adrian77
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Post by adrian77 on Aug 28, 2020 7:58:43 GMT
yet another mega disaster which strikes me as 100% due to FS's gross incompetence or whatever - there were clearly issues with the land as many people pointed out. I just hope we can recover the 5% Fs fee which is digusting beyond belief - sympathies for people invested in this one..
No good new about the zombie loan book for weeks now..of my top 40 it looks as if 2 loans are going to give 100% plus full interest repayment - unbelievable!
How the hell can "property experts" lose 99% of capital on a secured real estate investment - beyond a joke.
Going to work now - feeling depressed.
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jonno
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nil satis nisi optimum
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Post by jonno on Aug 28, 2020 9:18:44 GMT
Luxmore and Our Nige must be wondering why no-one has popped round and had a cup of tea and a friendly chat with them yet? I certainly am. What? You're wondering, or you're going round for a chat??
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iRobot
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Post by iRobot on Aug 28, 2020 9:22:43 GMT
And I see on this occasion FS have taken their 5% from the full loan amount (as they are entitled to) rather than the redemption amount as has often been done to date. Well, I say FS. I mean CG&Co. (Who still take their additional 2.5%, of course.) To quote the mighty Bart: "I didn't think it was physically possible, but this both sucks and blows" I don't understand why you are saying "as they are entitled to". FundingSecure's Terms and Conditions state: "8.3 FundingSecure does not charge Investors any fees or commissions." That's pretty clear to me. It's not a fee against Investors / lenders. It's a defaulted loan administration fee against the borrower. The reason it impacts Investors / lenders here, is because it ranks higher-most in the loan redemption waterfall, and there were insufficient returns to cover everything. If, in this case, the land had sold for the <ahem> Valuation amount, there would have been sufficient to cover the FS 5% default loan administration fee and then lender capital in full and most, if not all, interest, I think - except ... CG&Co. would still have taken their 2.5%+vat+exp's directly from lenders returns because - whether they (the CC) were fully aware of it or not - that is what was agreed with the Creditors Committee. On a full capital payout, CG&Co's nett fees would have been over £11k. As FS and CG&Co. are arguably the same entity - inasmuch as CG&Co need FS at a company level to generate revenues, so that CG&Cos fees for operating FS at that 'company level' are covered - it starts to become apparent why CG&Co / FS chose to exercise their right to charge 5% on the full loan amount, rather than just the actual redemption amount. Taking fees against the significantly lower sum would have returned a sum to CG&Co which would have been unlikely to cover their costs on this one. When you hold all the cards, you can always deal yourself a winning hand....
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pfffill
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Post by pfffill on Aug 28, 2020 11:35:59 GMT
In Faul***s Fi*ld the poppies blow Between the crosses, row on row, That mark our place; and in the sky The larks, still bravely singing, fly Scarce heard amid the guns below.
We are the Dead. Short days ago We lived, felt dawn, saw sunset glow, Loved and were loved, and now we lie, In Faul***s Fi*ld.
Take up our quarrel with the foe: To you from failing hands we throw The torch; be yours to hold it high. If ye break faith with us who die We shall not sleep, though poppies grow In Faul***s Fi*ld.
With apologies to John McCrae
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Post by waryinvestor on Aug 30, 2020 11:44:35 GMT
I don't understand why you are saying "as they are entitled to". FundingSecure's Terms and Conditions state: "8.3 FundingSecure does not charge Investors any fees or commissions." That's pretty clear to me. It's not a fee against Investors / lenders. It's a defaulted loan administration fee against the borrower. The reason it impacts Investors / lenders here, is because it ranks higher-most in the loan redemption waterfall, and there were insufficient returns to cover everything. If, in this case, the land had sold for the <ahem> Valuation amount, there would have been sufficient to cover the FS 5% default loan administration fee and then lender capital in full and most, if not all, interest, I think - except ... CG&Co. would still have taken their 2.5%+vat+exp's directly from lenders returns because - whether they (the CC) were fully aware of it or not - that is what was agreed with the Creditors Committee. On a full capital payout, CG&Co's nett fees would have been over £11k. As FS and CG&Co. are arguably the same entity - inasmuch as CG&Co need FS at a company level to generate revenues, so that CG&Cos fees for operating FS at that 'company level' are covered - it starts to become apparent why CG&Co / FS chose to exercise their right to charge 5% on the full loan amount, rather than just the actual redemption amount. Taking fees against the significantly lower sum would have returned a sum to CG&Co which would have been unlikely to cover their costs on this one. When you hold all the cards, you can always deal yourself a winning hand.... If they are taking the 5% Fee, then surely the 2.5%+VAT should surely come from that pot ? Heads you Win, Tails I Lose.
