North London Commercial Property Loan

I think your edit succinctly and adequately answered your question.

jjc

I needn't repeat your list of questions; they are similar to mine - and at this stage, having allowed a lot of leeway to the platform's overall performance efficiency, especially since the "wonderful" new website last October, I have to question whether to move more money in* when so many of my existing loans are now "suspended" (11 out of 89), 19% of my cash frozen.

The gradual emergence of AC's selectivity in providing ongoing loan management information needs a robust reply when Andrew H reports on yet another apparent case of "the lenders don't need to know. Let them carry on investing even though the borrower is not making repayments."

I am expecting more action than just what he thinks we want him to say. Can't blame IT glitches for this kind of situation.

*or, indeed the opposite - something I would never have contemplated a year ago.

gnasher, I’m personally less inclined to think there has been asymmetry in the info provided to lenders – it seems we’ve all been treated equally poorly.. not sure how much satisfaction to take from that!

I’m more concerned as to what happened internally to allow this situation to arise, both as a lender & a future shareholder. Hence my questions on the various layers, checks & balances that presumably were in place, any one of which might have brought the issue to light.

oldgrumpy, I still have faith in AC. That doesn’t mean when apparently serious mistakes are made we shouldn’t be asking uncomfortable questions, quite the opposite actually.

From a post further up this thread on 15/10/14: (“Playing games with lenders”)

But I am surprised that no questions were asked (pre loan completion) about the very questionable behaviour of the previous accountant. He contrived to extort (legally of course) benefits from Santander by playing games with the loan repayments. This guy was a member of the senior management team. Surely the hospital-bound director would have known - or would have been told - that such serious machinations were being undertaken on his behalf? It is beyond credible that the accountant would have taken these activities on himself without any discussion with other managers or with relatives of the director.

I am left wondering if there might be a culture in this business whereby managers might be tempted to play games with AC lenders over the next 36 months.

markdirac – I’ve been in two minds about this loan for some time. I had the same concerns about the accountant’s monkey business at the time, but assumed there would have been some mitigating circumstances (hence why Santander agreed to the debt forgiveness) & being a bit of a sucker for “ethical” businesses anyway bought into the loan. Given recent events I think we do need to know more about the company’s management & whether lenders should be concerned about their handling of creditor relationships, perhaps repayments are seen as an (if possible) avoidable optional. Oh & recent performance on their new ventures.

An urgent clarification from AC as to what responses they’ve had from the borrower to date aside, my feeling is a quick & tough action asap now (lender vote appointing receivers) will be needed to nip things in the bud. Eco-friendly products, ethical companies bla bla aside if the management is a tricky bunch we need to show our teeth pretty sharpish.

andrewholgate. this is not the first issue with buffers not being as expected. I am getting increasingly frustrated by this type of thing. The experience of your team and strong monitoring were key differentiators from other platforms.  The drip drip effect of different issues, some small in themselves, is in danger of eroding this.

On this particular issue, no matter what your welcome investigation throws up, can I suggest that you urgently add the "current size of buffer £" as a field onto the website for all appropriate loans so that we can see it. This should hopefully avoid any similar surprises in the future.  (Though I do think that there should also be an update on the activity log whenever there is a need to dip into the buffer).

The 72k sale could have just have been a UW releasing funds to put into a new loan.

I will be interested to see why AC decided to treat this loan differently to L**** Com where the borrower was immediately told to make up the buffer payment or face default. In that case, issues with the loan were put into the public domain which forced AC to respond. Would a similar scenario have occurred otherwise (AC knew & didnt immediately inform lenders or suspend the loan as AH has admitted)

As far as Im concerned a buffer is there to cover interest during a distressed loan scenario, in the early stages of default/ recovery,not to provide a payment holiday for borrowers. Fine to pay from buffer but if after 7 days it hasnt been replenished by the lender, then thats a default and recovery action should start. Simples!

I have major concernsof ACs approach to buffers. This is the 3rd while I feel there has been an issue over information provided to lenders & the clarity of the info in the CR/management of the buffer, L****, NLCPL, E**** ( where the buffer was presented as a risk mitigator but never established & not made clear to lenders IMO)

Again back to monitoring, no updates or comms if everything seems to running fine. I would prefer some form of regular health check on all loans communicated to lenders, even if its just everythings OK.

With respect, that neither answers the question that Chielamangus asked, nor the more fundamental question of whether those particular lenders were aware that the buffer was being used to make the payments to lenders.