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Post by portlandbill on Nov 29, 2019 19:03:14 GMT
Does this mean that the administrators are enforcing lendy's Ts & Cs change that most of us rejected?
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11025
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Post by 11025 on Nov 29, 2019 19:13:31 GMT
Would it mean there is more chance of a higher return on Mode 1 as there could be sufficient money in the company accounts eventually as they get a good return from EVERY loan as fees and interest. ?
Mode 2 loans will only get their contractual returns after fees. Mode one would have claim for their total amount due to be paid from assets.
I think Lendy's creditor's, including model 1 loans, will be pretty much wiped out after administrator fees. The administrators themselves seem to allude to this as they are relying on the 3%pa fee on recoveries to help fund their fees with anything in excess of their fees being redistributed back to model 2 investors. The priority of Lendy's late payment interest ahead of investors is a real shocker. It leads to a perverse incentive for the administrators to string out recovery for the benefit of Lendy's creditors (whose interests are their primary concern) at the detriment of model 2 investors - a massive conflict of interest..... This must be the "orderly wind down" that the FCA ticked the box for.
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Monetus
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Post by Monetus on Nov 29, 2019 19:13:59 GMT
Does this mean that the administrators are enforcing lendy's Ts & Cs change that most of us rejected? No it means the administrators are attempting to enforce fees owed to Lendy Ltd that were allegedly written directly into the loan security documents/debentures by Lendy when the loans were originated. Essentially the loan/borrower agreements have apparently superseded the platform terms. "The security documents set out an order of priority of payment"This has nothing to do with the platform terms and conditions or any variation of them. The real relevant parts of the terms are: "9.1 The Loan Contract governs the terms of repayment of principal and payment of interest by the borrower." "9.11 Details of the fees which Lendy charges borrowers are set out in the relevant Loan Contract, and these are, typically, an arrangement fee, an exit fee, and a loan monitoring fee."
Investors have never seen these security documents so won't have had any idea what fees would be contractually due to Lendy Ltd or indeed what their priority would be in the waterfall in this type of scenario although I do believe that one loan agreement may be out there in the public domain somewhere due to a well-publicised court battle to give you an idea. From the way I'm reading it the 3% "fixed" SLA will only be enforced if RSM run out of money from the Lendy Ltd pot to fund the administration having burnt through all the waterfall distributions cash.
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Post by billy169 on Nov 29, 2019 19:20:09 GMT
So ideally..we all need to be classified as creditors. ?.. could that be possible ?
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sam i am
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Post by sam i am on Nov 29, 2019 19:53:26 GMT
Would it mean there is more chance of a higher return on Mode 1 as there could be sufficient money in the company accounts eventually as they get a good return from EVERY loan as fees and interest. ?
Mode 2 loans will only get their contractual returns after fees. Mode one would have claim for their total amount due to be paid from assets.
I think Lendy's creditor's, including model 1 loans, will be pretty much wiped out after administrator fees. The administrators themselves seem to allude to this as they are relying on the 3%pa fee on recoveries to help fund their fees with anything in excess of their fees being redistributed back to model 2 investors. The priority of Lendy's late payment interest ahead of investors is a real shocker. It leads to a perverse incentive for the administrators to string out recovery for the benefit of Lendy's creditors (whose interests are their primary concern) at the detriment of model 2 investors - a massive conflict of interest.....
Hi Nick, Referring to your second point, I completely agree. Indeed I have already written to Lendy support with a number of initial questions including this one.
Below is my email. I think questions 3-6 cover what you have written above.
Thank you for your Investor update. I have some initial questions to seek clarification of how the Dividend Apportionment will operate.
Referring to your fictional example:
1. Where you state that the investor is entitled to interest of £60,000 please confirm that this includes amounts referred to on the website as 'Bonus Interest'
2. Where you state that Lendy is entitled to Interest of £30,000 and Default interest of £500,000 please confirm that this is the net amount based on the total interest payments due by the borrower less the interest and bonus interest due to the lender (otherwise there will be double counting in favour of Lendy).
