gareot
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Post by gareot on Jun 12, 2018 17:37:13 GMT
Morning, Given that the administrator yesterday determined that Collateral lenders would be classified as creditors to the business and that platform data may no longer be available, this places Collateral lenders in a somewhat difficult position. While this is not our concern, we do have considerable sympathy for lenders involved and we have been considering what practical help we may be able to provide. We have made contact with an insolvency practitioner that may be prepared to act on behalf of any individual lenders to give them a collective voice. While they would not be the IP of course, since one has already been appointed, they are familiar with the P2P set up as they have acted for us before and they are an experienced administrator themselves. We have sent them some information and they are currently reviewing this to assess whether they can assist. In the meantime, if any lenders are interested in this type of solution, please let me know. Kind regards, Ed Well I'm certainly in favour of this approach being a creditor of various companies to whom I lent money via the Collateral platform!!! Many thanks Ed.
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carolus
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Post by carolus on Jun 12, 2018 17:38:18 GMT
Admittedly I have not seen any documentation. Just maybe it refers only to Collateral as lender (incorrectly), in which case I could see how the documents would be valid and enforceable, but only in favour of Collateral, leaving investors as creditors. So what we need to know is - just what do those loan documents say? Another possibility which may explain the inconsistency between the two statements is that the loan security is unenforceable because the underlying loan has been made via an unauthorised platform and therefore illegal. In that case I can see how only the second statement could be correct. The first of these feels very plausible to me, and I think would explain a lot of the current situation. I also note the slightly strange mention that the security documentation was prepared by Collateral's lawyers. I'm not sure why this would be specifically mentioned, unless perhaps it might be a suggestion that the documents have been prepared in favour of Collateral rather than investors. I am perhaps speculating now, but further if we were in fact lending to Collateral then that might mean keeping lender records with multiple backups less important, and making it easier for them to encounter some sort of "accident"
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radar
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Post by radar on Jun 12, 2018 17:43:21 GMT
I personally have been a creditor on two occasions, in neither case did I receive a penny, we are lenders and should be at the other end of the scale and our outlay secured. To form a "creditors committee" would be the easy way out for administrators we should find some way to resist being pushed into accepting creditor status
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11025
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Post by 11025 on Jun 12, 2018 17:58:59 GMT
Does anyone know the exact amount of live/active lenders ?
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Monetus
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Post by Monetus on Jun 12, 2018 18:05:28 GMT
the Collateral case serves as a very good warning example how the actual outcome of a marketplace 'collapse' can differ vastly from what investors could reasonable expect the process to be when it was still in operation. 100% this. You think you are safe. But you are most certainly NOT safe. I heavily invested into P2P as I was under the impression that I was dealing with FCA regulated businesses, ring-fenced assets/client money and adequate wind down procedures in the event a company should fail. How wrong and foolish I clearly was. It's made me realise just how rapidly things can take a turn for the worse and just how flimsy these supposed "safeguards" clearly are if they can be so easily brushed aside. The fact that any platform can just ignore required FCA permissions and totally dismantle the entire market safety structure that was put in place to protect investors so easily just blows my mind. And who will pay the price heavily from this now? The supposedly "protected" investors.... The whole thing just stinks.
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Post by Butch Cassidy on Jun 12, 2018 18:09:29 GMT
Does anyone know the exact amount of live/active lenders ? 1132 according to RR, not sure whether that was active or registered but which ever it is quite a small number, yet BDO still find it impossible to send each of them even an introductory e-mail let alone establish their loan holdings.
EDIT: These 1132 lenders had £17.5m invested, split £15.5M property (value £23.5m) £1.7m chattels (value £2.5m) + £400k cash. RR verified the assets were in place but £390k was withdrawn from cash account (revealed at court)
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pikestaff
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Post by pikestaff on Jun 12, 2018 18:18:21 GMT
Extracted from BDO's FAQs dated 11 May 2018: "Based on the information currently available there is no reason to doubt the validity of the security documentation, which the Joint Administrators note was originally prepared by the Companies’ lawyers." "From the information currently available, the initial view of the Joint Administrators’ lawyers is that investors will be treated as creditors of the Companies as a consequence of s26 of the Financial Services and Markets Act 2000." How can these two statements be consistent with each other?... I'm not on Collateral (thank goodness), but if it worked in a similar way to other platforms loans will have been made by a Collateral company acting as agent for the lenders. The loans by that company to the borrowers would appear to be valid loans and BDO are making encouraging noises about the security documentation.
Unfortunately, Collateral were not authorised to act as lenders' agents. BDO appear to be suggesting that, as a result of s26 FSMA 2000, lenders therefore become creditors of Collateral - in which case IMO they would be unsecured creditors of Collateral because it would then be Collateral and not the lenders who benefit from the security.
I'm not convinced. The section says [with some annotations from me]:
Sub-s. (3) is inconsquential and we can forget about sub-s. (4). There have been a couple of posts on here trying to make sonething of it, but the reference to "accepting deposits" is a legal term. It means acting as a licensed deposit taker or bank would do, seeking deposits on their own account, which Collateral did not do. Also, a depositor would be a creditor anyway, which is what [some] lenders are unhappy about, and deposit taking is dealt with under a different heading which merely entitles depositors to the immediate return of their deposit, regardless of its terms. Which, in the circumstances, would not get lenders any further.
Sub-s. (1) is what matters. The key question is what are the consequences of the contracts between Collateral and lenders being unenforceable by Collateral against lenders? Clearly one consequence is that lenders are not bound by those contracts, and lenders are entitled to seek repayment plus compensation (sub-s. (2)). In other words they are entitled to be treated as creditors of Collateral.
