CREA payouts will begin in late August but SEPS dodges questions about the delay in closing the coop

The management of Superintendence of Popular and Solidarity Economy (SEPS) said Saturday that depositors at the Cuenca-based CREA Savings and Credit Cooperative could begin receiving reimbursements of their accounts within three weeks. CREA was closed by SEPS July 29 for lack of liquidity and failure to comply with improvements ordered by regulators. The coop had been on “probationary status” by SEPS for more than two years.

Cuenca-based CREA had members in nine Ecuador provinces.

SEPS director Christina Murillo said CREA members with deposits of less than $32,000, the amount insured by the National Deposit Insurance Corporation, would receive payment between August 25 and September 25. Those with accounts larger than $32,000 will receive $32,000 during the payment period but will have to wait for the balance pending liquidation of coop assets.

Murillo added that CREA accounts, assets and liabilities, are under a mandatory 15-day review after which payouts will begin. “We expect this to be an orderly process governed by preestablished rules, and we expect most account holders to see a full return of their investments,” she said.

In Friday interviews, Murillo refused to answer questions regarding the timing of the CREA closure. “We expect legal actions by some coop members and have been advised not to comment about the various claims until these are resolved,” she said.

Several members claim that SEPS should have acted sooner in shutting down the coop. CREA member and attorney María Bernarda Vásquez believes the coop should have been closed in late 2024. “The signs of failure were evident then and if SEPS had done its job, there would be more assets to distribute to large account holders,” she said. “The delay probably cost millions of dollars.”

At least three coop members complained to SEPS and threatened legal action in October of last year after CREA refused to make large payouts on several accounts. “SEPS told us to keep quiet in the interest of avoiding financial panic,” Vásquez said. “They assured us the problems were temporary and were in the process of being resolved. Obviously, they were wrong.”

According to Murillo, CREA was closed because it only had $6.5 million cash-on-hand against outstanding loans and other liabilities of $196 million. “This was less than 4% of the 9% required for coops,” she said. “There had been very little response to our recommendations and the financial mismanagement continued, forcing the closure,” she said, adding that CREA had operated under probationary status since early 2023 because of liquidity and other management issues.

At the time of its closure, CREA had 98,000 customers in nine provinces — Azuay, Cañar, Cotopaxi, Guayas, Loja, Morona Santiago, Pastaza, Pichincha and Tungurahua – with more than 60% of those in Azuay and Loja Provinces.

Murillo has appointed Luis Cabrera CREA administrator for the duration of the liquidation process.