What do u do if someone on the run is living in yr security?
Oct 13, 2018 15:09:31 GMT
pepperpot, duck, and 6 more like this
Post by jjc on Oct 13, 2018 15:09:31 GMT
(Apologies for length & slight clickbait thread title, made for hopefully understandable reasons)
On Tue 9/10 (at 16.39) I received an invitation to vote on loan #275, asking me to vote on whether to appoint receivers. Voting deadline 16.00 Mon 15th.
Brief summary: This is a personal 2Y (9.3%) loan to 2 sisters in their early 20’s in Derbyshire who had been part-gifted a property by a family member, & were looking to refurb the upper floors to rent out for resi use. The ground floor was already let to a popular indian restaurant, who’s owner had recently invested a sizeable sum in a refurb & kitchen refit (hence presumably unlikely to up sticks at short notice), with rent paid by them servicing our interest. The property had been owned by the family for 40Y, which lenders might have taken to be a reassuring sign they would prefer not to lose it, & a second property in Derby worth 130k, that had also been gifted to the sisters, was also cited (p8) for further reassurance.
Despite the simple profile to the loan (how hard could a refurb to the 2 flats above be?), a 3M buffer & some reasonable covenant cover, eg (my bold)
1. Loan To Value – The Loan must not exceed 65% of Property Value on each Valuation Date.
2. All passing rents are to be remitted to Assetz SME Capital Limited’s Clients account to cover the monthly interest, with the net amount (after payment of interest) to be remitted back to the borrowers.
3. Interest Cover – Gross Rental Income to Assetz Capital Interest Cost for each Quarter must be at least 1.17:1. To be tested Quarterly on a Rolling 12 month basis.
4. Residential element of the Property to be let on an AST within 12 months of drawdown.
5. Neither the Borrower nor any connected/related party may occupy the Property as a private dwelling place at any time during the currency of the Loan.
not much progress was made (&, whilst it seems some efforts were made, notably little sign of the covenants being kept or properly monitored by AC). That said, the fact that one of the sisters (AC’s main/only borrower contact) had suffered a serious car accident in 2017 seemed to explain the (perhaps, at least initially, justifiably) relaxed attitude taken on the loan. This continued after expiry of the loan in May when the loan was suspended, with the borrowers asking for time to refi, remaining in regular contact (until at least a month ago) & servicing interest (until July/Aug). A VR satisfactory to the new lender appears to have been completed. The refi offer has been seen by AC. Reviews of the restaurant continued to be good/excellent.
Reacquainting myself with the loan for the vote, & intrigued as to the lack of progress on the refurb (or news of substance, also on what had happened to the 3M buffer..) during the loan’s lifetime, a quick google (restaurant name & town should be enough) threw up press coverage from autumn’17 stating that a sex offender (SO) who’d been on the run for 4-5Y was found to have been the manager of the restaurant on our ground floor (for over 2Y ie since well before the loan was taken & until his arrest in 9/17) & living in a flat above it (one of those that was supposed to have been refurbed presumably). He was apparently on sufficiently good terms with the owner of the restaurant to have been offered to keep his job (& accommodation) open for him, even after his arrest, should he not to be jailed at short notice. Of possible coincidence/irrelevance the first letter of the “Manager” (could be a second manager, the top manager or the owner who knows) of the restaurant on TripAdvisor’s reviews surname matches with the SO’s surname.
The above (& more) was swiftly conveyed to AC on Wed. Numerous questions asked, the general gist of these being:
1. were AC aware of the story reported in the press, & what impact might this have on lenders’ security & recovery prospects?
2. what connections were there between the SO or owners & employees of the restaurant & our borrowers (&/or their family), & had any of the staff ever lived in the flats above (& on what basis) since the loan was taken on?
3. why has interest on the loan not been serviced since July, is the restaurant still trading & paying rent to our borrowers, if so why are we not receiving it, if not why not etc
4. did the flats’ refurb take place or not, what rent has been paid, are the ASTs in place
in addition to questions focusing on recovery issues (prob best not discussed here)
& suggesting that, were the press story to be new to AC, the vote perhaps be temporarily suspended whilst clarity was found on what’s really been going on (& how we go from here).