3. Please confirm the point at which default interest will cease accruing to Lendy. Any reasonable person would expect that the purpose of default interest would be to focus the mind of the borrower and ensure prompt repayment. However the method of apportionment you describe has the potentially perverse effect of incentivizing Lendy to delay matters for as long as possible since this will increase default interest owed and will increase the proportion of the available repayment to Lendy at the expense of lenders capital. Please explain and justify.
4. Further to question 3, lender bonus interest appears to subject to a cap and ceases accruing after this point. In order to ensure fairness and equity between the parties please confirm that default interest to Lendy will also cease at this point (at the latest) or that the cap on lender bonus will be removed.
5. Lendy has made it clear (for model 2 loans) that they are operating on the basis of a platform operator and are taking no capital risk. Since Lendy has not invested capital in the loan the whole concept of interest accruing to Lendy is a nonsense since interest is defined as a payment made for lending capital. Any 'default interest' accruing to Lendy is nothing of the sort. It is purely a fee. Please confirm that the conflict administrators have or will review this fee to ensure that it is fair to all parties and is in line with industry norms in both the level charged and its method of operation.
6. I am extremely concerned that Lendy is charging high levels of default interest to borrowers even though Lendy knows there is little hope of ever recovering this amount from borrowers. The sole purpose of this would appear to be that it increases the proportion of recovery proceeds due to Lendy which will be taken from lender capital. It is therefore a charge on lenders and not a charge on borrowers. This is a severe conflict of interest. Please comment on this and give a detailed response as to how this conflict will be resolved.
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sb
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Post by sb on Nov 29, 2019 20:26:10 GMT
Would it mean there is more chance of a higher return on Mode 1 as there could be sufficient money in the company accounts eventually as they get a good return from EVERY loan as fees and interest. ?
Mode 2 loans will only get their contractual returns after fees. Mode one would have claim for their total amount due to be paid from assets.
I think Lendy's creditor's, including model 1 loans, will be pretty much wiped out after administrator fees. The administrators themselves seem to allude to this as they are relying on the 3%pa fee on recoveries to help fund their fees with anything in excess of their fees being redistributed back to model 2 investors. The priority of Lendy's late payment interest ahead of investors is a real shocker. It leads to a perverse incentive for the administrators to string out recovery for the benefit of Lendy's creditors (whose interests are their primary concern) at the detriment of model 2 investors - a massive conflict of interest..... For me the concept that investors lend their capital and Lendy charges their own interest on it is outrageous. Extremely outrageous if the example they gave is a realistic one, 2mln lend by investors pays 60k interests to investors and 530k to Lendy. 3% per annum Lendy fee for recovery services, which doesn't include any direct recovery costs, is also excessive and needs to be challenged.
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quidco
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Post by quidco on Nov 29, 2019 20:31:33 GMT
It feels like a "we're going to take your money" update, hopefully I'm wrong
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copacetic
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Post by copacetic on Nov 29, 2019 20:59:07 GMT
From the Lendy's terms and conditions I downloaded on 08/11/17 in regards to the order of defaulted recovery payments:
The new terms and conditions on the website which say 11/07/18:
The new T&Cs seriously benefit Lendy at the expense of lenders. In the example from todays email from administrators the recovery to lenders was £1,078,000. Under the old T&Cs it would have been £1,425,000.
Does anyone remember if we were forced to accept the new terms explicitly when we logged in? The last time I invested new money onto the platform was Dec 2017. Is there anyone else in this position that thinks it might be possible to argue to the administrator that we implicitly refused the new T&Cs since we stopped investing after they were implemented?
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Post by pjt1 on Nov 29, 2019 20:59:46 GMT
So looking at a loan of £10m. Lendy mess about for a bit so as to protect their “nobody loses a penny” mantra and then go into admin which takes more time up.
Meanwhile default interest is accruing at 4% a month meaning after 18 months the total owing to Lendy is a fraction over £20.25m.
We already know that RSM expect as a BEST CASE to get 58% back - call it £6m for ease.
Yet under the waterfall Lendy lay claim to the first £10.25m of default interest before we even begin to look at repaying investors.
Repayments from Herc Quay were obviously before RSM got savvy about this. Can the rest of us expect nothing?
They will probably find some advisors to claim we owe them the £4m shortfall too.
Unbelievable. But the writing is on the wall.