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Post by overthehill on Aug 30, 2020 13:36:29 GMT
I had similar thoughts about the fees after reading the comments in this thread.
The FS fee was surreptiously added to the constitution when they realised 'all the loans' were going to default and need recovery, they take 5% from the investors for the effort and costs as it wasn't their fault ! That's fine but that was before Administration, why the hell are they still taking 5% when C&G are doing all the work that FS would have been doing to recover the loans ?
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ilmoro
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Post by ilmoro on Sept 1, 2020 19:27:03 GMT
I had similar thoughts about the fees after reading the comments in this thread.
The FS fee was surreptiously added to the constitution when they realised 'all the loans' were going to default and need recovery, they take 5% from the investors for the effort and costs as it wasn't their fault ! That's fine but that was before Administration, why the hell are they still taking 5% when C&G are doing all the work that FS would have been doing to recover the loans ?
They are taking the 5% because it is a contractual entitlement in the terms & conditions, always has been and has always been on the Loan value not the realisation sum (the only changes have been an increase from 3 to 5% and changing it to be the proceeds from any means of sale rather than auction only but that was amended years ago), and that money is due to the creditors on whose behalf the administrators act. C&G are taking the 2.5% because CC agreed to allow them to take that sum to get things going, separate agreement outside of the contractual terms. The question is was the CC mislead as there was no indication that the 5% fee was applicable and that should have been spelt out.* Also I dont quite get the calculation of the fees as they were supposed to be allocated prorata between investors & creditors and I am unclear how the creditors bit is being applied. *Edit. As iRobot has reminded me of the DD thread this appears incorrect
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iRobot
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Post by iRobot on Sept 1, 2020 20:09:42 GMT
... The FS fee was surreptiously added to the constitution when they realised 'all the loans' were going to default and need recovery, ... ...
They are taking the 5% because it is a contractual entitlement in the terms & conditions, always has been and has always been on the Loan value not the realisation sum (the only changes have been an increase from 3 to 5% and changing it to be the proceeds from any means of sale rather than auction only but that was amended years ago), and that money is due to the creditors on whose behalf the administrators act. As ilmoro points out, I'm afraid that just isn't correct: 30 Mar 2014: " 7.3.3 an additional administration fee of 3% of the loan value will be deducted from the net proceeds of sale of the Asset at auction (after deduction of selling expenses such as commissions)." 11 Mar 2016: " 6.2.4 An additional administration fee of 5% of the Loan value will be deducted from the net proceeds of sale of the Asset and paid to FundingSecure (after deduction of all selling expenses such as commissions)." IMO, further discussion as to whether the 5% is justifiable is pointless. However, discussion over what action to take (or is being taken) to get the agreement between the CC and CG&Co amended so that CG&Co's fees are deducted from that 5% is very much worthwhile. There is a thread - now somewhat buried - on FS DD that outlines this: Summary from FSAG Solicitors 22.11.19 - would be useful if, 9 months later, Mucho P2P / Garage246 could revive it and perhaps bring everyone up to speed with progress to date.