As no reply has yet been forthcoming* I am posting here so:
a. lenders are aware
b. (should they see fit) they can add their voices (on the loan’s Q&A ideally) requesting a temp suspension of the vote, until things are clearer
c. they can consider the various aspects, & do their own research, into this loan before deciding how to vote
My primary concern is that, should the press story have a bearing on our loan/security/recovery prospects, this be explained in terms sufficient (I appreciate this, depending on the circumstances, may not be trivial) to allow us to make an informed choice as to which option might be preferable.
At this stage, with the info we have to hand, I personally don’t feel able to make an informed choice.
Some random thoughts:
i) the impact of costs of recovery & receivers (particularly in a disputed scenario, & I note no costs have been notified or outlined to us yet), on a relatively low value property with who knows what third parties &/or legal complications involved, does make me hesitate voting for A without further clarity
ii) LTV on a 90D restricted value (ie excluding any recovery costs) is 76.5%
iii) could there be issues of TCF (treating your customers – ie the borrowers – fairly) here that, if not handled well, might backfire on us? Without going into details (requires reading between lines best not done here) I personally can envisage a more complex (& possibly sad human) story behind reported events. But that’s just a guess (amongst many other possible ones). Should we be needing to guess, perhaps even wildly, on info in the public domain (that we know exists but don’t know if AC do..), still totally unclear as to what it means & how any course of action we vote for might affect the borrowers (& us & our money)?
iv) slightly surprised that comms & mood-music with the borrowers seem to have deteriorated rather suddenly since the last rosy update of 7th Sep (& those before that). AC ofcourse may have very valid reasons for calling the vote, which I’d be happy to support (but I’d like to know what these are – it’s my/our money at risk after all)
In the meantime, slightly frustrated that my best efforts to shed light on this affair seem to have come to nothing, the vote has not been suspended & no answers have been received, I will be voting for what I consider to be the safest way to safeguard my interests: B
davidricketts1 Dominic & escalating to stuartassetzcapital FYI
Mods, I would appreciate if, for reasons of visibility given the short time till the vote closes, this thread could be kept here. I am happy to open (or have opened) a thread on pink pages for further more discreet discussion, & post any feedback received there if appropriate. Thanks
*aside from an unusual (& looked like “on our way out for the weekend, byeee” reply) at 6pm Fri which failed to address any points (even the simple were/are AC aware of the press story & might this impact our vote) & suggested it might be weeks before I get a reply (!) To which I replied (immediately), with no further news as of now. Make of that what you will..
On Tue 9/10 (at 16.39) I received an invitation to vote on loan #275, asking me to vote on whether to appoint receivers. Voting deadline 16.00 Mon 15th.
Brief summary: This is a personal 2Y (9.3%) loan to 2 sisters in their early 20’s in Derbyshire who had been part-gifted a property by a family member, & were looking to refurb the upper floors to rent out for resi use. The ground floor was already let to a popular indian restaurant, who’s owner had recently invested a sizeable sum in a refurb & kitchen refit (hence presumably unlikely to up sticks at short notice), with rent paid by them servicing our interest. The property had been owned by the family for 40Y, which lenders might have taken to be a reassuring sign they would prefer not to lose it, & a second property in Derby worth 130k, that had also been gifted to the sisters, was also cited (p8) for further reassurance.
Despite the simple profile to the loan (how hard could a refurb to the 2 flats above be?), a 3M buffer & some reasonable covenant cover, eg (my bold)
1. Loan To Value – The Loan must not exceed 65% of Property Value on each Valuation Date.
2. All passing rents are to be remitted to Assetz SME Capital Limited’s Clients account to cover the monthly interest, with the net amount (after payment of interest) to be remitted back to the borrowers.
3. Interest Cover – Gross Rental Income to Assetz Capital Interest Cost for each Quarter must be at least 1.17:1. To be tested Quarterly on a Rolling 12 month basis.
4. Residential element of the Property to be let on an AST within 12 months of drawdown.
5. Neither the Borrower nor any connected/related party may occupy the Property as a private dwelling place at any time during the currency of the Loan.
not much progress was made (&, whilst it seems some efforts were made, notably little sign of the covenants being kept or properly monitored by AC). That said, the fact that one of the sisters (AC’s main/only borrower contact) had suffered a serious car accident in 2017 seemed to explain the (perhaps, at least initially, justifiably) relaxed attitude taken on the loan. This continued after expiry of the loan in May when the loan was suspended, with the borrowers asking for time to refi, remaining in regular contact (until at least a month ago) & servicing interest (until July/Aug). A VR satisfactory to the new lender appears to have been completed. The refi offer has been seen by AC. Reviews of the restaurant continued to be good/excellent.