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averageguy
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Post by averageguy on Nov 29, 2019 21:13:54 GMT
"The Administrators are unable to provide any material update on other loans until such time as a property sale or refinance has concluded so as not to prejudice the outcome. Accordingly, platform updates will no longer be posted monthly, but only on individual loans once the sale or refinance is concluded." This from todays update at lendy.co.uk/. Dont login just look for the file dated 29/11. basically we can’t be bothered giving you an update so piss off as we’ll still be earning the same fee for less work perhaps this poll should be started again p2pindependentforum.com/thread/15980/happy-administration-process-far
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sam i am
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Post by sam i am on Nov 29, 2019 21:21:13 GMT
In the latest communication RSM state this:
The contractual documentation provides for interest, default charges and/ or exit fees to accrue to Lendy. Those sums would form part of Lendy's administration estate for distribution to all valid creditors of Lendy. Despite this, for the time being all sums accruing to Lendy under the Dividend Apportionment will be deferred and held pending further consideration by the Administrators and their legal advisors as to the enforceability of the contractual terms in favour of Lendy, and whether Lendy is the correct beneficiary in accordance with the legal position. In the event that the Administrators determine that Lendy is not legally entitled to all or part of such sums, a further distribution of any deducted sums will be distributed to the relevant Model 2 investors.
Which does give me some hope that RSM suspect that the terms are unfair and legally questionable. I'm hoping that with enough pressure, lenders can encourage RSM to see things this way.
Furthermore, RSM go on to say:
To avoid any undue delay in making distributions to investors, the Administrators have taken the view to process Waterfall Distributions where possible for certain loans, pending further consideration of Lendy's entitlement, rather than waiting for a final determination and to pay investors such amounts as are unequivocally theirs, and not Lendy's. The Administrators are committed to resolving this in a timely manner, subject to any claims that they may receive in the administration of Lendy.
The faster we get our money out the better as this will close-end the default interest problem, so let's hope RSM pay as many loans as quickly as possible. And where RSM are making an initial payment, one would hope that it would only include default interest to that point and cease to accrue after this point. This would the stop default interest reducing any further potential distributions (I have asked for clarification as to when default interest will cease to accrue).
The communication has some very serious concerns but also some glimmers of hope. Let's keep our fingers crossed.
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Post by denzilh on Nov 29, 2019 21:23:45 GMT
I hope LAG and the Credit committee are having a good look at what options are available to challenge these proposals as it not looking good!
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Post by brightspark on Nov 29, 2019 21:35:15 GMT
PBL178 has today returned me 18.2% of capital as a first interim payment. I don't expect much more. I am very fortunate that I read the writing on the wall of Lendy a while ago and baled out other than around £800 of unrealisable loans which to my mind are effectively written off. The whole Lendy operation now has a feel of being an orchestrated failure from beginning to end rather than something that arose over a period. I sincerely hope that those lenders with deep pockets about to be hammered with similar repayments percentages get together to challenge the legality of the whole Lendy modus operandii. Reading between the lines the Administrators do not feel comfortable about what they are having by law to implement - hence their temporary retention of creditor monies.
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Post by pjt1 on Nov 29, 2019 21:45:23 GMT
So looking at a loan of £10m. Lendy mess about for a bit so as to protect their “nobody loses a penny” mantra and then go into admin which takes more time up. Meanwhile default interest is accruing at 4% a month meaning after 18 months the total owing to Lendy is a fraction over £20.25m. We already know that RSM expect as a BEST CASE to get 58% back - call it £6m for ease. Yet under the waterfall Lendy lay claim to the first £10.25m of default interest before we even begin to look at repaying investors. Repayments from Herc Quay were obviously before RSM got savvy about this. Can the rest of us expect nothing? They will probably find some advisors to claim we owe them the £4m shortfall too. Unbelievable. But the writing is on the wall.
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Post by pjt1 on Nov 29, 2019 21:46:17 GMT
Taking this one step further - if Lendy get to keep the lions share of the waterfall based on even say £50m recovery of the £165m loan book. There will still be £25m+ left over once the dust settles and then that would be set for distribution to the shareholders of lendy.
Will Liam B be looking at a £20m payday?
That’s what their legal advice of saying it seems
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