The High Court has forced a Birmingham-based lender into liquidation, amid ongoing investigations into the poor state of its finances.

Communisave, otherwise known as South Birmingham Community Credit Union Limited (SBCCU), had been recognised by the Court as insolvent, owing to a large increase in bad debts and a fall in investment income.

In a statement liquidators claimed that Communisave had been impacted by a distinct lack of growth in its loan book, with large increases in bad debts associated with its loan book.

The Union, which has over 2,000 members, is now subject to an on-going investigation by the Authorities following the winding up order, with the SBCCU now no longer able to accept deposits or issue new loans.

Members are however protected by the Financial Services Compensation Scheme (FSCS) who confirmed that all deposits/savings with the credit union will be protected, with members and junior savers receiving reimbursement within seven days of the order.

SBCCU had approximately 2,100 members and junior savers across South Birmingham, Bromsgrove and Redditch.

Guy Mander and Graham Bushby of Baker Tilly Restructuring and Recovery LLP have been appointed as liquidators, who performed a similar winding up of Marches Credit Union in April.

Court documents revealed that Marches was liquidated following a suspected embezzlement by a former director, who is believed to have attempted suicide.

Speaking on behalf of the appointed liquidators, Guy Mander, joint liquidator, said “We have immediately written to all members and junior savers to provide them with information as regards the Financial Services Compensation Scheme, details of an alternative local credit union and suggested practical steps they may wish to take to minimise the impact of the closing of SBCCU.”

By Ian Walker