank following completion of the LME, for an aggregate consideration of £125 million3(iii), pursuant to, and on the terms of, the Modified Scheme. This subscription would be fully underwritten by, amongst others, the Ad Hoc Group.  The Modified Scheme would provide that any holder of Dated Notes would be entitled to elect to subscribe for between a minimum election of 26,667 (for an aggregate subscription price of £100,001.25) and a maximum election of 33,333,334 additional new ordinary shares. The allocation mechanism for the allocation of additional new ordinary shares described in the explanatory statement dated 18 November 2013 relating to the Scheme would otherwise remain unchanged."Note 3(iii) reads: '33,333,334 (representing the balance of 13.33 per cent. of the total) will be available for subscription by holders of Dated Notes pursuant to, and on the terms of, the Modified Scheme for an aggregate consideration equal to £125,000,002.50 (representing an effective subscription price of £3.75 per share)'."

This appears to mean that they would get more shares up front and subscribe for fewer further down the line. However,:

"The total number of new ordinary shares in the Bank issued to holders of Dated Notes as a class under the Modified Scheme would be the same as the number to be issued under the Scheme."

I fear I am at the limits of my ability to interpret this information here but maybe a failure to get the Scheme modified could cost them £125m without changing the overall percentage holding they would have?

Maybe this was an error in transcribing what was agreed to the detail of the official Scheme documents or maybe it was only realised later that there was an issue about the timing and minimum and maximum permitted subscriptions by this Group and its effect on their stake?

The position of the classes of creditors and preference shareholders deciding by tomorrow whether to take extra money for early agreement will be unaffected by the proposed change so maybe a court would grant a modification if it was asked to?

 Aurelius Sale?

The FT reported at 4.47pm today that Aurelius has "walked away" by selling most of its stake to another Hedge Fund.

"Aurelius piled into Co-op Bank’s lower tier two bonds as a severe capital shortage emerged at the lender in the summer. Along with several other hedge funds, including Silverpoint Capital and Beach Point Capital, it built up a blocking stake in the bonds, which it used to secure a far better deal for creditors than had originally been offered by the bank.People familiar with Aurelius’s decision to sell said it was based purely on economic value, as its bonds performed strongly after the restructuring deal was announced."

However, because key parts of the deal have already been contractually agreed, the obligation to vote for the Scheme and the commitment to the ethical aspects of the Bank's constitution will still bind the new owner of the Aurelius stake.

Flowers and the Chancellor

The announcement on the Co-op Group website also warns investors:

"On 22 November 2013 the Chancellor of the Exchequer ordered an independent investigation into events at the Bank and the circumstances surrounding them to take place under section 77 of the Financial Services Act 2012. Separately, the Financial Conduct Authority and the Prudential Regulation Authority each announced on 22 November 2013 that they are considering whether they should also launch their own formal enforcement investigations. The precise scope and timing of these investigations is yet to be determined.

The regulatory and other investigations that have been recently announced are likely to subject the Bank to greater scrutiny from regulators, will take management time and result in the Bank incurring costs not currently included in its business plan which cannot be quantified at this time. Recent events may have caused some brand and reputational damage, but it is too early to form a definitive view as to the extent of such damage.  These recent events, together with the competitive landscape in which the Bank operates, the introduction of seven day account switching and the associated increased competitor marketing activity at a time when the Bank has been constrained in its ability to undertake its own marketing activity, may be a contributing factor to an increase the Bank has seen in the switching out of current accounts.  However, the Bank's retail deposit base remains broadly stable and it is too early to identify any significant trends at this point.  Further, the Bank's liquidity position remains stable.  Overall, the Bank's performance has been consistent with or, in the case of costs, slightly better than, management’s expectations."

Interesting times indeed..........but lets hope the Scheme gets approval.

© Ian Snaith 2013 This work is licensed under the 
This work is licensed under a Creative Commons Attribution-ShareAlike 2.0 UK: England & Wales License.

Co-op Bank Recapitalisation: Stage One and Its Timetable

Friday this week 29th November 2013 is the first key date in the long and complex process of saving the Bank from insolvency proceedings by recapitalising and demutualising it. The others are 11th December 2013 , the day of the Class Meetings to approve it and 16th December 2013, the date of the court hearing to finally approve it.

This post looks at that process, the legal mechanisms used to implement it and the timetable.

The Story So Far

• In May this blog examined the Co-op Bank's credit rating downgrade. That was the first public sign of the trouble to come.

• In June, I looked at Plan A for a rescue of the Bank in the light of the £1.5bn shortfall identified by the PRA.

• In September, hints of the likely demutualisation and indications of the Hedge funds' demand for 100% ownership were addressed.

• On 23rd October the scale of investor control was announced and later that month I shared my thoughts on the issue of the use of the name “co-operative” in that bank after it becomes 70% owned by stock market investors with follow up on Co-operatives UK's response.

The Plan in Summary: A Reminder

The Co-operative Group will give 70% of the equity shares in the Bank to the senior bondholder (i.e. those with the highest priority claim – upper tier 2) in exchange for about £940m of the debt they hold plus a £125m cash injection into the bank. The Group will continue to hold the remaining 30% in return for providing £462m in a new Group bond and cash.