Reacquainting myself with the loan for the vote, & intrigued as to the lack of progress on the refurb (or news of substance, also on what had happened to the 3M buffer..) during the loan’s lifetime, a quick google (restaurant name & town should be enough) threw up press coverage from autumn’17 stating that a sex offender (SO) who’d been on the run for 4-5Y was found to have been the manager of the restaurant on our ground floor (for over 2Y ie since well before the loan was taken & until his arrest in 9/17) & living in a flat above it (one of those that was supposed to have been refurbed presumably). He was apparently on sufficiently good terms with the owner of the restaurant to have been offered to keep his job (& accommodation) open for him, even after his arrest, should he not to be jailed at short notice. Of possible coincidence/irrelevance the first letter of the “Manager” (could be a second manager, the top manager or the owner who knows) of the restaurant on TripAdvisor’s reviews surname matches with the SO’s surname.
The above (& more) was swiftly conveyed to AC on Wed. Numerous questions asked, the general gist of these being:
1. were AC aware of the story reported in the press, & what impact might this have on lenders’ security & recovery prospects?
2. what connections were there between the SO or owners & employees of the restaurant & our borrowers (&/or their family), & had any of the staff ever lived in the flats above (& on what basis) since the loan was taken on?
3. why has interest on the loan not been serviced since July, is the restaurant still trading & paying rent to our borrowers, if so why are we not receiving it, if not why not etc
4. did the flats’ refurb take place or not, what rent has been paid, are the ASTs in place
in addition to questions focusing on recovery issues (prob best not discussed here)
& suggesting that, were the press story to be new to AC, the vote perhaps be temporarily suspended whilst clarity was found on what’s really been going on (& how we go from here).
As no reply has yet been forthcoming* I am posting here so:
a. lenders are aware
b. (should they see fit) they can add their voices (on the loan’s Q&A ideally) requesting a temp suspension of the vote, until things are clearer
c. they can consider the various aspects, & do their own research, into this loan before deciding how to vote
My primary concern is that, should the press story have a bearing on our loan/security/recovery prospects, this be explained in terms sufficient (I appreciate this, depending on the circumstances, may not be trivial) to allow us to make an informed choice as to which option might be preferable.
At this stage, with the info we have to hand, I personally don’t feel able to make an informed choice.
Some random thoughts:
i) the impact of costs of recovery & receivers (particularly in a disputed scenario, & I note no costs have been notified or outlined to us yet), on a relatively low value property with who knows what third parties &/or legal complications involved, does make me hesitate voting for A without further clarity
ii) LTV on a 90D restricted value (ie excluding any recovery costs) is 76.5%
iii) could there be issues of TCF (treating your customers – ie the borrowers – fairly) here that, if not handled well, might backfire on us? Without going into details (requires reading between lines best not done here) I personally can envisage a more complex (& possibly sad human) story behind reported events. But that’s just a guess (amongst many other possible ones). Should we be needing to guess, perhaps even wildly, on info in the public domain (that we know exists but don’t know if AC do..), still totally unclear as to what it means & how any course of action we vote for might affect the borrowers (& us & our money)?
iv) slightly surprised that comms & mood-music with the borrowers seem to have deteriorated rather suddenly since the last rosy update of 7th Sep (& those before that). AC ofcourse may have very valid reasons for calling the vote, which I’d be happy to support (but I’d like to know what these are – it’s my/our money at risk after all)
In the meantime, slightly frustrated that my best efforts to shed light on this affair seem to have come to nothing, the vote has not been suspended & no answers have been received, I will be voting for what I consider to be the safest way to safeguard my interests: B
davidricketts1 Dominic & escalating to stuartassetzcapital FYI
Mods, I would appreciate if, for reasons of visibility given the short time till the vote closes, this thread could be kept here. I am happy to open (or have opened) a thread on pink pages for further more discreet discussion, & post any feedback received there if appropriate. Thanks
*aside from an unusual (& looked like “on our way out for the weekend, byeee” reply) at 6pm Fri which failed to address any points (even the simple were/are AC aware of the press story & might this impact our vote) & suggested it might be weeks before I get a reply (!) To which I replied (immediately), with no further news as of now. Make of that what you will..