elliotn
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Post by elliotn on Mar 2, 2018 10:37:09 GMT
Although tbf it was running losses with negative liabilities in its last accounts. Without inquiring what is a "negative liability", and with zero intentions to have a interchange of thoughts about this, I want to remark that a company can make a loss without being insolvent. Most startups and young companies have operating loses during early years without falling into insolvency. Losses are fine but you unfortunately do need to understand negative liabilities before replying about insolvency. An 'interchange' is unavoidable to help other investors more willing to understand - the funding of their losses is not on their balance sheet so perhaps you could tell us where you think the funding lines for these losses are coming from? There are no notes for going concern or creditors, just that the directors lent 86,000 to another company of theirs. / auditor hat on.
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blender
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Post by blender on Mar 2, 2018 11:01:33 GMT
It's not a situation that would result in contagion because the failure of Collateral was not caused by a systemic risk. Yes, that is the strict definition, but I think the queston needs to take into account the consequences of COL's administration, which is in the short term at least going to be a loss of lender appetite on similiar platforms making funding new loans hard work. The clue to answering the question posed is in MT's update this morning "we operate a stable business model that includes ongoing revenue from interest and does not rely solely on new loan origination." (my bold). If there is any platform needing fees from ongoing loan origination for their survivial, they will be feeling a bit uncomfortable this morning. This is spot-on. We need to distinguish between the superficial reasons for failure (a safe word) and the underlying causes. On start-up it is good to get your income up-front, to reduce the cash requirement, but in the longer term you need a revenue stream to manage the loan book that has been created. FC started wisely with a mix, but I think has always had a challenge with the 1%. It forced them to become bank-like from the lender's perspective, though I think that was always the intention. With the smaller platforms it is important to look for a sustainable business model and to see how the income stream develops in practice to match the changing pattern of costs.
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Post by penguin on Mar 3, 2018 15:37:41 GMT
The success or otherwise of the COL loan book unwind will become the most significant part of this episode for the industry
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