The lower ranked bondholders who are mainly retail investors on a smaller scale but who would have lost their whole investment if existing priorities of debt had been followed, will be offered new bonds with a choice between continuing their existing annual payments for 12 years with no capital sum or a lower annual payment plus a future capital sum. (See the FT Outline and Q & A)

The Legal Mechanisms Involved

Since this is a Law Blog, it might be useful to look at the legal basis and process for this crucial first stage of the recapitalisation plan for the Co-operative Bank PLC.

The detailed plans for the scheme can be found in a combination of the outline press release announcement and the detailed “nitty gritty” of the legal mechanism.

Why the Money is Needed:

Readers will remember that £1.5bn extra “common tier 1 Equity” is required by the bank as a result of the wide range of problems it has faced and the increased requirements imposed by the PRA and Bank of England for bank capital. The problems included the bad debt that Britannia brought, the bank's excessive cost to income ratio, the money written off on IT schemes, and the compensation it is having to pay as a result of mis-selling PPI to its customers.

As the Summary section of the Bank Prospectus succinctly puts it:

“Para B.4b The capital shortfall is a result of continuing losses incurred by the Bank predominantly driven by impairment charges to the carrying value of the Bank’s loans, in particular corporate loans acquired as part of the merger with Britannia Building Society (Britannia) in 2009. Impairment charges for the six months ended 30 June 2013 were £496.0 million.

The Bank also has a high cost base relative to its revenue when compared with its peers. The Bank has an ageing IT platform that has suffered from under-investment in recent years and has failed to integrate Britannia into the Bank’s operations, resulting in significant cost duplications in front, middle and back office functions and a significant overlap in the branch network. In addition, the Bank’s revenues are impacted by it not having achieved sufficient penetration of its current account customer base and historically pricing certain of its products on terms more generous to customers than the market.”

- Page 8.

The recapitalisation plan will raise the £1.5bn in two ways:

• A Liability Management Exercise in 2013 will contribute £1062m and

• Another £333m - £170m by 30.06.2014 and another £163m by 31.12.2014 – will come from the Banking Group, the subsidiary of the Co-operative Group through which the Bank is held.

They are linked and conditional on each other but let's look at the Liability management Exercise today. The rest of the money only comes if that goes ahead and that question depends on alegal process. Let’s look at that.

The Liability Management Exercise: The Current Process

As the FT Outline and Q & A reported, the two main groups of securities (bonds or shares in the Bank) affected are:

• 5.555% perpetual subordinated bondholders - lower tier 2 (LT2) investors - hand over their £937m of debt plus £125m of new cash plus £38m of interest (£1100m in total) for 70% of the Bank’s ordinary shares. This Group includes the Hedge Funds and holders of 48% of these securities have signed up to a legal commitment to vote in favour of the Scheme in their meeting. So those votes are in the bag.

• 9.25% Preference Shares and 13% perpetual subordinated bonds - both mainly held by retail investors and lower in priority for payment than the other bonds. They would have been completely wiped out in the normal course of events but are offered £38m for their £60m. They can swap for either “Instalment Repayment Notes” which get 12 years of income with no capital at the end or “Final Repayment Notes” which give capital at the end of the 12 years but less income from interest in the meantime. If 75% of each of the two groups agree to swap by 29.11.13, they all get more than if that doesn’t happen. Their agreement to swap is taken as a vote for the Scheme. However, the whole scheme has to be agreed before anyone gets anything. If the financial incentive works, it will be known on 29.11.13 whether one or both of these groups have effectively voted in favour of the whole plan.

Legal Process and the Key Dates

This process involves a combination of legal agreement based on the common law of contract and procedures under the Companies Act 2006 to allow the imposition of what is agreed by a big enough majority on the minority.

Under the Law of Contract, agreement must be made with anyone who is to be legally bound by their promise. If people already have rights attached to their bonds or shares, Contract Law would require the agreement of each one of them before those rights were changed. Here the plan is to substantially change the rights of the holders of these securities. If each and every one of them had to agree, a tiny group could hold the rest to ransom and it would be impossibly complex to organise the arrangement.

To allow deals agreed through “creditor democracy”, Part 26 of the Companies Act 2006 provides a mechanism, now being used for the Bank Liability Management Exercise, to allow majorities to impose new terms on minorities. This requires court approval as well as special majorities in separate meetings of each sclass of creditors or members. Section 895 of the Act sets out the possible uses of the procedure for “a compromise or arrangement” between a company and its creditors or members or any class of them. In the case of the Co-op Bank, the Bondholders are creditors and the preference shareholders are members.

The first step is an application to the court to order class meetings of different groups of creditors and members. That was done for this Scheme on 18th November 2013 as planned and the Court ordered that the meetings be called on 11th December 2013 as had been intended all along. That meets the requirement of section 896 of the Companies Act 2006.

Under section 897 of the Companies Act 2006, a statement explaining the effect of the compromise or arrangement must be made available and with the creditors being involved about where it can be found. That has been done by the availability of the statement on the Co-op Group website which is referred to in the Court Order.