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Mucho P2P
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Post by Mucho P2P on Sept 2, 2020 18:39:09 GMT
They are taking the 5% because it is a contractual entitlement in the terms & conditions, always has been and has always been on the Loan value not the realisation sum (the only changes have been an increase from 3 to 5% and changing it to be the proceeds from any means of sale rather than auction only but that was amended years ago), and that money is due to the creditors on whose behalf the administrators act. As ilmoro points out, I'm afraid that just isn't correct: 30 Mar 2014: " 7.3.3 an additional administration fee of 3% of the loan value will be deducted from the net proceeds of sale of the Asset at auction (after deduction of selling expenses such as commissions)." 11 Mar 2016: " 6.2.4 An additional administration fee of 5% of the Loan value will be deducted from the net proceeds of sale of the Asset and paid to FundingSecure (after deduction of all selling expenses such as commissions)." IMO, further discussion as to whether the 5% is justifiable is pointless. However, discussion over what action to take (or is being taken) to get the agreement between the CC and CG&Co amended so that CG&Co's fees are deducted from that 5% is very much worthwhile. There is a thread - now somewhat buried - on FS DD that outlines this: Summary from FSAG Solicitors 22.11.19 - would be useful if, 9 months later, Mucho P2P / Garage246 could revive it and perhaps bring everyone up to speed with progress to date. Regarding the “Summary" from the post that you refer to, this is now quite old info, as the next pertinent piece of info for FundingSecure lenders will be two-fold: 1) Lendy/RSM hearing on whether P2P lenders are creditors and 2) The 5% fee withholding by FS, hearing date to be confirmed nearer the time. Most general updates now appear on the Facebook site for FundingSecure (https://www.facebook.com/groups/626220967911432/) , or FSAG free forums (https://fsag.freeforums.net/). For people who are not signed up or registered with the Facebook site, pertinent updates, such as court rulings and possibly transcripts will also be posted to p2p Indi, in an attempt to convey the news to the largest possible audience of lenders. It is not possible to duplicate all news to all outlets, to also include replying to all queries from all sources, as there is not the man power at FSAG to accomplish this feat. We try to broadcast the important or unanswered (where we can) queries. We do our best. Regarding the 5% fee debate, I would direct everyone’s attention to point 8.3 of the T&Cs [ 8.3 FundingSecure does not charge Investors any fees or commissions.]. I would also add that there is never any mention of 5% being attributable to lenders! I won’t say more due to jeopardising the upcoming hearing. With reference to your statement, “to get the agreement between the CC and CG&Co……..”. There is no “agreement” between the CC and CG on the fees other than the 2.5%+VAT deduction that was proposed and agreed last year by majority lender vote, prior to, and during the Manchester meeting. The CC only have one bona fide creditor on the CC, all other members are in effect quasi-creditors, not creditors as defined by law. Hence, we have virtually zero power at this time, other than to “discuss” and offer advice, which CG&Co are under no obligation whatsoever to take. Any fee amendment will be at the direction of the courts and only by the direction of the courts at this time, due to the CC members lack of standing as official creditors. I believe that garage246 has "removed" himself from visible action for the time being. I hope the above has shed some light on your queries. All the best, MP2P
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iRobot
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Post by iRobot on Sept 2, 2020 20:32:33 GMT
IMO, further discussion as to whether the 5% is justifiable is pointless. However, discussion over what action to take (or is being taken) to get the agreement between the CC and CG&Co amended so that CG&Co's fees are deducted from that 5% is very much worthwhile. With reference to your statement, “to get the agreement between the CC and CG&Co……..”. There is no “agreement” between the CC and CG on the fees other than the 2.5%+VAT deduction that was proposed and agreed last year by majority lender vote, prior to, and during the Manchester meeting. Thanks for these insights. Apologies if I've misconstrued the situation re: fees. Obviously with limited information available, 'facts' have to be taken where they can. The following was gleaned from the FAQ on the FS web site: From what you've written, the Creditors Committee seemingly has little or no standing, so even if it hadn't approved he basis of the Administrators’ Fees and Expenses at that 17 December 2019 meeting, then presumably CG&Co would have just gone ahead and implemented that basis of remuneration anyway. Is that correct? Interesting times ahead. Hopefully the Lendy situation will see lenders be classed as creditors which will give the FS CC something more in the way of a standing when at the meeting table. That may also be a catalysts for less visibly active members of the CC to become more so and a trickle down of news and developments across all channels might become a possibility. Fully accept news may, through either necessity or circumstance, be sparse and infrequent but it is always appreciated when it can be shared.
