2.5 The Treasury could have withdrawn public support, by terminating or not renewing the Bank's loan facility or removing the guarantee arrangements, thereby forcing the directors of Northern Rock to put the company into an insolvency procedure, such as administration. On entering administration, control of the company would pass immediately to an administrator, who would aim to run the company while selling the assets for the benefit of all creditors.
2.6 In early October 2007, the Treasury's evaluation concluded that the option of administration would not meet its objectives to protect consumers, maintain wider financial stability or protect the taxpayers' interest.
■ Depositors' funds would be inaccessible for some months as payments could not be made until assets had been sold and secured creditors had been paid. The Treasury judged that such a delay for Northern Rock depositors could have led to runs on retail deposits at other financial institutions. It considered the possibility of stepping in to pay off depositors quickly by providing funding of around £10 billion, initially from the Bank of England. Such a plan, however, involved greater exposure for the taxpayer and was not risk-free, in part owing to the challenge of preparing and posting many thousands of cheques in a few days.
■ It estimated that the proceeds from the sale of assets would probably have fallen short of the liabilities to be paid off, including the emergency support provided by the Bank of England. Any shortfall of funds to repay deposits of up to £35,000 would have been covered by the Financial Services Compensation Scheme. Shareholders would be expected to lose their investment. Under market conditions at the time, the Treasury and its advisers judged that there would be a "firesale" of assets at reduced prices. Goldman Sachs estimated that the loss to the taxpayer might lie in the range £2 billion to £10 billion - the range reflected its assessment of the uncertainties involved.