The Scheme meeting will be held at 10.am on 11th December 2013 at the Bloomsbury Holiday Inn. Although it is referred to as one meeting, there are separate class meetings and the necessary majority has to vote in favour of the Scheme at each of those meetings. If any meeting does not get the necessary majority the whole Scheme collapses. According to the document on the Co-op Group website, the votes by Preference Shareholders will be at 1.00pm, those of 13% Bondholders will be at 2.00pm and those for the 5.555% Bonds at 3.00pm.

In each case the vote will be on an Extraordinary Resolution. A majority in number representing 75% in value of each class of creditors or and class of members voting either in person or by proxy at the meeting called under section 896 must agree the Scheme - s 899(1). That means that there must be a simple majority of votes by people present at the meeting and voting (in person or by proxy) and that simple majority of voters must also hold between them 75% in value of the holdings of all those present and voting (again in person or by proxy).

In addition each of the three classes must vote in favour of the Scheme by that dual majority and if they don’t the court has no power to sanction the Scheme and it cannot go ahead - 899 (1) and Re Hellenic & General Trust Ltd [1976] 1 WLR 123.

If the meetings do pass the necessary resolutions by the necessary majority, the court may approve the Scheme so that it becomes binding on all those it affects whether or not they voted in favour of it s 899(1). As that wording suggests, the court has a discretion about whether or not to approve the Scheme. Even after approval by the correct majorities, it can refuse approval. However, the court will be unwilling to upset the Scheme on its own commercial assessment, especially if there is a large majority in favour of it in each class. That is because the test applied by the court is whether no honest and intelligent person among those affected by it could reasonably approve it and the more votes there are in favour the less likely that is - Re Equitable Life Assurance Society (No.2) [2002] EWHC 140 (Ch). It is also the case that the existence of an adverse situation facing the company if the Scheme fails is a factor in favour of approving the Scheme at least of all the procedural rules have been followed - Scottish Lion Insurance Co Ltd [2010] CSIH 6 at para 44 [LINK]. Given that the Scheme document indicates (at para 5) [link] that:

"If the Liability Management Exercise is not successfully implemented on or before 31 December 2013, the Bank therefore considers that the PRA would have a basis for determining that the Bank is failing, or is likely to fail, to satisfy its threshold conditions; that the power of the Resolution Authorities to exercise stabilisation powers under the Banking Act had arisen; and the Bank believes it is likely that the Bank would be subject to a resolution procedure under the Banking Act. The Bank therefore believes that there are only two realistic outcomes for the Bank, which are either its recapitalisation following successful implementation of the Liability Management Exercise or a failure of the Liability Management Exercise resulting in the Bank becoming subject to a resolution procedure under the Banking Act.”

The result of the votes at the class meetings will be announced on 12th December 2013.

The Court hearing to sanction the Scheme will be on 16th December 2013 and the result of the hearing will be announced “as soon as reasonably practicable” after the hearing.

Likely Outcome?

I don’t have a crystal ball. However, key factors making it likely that the necessary majorities will be found and that the court will approve the Scheme are:

The retail investors - Preference Shares and 13% Notes

They get quite a good deal they can get more if they agree the swap by 29.11.13 instead of waiting till 6th December and to get the extra they have commit to vote for the Scheme. They are treated generously. They can still get 12 years of income or less income plus some capital instead of losing the whole investment. Arguably, anyone investing in a security labeled as bearing a 13% return should have understood how risky it was and preference shares are shares and not debt. However, the potential PR disaster of a lot of elderly individuals with faith in the Co-op Bank ( or previously Britannia) having their savings wiped out, the great work of Mark Taber and others on their behalf, and the relatively small value of their total investments in the scheme of things has saved their bacon - as long as the Scheme goes through. They should be very grateful.

The LT2 Bond Holders - 5.555% Notes

This group get 70% of the Bank in return for all their bonds plus some cash. Whether that is a good deal depends on how the bank fares in the future. Negatives for the value of the Bank’s shares include the recent blizzard of bad publicity and political mud slinging around Paul Flowers and the plethora of enquiries into the Bank, the Group and the regulators. That all means that the controversy will run and run. However, if the business plan works and the Bank’s performance improves with its new capital structure, the new shareholders and the Co-op Group could do quite well. More immediately, holders of 48% of this class of securities are locked into voting in favour of the deal.

Both groups have been party to the detailed negotiations to agree the Scheme and seem to welcome it. If the Scheme fails and the Bank goes into “Resolution” (i.e. special regime for banks with financial difficulties) all parties will be worse off than they would be under the Scheme. The creditors and preference shareholders will either be wiped out or suffer significant loss.

For the Co-op Group, the “cross default” that Len Wardle was reported as mentioning at the Co-op Group Half Yearly meeting might also arise. So there can be no doubt that agreement on this plan is also in the interests of the Co-operative Group and the whole co-operative movement.

We must hope that the Scheme is approved despite the demutualisation of the Bank that it will involve.

© Ian Snaith 2013 This work is licensed under the 
This work is licensed under a Creative Commons Attribution-ShareAlike 2.0 UK: England & Wales License.