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Mucho P2P
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Post by Mucho P2P on Sept 2, 2020 21:13:13 GMT
With reference to your statement, “to get the agreement between the CC and CG&Co……..”. There is no “agreement” between the CC and CG on the fees other than the 2.5%+VAT deduction that was proposed and agreed last year by majority lender vote, prior to, and during the Manchester meeting. Thanks for these insights. Apologies if I've misconstrued the situation re: fees. Obviously with limited information available, 'facts' have to be taken where they can. The following was gleaned from the FAQ on the FS web site: From what you've written, the Creditors Committee seemingly has little or no standing, so even if it hadn't approved he basis of the Administrators’ Fees and Expenses at that 17 December 2019 meeting, then presumably CG&Co would have just gone ahead and implemented that basis of remuneration anyway. Is that correct? Interesting times ahead. Hopefully the Lendy situation will see lenders be classed as creditors which will give the FS CC something more in the way of a standing when at the meeting table. That may also be a catalysts for less visibly active members of the CC to become more so and a trickle down of news and developments across all channels might become a possibility. Fully accept news may, through either necessity or circumstance, be sparse and infrequent but it is always appreciated when it can be shared. If the lenders had not approved the 2.5%, I presume that CG&co would have just gone to Court, and would have been awarded that amount, if not more, as from what I see, the administrators rates are usually from 3-5%. I do my best to share and get info out where I can. I am stuck in-between a rock and a hard place. The juicy info can not be shared due to NDA, or compromising recoveries. October will see some "news" relating to FS, news that I will try to get out here to this forum as well.
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Brainer
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Post by Brainer on Sept 4, 2020 13:12:05 GMT
I don't understand why you are saying "as they are entitled to". FundingSecure's Terms and Conditions state: "8.3 FundingSecure does not charge Investors any fees or commissions." That's pretty clear to me. It's not a fee against Investors / lenders. It's a defaulted loan administration fee against the borrower. The reason it impacts Investors / lenders here, is because it ranks higher-most in the loan redemption waterfall, and there were insufficient returns to cover everything. If, in this case, the land had sold for the <ahem> Valuation amount, there would have been sufficient to cover the FS 5% default loan administration fee and then lender capital in full and most, if not all, interest, I think - except ... CG&Co. would still have taken their 2.5%+vat+exp's directly from lenders returns because - whether they (the CC) were fully aware of it or not - that is what was agreed with the Creditors Committee. On a full capital payout, CG&Co's nett fees would have been over £11k. As FS and CG&Co. are arguably the same entity - inasmuch as CG&Co need FS at a company level to generate revenues, so that CG&Cos fees for operating FS at that 'company level' are covered - it starts to become apparent why CG&Co / FS chose to exercise their right to charge 5% on the full loan amount, rather than just the actual redemption amount. Taking fees against the significantly lower sum would have returned a sum to CG&Co which would have been unlikely to cover their costs on this one. When you hold all the cards, you can always deal yourself a winning hand.... Not by my reading of term 6.2.5:
6.2.5 Net proceeds of sale of Assets shall be used to settle amounts due in the following order:
1) Principal amount of Loan which was funded by, and is repayable to, the Investors (allocated pro rata in accordance with the proportion of the Loan amount which each Investor invested); 2) Direct costs incurred by FundingSecure through the setting up and the administration of the Loan including, but not limited to, storage costs, referral fees and valuation fees up to the date of sale; 3) Interest due to the Investors up to the date of sale (allocated pro rata in accordance with the proportion of the Loan amount which each Investor invested); 4) Administration fees due to FundingSecure not recovered through clause 6.2.5(ii) above; 5) The balance (if any) will be returned to the Borrower.And seemingly not from FundingSecure's own understanding of their T&Cs as discussed here, and which I quote below:
