Philips Trust Corporation: £300,000 Covid loan paid to investment scandal firm unlikely to be repaid

Four building societies have already committed to paying more than £40m to customers who were victims of the collapse of PTC.

The societies – Leeds, Newcastle, Nottingham and Saffron – and six other smaller mutuals had introduced hundreds of customers to unregulated advisers who sold them family trusts linked to properties and investment schemes for their savings which then became mired in financial complications and ultimately ended up in the hands of PTC.

It collapsed in 2022 while holding £138m of 2,300 building society customers’ assets including properties in trust and £44m worth of invested life savings.

Administrators then struggled to recover millions in savings which PTC had passed on to high-risk “investment management” firms, several of which had themselves collapsed. It left those affected fearing they would lose everything.

The four main mutuals decided last year to voluntarily reimburse almost 700 affected customers despite having no legal or regulatory obligation to do so.

Under the agreement, the societies are due to receive money back from administrators depending on what can be recovered but there is an expectation little will be returned.

A new progress report by administrator Kroll has just been published and reveals it is likely to apply for the administration period, which is currently due to end in April 2026, to be extended.

Any delay is likely to have an impact on a potential police investigation into the collapse of PTC, with Greater Manchester Police previosuly pausing its initial investigations to let the administration process take its course.

The new Kroll report also states that it is “unlikely” creditors will receive any distributions.

The report said those owed money include Barclays, which provided a £300,000 loan to PTC in April 2021 under the Government’s Coronavirus Business Interruption Loan Scheme, which was known as CBILS.

The scheme was designed to help small and medium-sized businesses to access loans and other kinds of finance up to £5 million to survive the pandemic, with the Government guaranteeing 80 per cent of the finance to the lender.

The Kroll report states a claim of £301,334 has been made by Barclays in relation to the loan, accured interest and unauthorised overdraft charges.

But it adds: “Based on the current information available, it appears unlikely there will be sufficient realisations to enable any distribution to be made to the bank under its security.”

It ultimately means taxpayer money which guaranteed 80 per cent of the loan value will be lost.

According to recent Government figures, businesses collectively drew more than £25bn from the CBILS scheme and almost 90 per cent of the money handed out has either been fully repaid or is on schedule to be.

The Government has settled payments in 7.5 per cent of cases, with around one per cent of loans currently in default but not yet at a stage where lenders have made claims. A further 1.34 per cent of the CBILS loans are currently in default.