BUT, as far as I can see, they are not obliged to be so treated, because nothing in the legislation says lenders cannot enforce the contracts against Collateral. I think they may well be entitled to do so.
I draw some tentative support for this from s28(9) of the Act which says:
"The commission of an authorisation offence does not make the agreement concerned illegal or invalid to any greater extent than is provided by section 26 or 27."
I say tentative only because by virtue of s28(1), the above does not apply to agreements "entered into in the course of carrying on a credit-related regulated activity", whatever that means. It can't mean everything covered by ss 26-27 because, if it did, s28(9) would be redundant.
Be that as it may, I think s28(9) is more of a "for the avoidance of doubt" provision and confirms what I believe to be the natural reading of s26(1) in any event. Collateral cannot enforce the contracts against lenders, but (on the face of it) there is no reason why lenders cannot enforce the contracts against Collateral.
As to whether this would do lenders as a whole any good, probably not (even assuming issues around records and documentation can be sorted out), because:
1. It would not make the pot any bigger. 2. BDO would still (almost certainly) be able to collect fees for realising the assets on lenders behalf. 3. It might well significantly increase the cost of the administration, because BDO would have to ask all lenders whether they wanted to be treated as creditors or not, and would then have to deal differently with those who did, and those who did not (for which the record keeping would be more onerous).
While lenders as a whole would probably not benefit from being treated as lenders rather than creditors, it would undoubtedly benefit some lenders (those holding mostly good, well-secured loans) at the expense of others...
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p2pete
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Post by p2pete on Jun 12, 2018 18:41:58 GMT
While lenders as a whole would probably not benefit from being treated as lenders rather than creditors, it would undoubtedly benefit some lenders (those holding mostly good, well-secured loans) at the expense of others...
i don't mind being in a pot with other lenders but I don't want to end up in a pot with every other type of creditor or businesses/employees that are owed money etc. Great post btw.
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Post by Please turn me over on Jun 12, 2018 18:58:55 GMT
C'mon guys, give 'em a break. They're trying! 
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Post by Please turn me over on Jun 12, 2018 20:31:46 GMT
<snip>
While lenders as a whole would probably not benefit from being treated as lenders rather than creditors, it would undoubtedly benefit some lenders (those holding mostly good, well-secured loans) at the expense of others...
Which points-out one of the potential problems with any kind of any collective voice as proposed by MoneyThing . The interests of Col lenders with mostly good, well-secured loans may not be aligned with the interests of other Col lenders. Indeed, the latter may prefer being treated as creditors if it prevents loan/tranch priorities being observed.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jun 12, 2018 21:17:28 GMT
The parties to the security agreements are the borrower, the Security Trustee (Collateral Security Trustee) and the lender Collateral Agent Limited (on whose behalf the ST holds the security). Collateral Agent Limited is not subject to the administration of BDO AFAIA.
Erm!!
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carolus
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Post by carolus on Jun 12, 2018 23:08:41 GMT
The parties to the security agreements are the borrower, the Security Trustee (Collateral Security Trustee) and the lender Collateral Agent Limited (on whose behalf the ST holds the security). Collateral Agent Limited is not subject to the administration of BDO AFAIA.
Erm!!
Oh dear
As far as I can tell you're right.
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Post by threeds on Jun 13, 2018 4:59:04 GMT
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Post by threeds on Jun 13, 2018 5:29:06 GMT
Also, just wanted to let other lenders know that I kept my own records and have the basics details of the loans I invested in which I can easily pull it if this is required in pulling information together
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greenslime
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Post by greenslime on Jun 13, 2018 5:51:38 GMT
Morning, Given that the administrator yesterday determined that Collateral lenders would be classified as creditors to the business and that platform data may no longer be available, this places Collateral lenders in a somewhat difficult position. While this is not our concern, we do have considerable sympathy for lenders involved and we have been considering what practical help we may be able to provide. We have made contact with an insolvency practitioner that may be prepared to act on behalf of any individual lenders to give them a collective voice. While they would not be the IP of course, since one has already been appointed, they are familiar with the P2P set up as they have acted for us before and they are an experienced administrator themselves. We have sent them some information and they are currently reviewing this to assess whether they can assist. In the meantime, if any lenders are interested in this type of solution, please let me know. Kind regards, Ed I've not been keeping up to date on this, but I find it next to impossible to believe that this data does not exist. If there is no physical record, then their would be some backups, somewhere. Presumably offsite. Even in the event the provider quickly killed off and wiped the client server, they'd not have cleared down any backups, if they existed. If collateral were maintaining their own backups, they would likely be off site. Having worked for well over a decade in data centres and providing servers/developing platforms in scenarios similar to this, I think it, unthinkable, that a recoverable backup is not somewhere... I'd be more than happy to volunteer my time to liaise with any providers and extract usable data from a database backup. fwiw - whilst in these situations in the past, I have been asked by clients to specifically delete and purge data held on servers. You can I expect draw conclusions from this. Either should be investigated imo, because either intent to commit fraud or yet more blatant incompetence and thus possible grounds for further legal action could be gained. A pessimistic non-lawyer writes. There may well be extant backups, in the shape of 1s and 0s residing on a system somewhere. I suppose the first question is where? - and of course it may not even be in UK. The next question that occurs to me is that of who now owns it? Presumably if the fees to the service provider have not been paid Col, RR or BDO don't own the data now residing with Servers'R'Us of High St, Lagos? Which leads onto the question of how does a non-owner access those 1s and 0s? Or maybe it's all much more straightforward - there's a first time for anything, even the law. As for any in-house backups that may or may not have existed - well, it's amazing what even a Guardian journalist can achieve with a few simple power tools - see here from 0:40 on
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