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iRobot
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Post by iRobot on Sept 4, 2020 14:19:19 GMT
It's not a fee against Investors / lenders. It's a defaulted loan administration fee against the borrower. The reason it impacts Investors / lenders here, is because it ranks higher-most in the loan redemption waterfall, and there were insufficient returns to cover everything. If, in this case, the land had sold for the <ahem> Valuation amount, there would have been sufficient to cover the FS 5% default loan administration fee and then lender capital in full and most, if not all, interest, I think - except ... CG&Co. would still have taken their 2.5%+vat+exp's directly from lenders returns because - whether they (the CC) were fully aware of it or not - that is what was agreed with the Creditors Committee. On a full capital payout, CG&Co's nett fees would have been over £11k. As FS and CG&Co. are arguably the same entity - inasmuch as CG&Co need FS at a company level to generate revenues, so that CG&Cos fees for operating FS at that 'company level' are covered - it starts to become apparent why CG&Co / FS chose to exercise their right to charge 5% on the full loan amount, rather than just the actual redemption amount. Taking fees against the significantly lower sum would have returned a sum to CG&Co which would have been unlikely to cover their costs on this one. When you hold all the cards, you can always deal yourself a winning hand.... Not by my reading of term 6.2.5:
6.2.5 Net proceeds of sale of Assets shall be used to settle amounts due in the following order:
1) Principal amount of Loan which was funded by, and is repayable to, the Investors (allocated pro rata in accordance with the proportion of the Loan amount which each Investor invested); 2) Direct costs incurred by FundingSecure through the setting up and the administration of the Loan including, but not limited to, storage costs, referral fees and valuation fees up to the date of sale; 3) Interest due to the Investors up to the date of sale (allocated pro rata in accordance with the proportion of the Loan amount which each Investor invested); 4) Administration fees due to FundingSecure not recovered through clause 6.2.5(ii) above; 5) The balance (if any) will be returned to the Borrower.And seemingly not from FundingSecure's own understanding of their T&Cs as discussed here, and which I quote below: It's an understandable 'reading' but not one I share. I think the 5% stands. Much more tellingly and having sought legal opinion, CG&Co thinks the 5% stands. This is being challenged with a court decision pending, so time will tell. That decision may turn out in favour of lenders, but IMO it won't. (I'm not even convinced it's a good idea that it should.) That's why, again IMO, efforts would be better spent trying to get CG&Co's 2.5% (+vat+exp's) deducted from that 5% at the FS level rather than charged direct against lenders at the loan level which, if you accept the 5% fee is in play, I think is just plain wrong. If the loan book realises 50% of the stated value at the onset of administration, that 5% would be worth c. £2.0m - that should be sufficient to cover CG&Co's fees and then some. (Direct 3rd party loan disposal costs - auctioneers, valuers, legal, etc - would still come directly off the top of individual loan realisations. It's 'only' CG&Co's direct costs which would be deducted from that 5% pool.) Secured Creditors - eg current directors and the like - may not appreciate the 'FS pot' being eaten into in that manner, but ... Probably also worth keeping in view that anything FS committed to 'conversationally' isn't being honoured by CG&Co. For example, lenders in those loan with imperfect charge arrangements were supposedly protected from capital losses with FS committing to 'stand behind' them. That's no longer happening. (Again, I think that's wrong and could / should be covered by the overall FS 5% pot and if lenders in those loans chose to pursue that, I'd be supportive of that action.)
