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PACE CU to be folded into another CU
May 14, 2022
12:11 am
Doug
British Columbia, Canada
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Loonie said

So, if purchaser could avoid being responsible for lawsuits, why do you think they'd be crazy to buy it at any price? It seems that a credit union has agreed to do so.

Since it's an acquisition, not a merger, I don't imagine it will require a membershi meeting to ratify. Would you agree?  

I don't see any mention in the Alterna press release they agreed to assume non-regulated deposit liabilities. The purchase price paid to Pace Credit Union will likely go in to a court-administered trust fund to partially settle the outstanding liabilities of Pace. Alterna is likely buying (a) the assets (i.e., the loan and investment books of business) and (b) assuming the regulated deposit liabilities.

Cheers,
Doug

May 14, 2022
12:15 am
Doug
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Loonie said
I was actually wondering if the purchasing CU would require a membership ratification. The fact that Pace is under Administration would, I think, remove that capacity from its members? They aren't having an AGM either as Admin is not accountable to them.

Membership fees are usually quite small, between $1 and 100, but they do vary. I would think it would be fair to transfer the membership to the new CU along with the fee already paid, but that may not work legally or bureaucratically.  

Unlikely. The FSRA has the authority to override any existing CU bylaws, particularly in CU wind up situations like this.

This is a CU failure, full stop. It's just a CU failure with a resolution that avoids the credit union deposit insurance scheme having to pay out, as Alterna is assuming all deposits.

Cheers,
Doug

May 17, 2022
11:59 am
savemoresaveoften
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Recd official email from Pace CU saying any investment shares are essentially "worthless" at this point, unless funds can be extracted from the lawsuit etc against the former management
.

May 17, 2022
2:18 pm
COIN
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savemoresaveoften said
Recd official email from Pace CU saying any investment shares are essentially "worthless" at this point, unless funds can be extracted from the lawsuit etc against the former management
.  

Did that email go to all members?

May 17, 2022
5:53 pm
savemoresaveoften
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COIN said

Did that email go to all members?  

maybe only to investment member ? I cut and paste below.

"
On April 21, 2022, Ontario’s Financial Services Regulatory Authority (FSRA) wrote to you to inform you that a transaction would be announced shortly and to provide the rationale for that transaction. As you now know, most of PACE’s assets have been purchased by Alterna Savings & Credit Union (Alterna Savings) in exchange for Alterna Savings:

• assuming all liabilities related to those assets;
• offering all PACE staff employment; and
• providing all PACE members with fully paid membership in Alterna Savings with full financial services.

This is good news for all members and employees of PACE. It provides a strong and stable place for PACE members to continue to receive credit union membership and financial services while also maintaining familiar places and faces for members to continue to conduct their financial activities.

FSRA went on to address the fact that holdings of PACE investment, profit and member shares will remain in the PACE legal entity and that these shares will be dealt with as part of the eventual wind-up process of that legal entity.

It is important to note that there are assets and potential expected recoveries from the litigation being pursued against former PACE management and the Board which will remain with the PACE legal entity. The wind-up process will involve realizing the value of assets and recoveries and paying out funds to creditors and shareholders in their order of priority as determined by applicable law. Due to the uncertainty in the value of some assets and the outcome of the legal actions being pursued, no value can be placed on these shares at this time.

If you require any other information about your investment, profit, or membership shares, please contact FSRA on 416-250-7250 or 1-800-668-0128. You can also email FSRA at contactcentre@fsrao.ca.

Regards,

David Finnie
CEO"

May 18, 2022
1:20 am
Loonie
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There is, I suppose, a faint hope of recovering some more money from assets, but it also sounds like it could easily be eaten up in legal fees.

I wouldn't hold my breath, but you might get a surprise cheque a few years down the road.

May 18, 2022
3:55 am
savemoresaveoften
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Loonie said
There is, I suppose, a faint hope of recovering some more money from assets, but it also sounds like it could easily be eaten up in legal fees.

I wouldn't hold my breath, but you might get a surprise cheque a few years down the road.  

Prob similar amount as the Microsoft lawsuit settlement…

If lucky 10-20 cents on the dollar.

May 18, 2022
5:04 am
i_got_smucked_too
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No worries..... if the legal fees don't eat up the left-overs, no doubt the FSRA Management fees, will.

It's a shame David Finnie's letter didn't provide more disclosure. a.k.a. Mark White and a non-stop FSRA Management fee bill in the millions will be paid before we see a dime.

But never say never, my heirs might see $1 or $2. I won't be around that long.

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