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Brainer
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Post by Brainer on Sept 4, 2020 18:13:39 GMT
Not by my reading of term 6.2.5:
6.2.5 Net proceeds of sale of Assets shall be used to settle amounts due in the following order:
1) Principal amount of Loan which was funded by, and is repayable to, the Investors (allocated pro rata in accordance with the proportion of the Loan amount which each Investor invested); 2) Direct costs incurred by FundingSecure through the setting up and the administration of the Loan including, but not limited to, storage costs, referral fees and valuation fees up to the date of sale; 3) Interest due to the Investors up to the date of sale (allocated pro rata in accordance with the proportion of the Loan amount which each Investor invested); 4) Administration fees due to FundingSecure not recovered through clause 6.2.5(ii) above; 5) The balance (if any) will be returned to the Borrower.And seemingly not from FundingSecure's own understanding of their T&Cs as discussed here, and which I quote below: It's an understandable 'reading' but not one I share. I think the 5% stands. Much more tellingly and having sought legal opinion, CG&Co thinks the 5% stands. This is being challenged with a court decision pending, so time will tell. That decision may turn out in favour of lenders, but IMO it won't. (I'm not even convinced it's a good idea that it should.) That's why, again IMO, efforts would be better spent trying to get CG&Co's 2.5% (+vat+exp's) deducted from that 5% at the FS level rather than charged direct against lenders at the loan level which, if you accept the 5% fee is in play, I think is just plain wrong. If the loan book realises 50% of the stated value at the onset of administration, that 5% would be worth c. £2.0m - that should be sufficient to cover CG&Co's fees and then some. (Direct 3rd party loan disposal costs - auctioneers, valuers, legal, etc - would still come directly off the top of individual loan realisations. It's 'only' CG&Co's direct costs which would be deducted from that 5% pool.) Secured Creditors - eg current directors and the like - may not appreciate the 'FS pot' being eaten into in that manner, but ... Probably also worth keeping in view that anything FS committed to 'conversationally' isn't being honoured by CG&Co. For example, lenders in those loan with imperfect charge arrangements were supposedly protected from capital losses with FS committing to 'stand behind' them. That's no longer happening. (Again, I think that's wrong and could / should be covered by the overall FS 5% pot and if lenders in those loans chose to pursue that, I'd be supportive of that action.) I think you are underselling it as "committed to 'conversationally'". I fully believe that FS themselves saw the repayment priority to be as shown in my post above. There are other instances of loans where FS said that in line with the T&Cs they would take no fees as investor capital ranked ahead. IIRC CG dismissed these as one-off gestures in the last administrators report but that was not my understanding. As you say, the court will decide in the end.
Should the 5% stand I agree with the rest of your post, and I hope that is where efforts will be directed at that point. Also worth noting that if, as it now seems, CG are taking 5% of the loan value from here onward there will likely be more than c. £2.0m in the pot by the end, possibly a lot more. If anyone has an idea of how much of the loan book is remaining, maybe we can get a better estimate.
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iRobot
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Post by iRobot on Sept 4, 2020 19:07:56 GMT
<snip>Probably also worth keeping in view that anything FS committed to 'conversationally' isn't being honoured by CG&Co. For example, lenders in those loan with imperfect charge arrangements were supposedly protected from capital losses with FS committing to 'stand behind' them. That's no longer happening. (Again, I think that's wrong and could / should be covered by the overall FS 5% pot and if lenders in those loans chose to pursue that, I'd be supportive of that action.) I think you are underselling it as "committed to 'conversationally'". I fully believe that FS themselves saw the repayment priority to be as shown in my post above. There are other instances of loans where FS said that in line with the T&Cs they would take no fees as investor capital ranked ahead. IIRC CG dismissed these as one-off gestures in the last administrators report but that was not my understanding. As you say, the court will decide in the end.
Should the 5% stand I agree with the rest of your post, and I hope that is where efforts will be directed at that point. Also worth noting that if, as it now seems, CG are taking 5% of the loan value from here onward there will likely be more than c. £2.0m in the pot by the end, possibly a lot more. If anyone has an idea of how much of the loan book is remaining, maybe we can get a better estimate.
I'm sure FS did when that quoted post was written in 2016. Had they not been in administration, they may have even honoured the 'informal' * commitments made on the loans with imperfect charges. However, FS today is not FS of four years ago. The Administrators only need to deliver what is legally required of them, not what an erstwhile FS may have felt morally and/or ethically duty-bound to deliver - if only to avoid the risk of being dragged through the courts, or worse, the press! CG&Co's stance on this particularly sucks, in my opinion, but ... * When I wrote 'conversationally', I was referring to FS' waterfall quote made here on the forum. However, I had forgotten about how FS typically communicated with lenders. As a layperson, and regardless of the standing of what FS wrote here, I'm really rather surprised that what FS communicated to all lenders via formal Loan Updates isn't deemed as some kind of legal contract. Maybe it's a question of their not wanting to throw good money after bad, but I should have thought it worthwhile lenders in those loans collectively formally querying the Administrators on what grounds they had based their determination and then showing the response to FSAG's legal rep for an opinion. Perhaps that's already been done. Perhaps it a non-starter. No idea.
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