Investor
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Post by Investor on Sept 25, 2014 10:04:50 GMT
Nick
Many thanks for this
I feel you have distilled thousands of post into one very accurate and informative single post on the SS/Lendy opportunity. Your post should be made mandatory reading for all new investors on the platform! My only addition is to add to your comments on the responsiveness of the SS team and to the simplicity of the website. Difficult to place a monetary value on these but as 'Pros' they are the areas that SS stands out from the crowd and seem to be gaining traction in the p2p arena.
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Liz
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Post by Liz on Sept 25, 2014 11:25:00 GMT
SS has insurance in place in case the platform folds, which would pay for recovering the monies owed to lenders(maybe fca demanded this)
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gb007
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Post by gb007 on Sept 25, 2014 13:16:10 GMT
Great summary Nick. To add a couple of points: Lendy Ltd’s abbreviated accounts for the period ended 31 December 2013 are filed at Companies House and indicate profitability, albeit small. An initial funder who had a charge over the company is also disclosed at Companies House. In addition, Lendy is on the FCA’s Interim Permission Consumer Credit Register with permission for Consumer Credit Business and Peer to Peer Lending, see fca-consumer-credit-interim.force.com/CS_RegisterSearchPageNew |
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nick
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Post by nick on Sept 25, 2014 15:19:25 GMT
SS has insurance in place in case the platform folds, which would pay for recovering the monies owed to lenders(maybe fca demanded this) This is interesting I for one will be seeking more clarification regarding the exact purpose and scope of this insurance as I struggle to understand how it fits in. Under the structure as I understand it, we are lenders to Lendy Ltd with repayment conditional on performance of notationally underlying loans, including realisation of any security value in the event of default. However, we do not have any formal recourse to the security (as we have no formal relationship with the end borrowers and security can not be reassigned trivially). Thus, in the event of Lendy folding, the company will continue to be owed by its underlying borrowers and will itself have payment obligations to ourselves as creditors. We do not have any direct recourse to the borrower. Normally an administrator would be appointed to either run-down the business and realise the most value for creditors (us), or look to restructure the business so it can trade out of its difficulties - whichever is most likely to be most beneficial to creditors. Maybe the insurance effectively pays the administrators costs (which can quite expensive and normally comes out of the creditors pot) to minimise value leakage to creditors? Insurance is not a FCA requirement, but it can be used to address some of the prudential requirements imposed on authorised firms so I don't think this is the reason. Perhaps if someone from SS reading this can comment directly on this forum and provide some clarity to the community? Otherwise I will email them and report back with any response.
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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 Sept 25, 2014 15:42:26 GMT
SS has insurance in place in case the platform folds, which would pay for recovering the monies owed to lenders(maybe fca demanded this) This is interesting I for one will be seeking more clarification regarding the exact purpose and scope of this insurance as I struggle to understand how it fits in. Under the structure as I understand it, we are lenders to Lendy Ltd with repayment conditional on performance of notationally underlying loans, including realisation of any security value in the event of default. However, we do not have any formal recourse to the security (as we have no formal relationship with the end borrowers and security can not be reassigned trivially). Thus, in the event of Lendy folding, the company will continue to be owed by its underlying borrowers and will itself have payment obligations to ourselves as creditors. We do not have any direct recourse to the borrower. Normally an administrator would be appointed to either run-down the business and realise the most value for creditors (us), or look to restructure the business so it can trade out of its difficulties - whichever is most likely to be most beneficial to creditors. Maybe the insurance effectively pays the administrators costs (which can quite expensive and normally comes out of the creditors pot) to minimise value leakage to creditors? Insurance is not a FCA requirement, but it can be used to address some of the prudential requirements imposed on authorised firms so I don't think this is the reason. Perhaps if someone from SS reading this can comment directly on this forum and provide some clarity to the community? Otherwise I will email them and report back with any response. They already have elsewhere ... twice. Heres the quote from further up this thread 'With regards to our run down procedures (again something that no other P2P network publishes). We have insurance in place that will cover the cost of a third party to conduct the orderly administration of contracts in the event the platform ceases to operate.' Only difference to other platforms seems to be that the others have a named intermediatory waiting in the wings to undertake the management of the loan book.
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webwiz
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Post by webwiz on Sept 25, 2014 15:47:55 GMT
Lurking in the background is a wealthy individual who has put up the seed capital. I think this may be the owner of the superyacht, as he is said on this forum to have a floating charge over Lendy, so will be paid before us. If the capital is in the form of a loan rather than equity he may be in a position to pull the plug at any time, leaving us to share out any dregs left.
I really hope that someone will tell me I'm wrong.
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nick
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Post by nick on Sept 25, 2014 15:50:04 GMT
Great summary Nick. To add a couple of points: Lendy Ltd’s abbreviated accounts for the period ended 31 December 2013 are filed at Companies House and indicate profitability, albeit small. An initial funder who had a charge over the company is also disclosed at Companies House. In addition, Lendy is on the FCA’s Interim Permission Consumer Credit Register with permission for Consumer Credit Business and Peer to Peer Lending, see fca-consumer-credit-interim.force.com/CS_RegisterSearchPageNewThanks for the steer to their accounts. The FCA authorisations should be taken with a pinch of salt. I have been unfortunate enough in previously helping to set up an investment advisory business and obtaining FSA authorisation for a number of activities. This was 6-7 years ago, so things have probably changed a bit, but I found the regulation to be very box ticking in nature. It was good in providing the minimum expected internal controls, prudential requirements etc, and providing guidance on how the business should be managed and controlled, but was very big picture and often satisfied by written procedure etc to tick boxes rather than adding real world value. The interim regulatory requirements also look very light, probably why they aren't covering these businesses under the financial compensation scheme. That said, it does provide some comfort, but I wouldn't overly rely on it. I have been unfortunate enough to lose money as a result of Lehman Brothers, and more recently MF Global the broker. The case of MF Global particularly irked me as I found out that my funds (I had closed out all my positions and was justing waiting for the transfer of cash out of my account) instead of being in a segregated account, never made it there and just became part of the unsecured creditor pool. MF Global hadn't abided by the rules (probably due to incompetence rather than intentional blatant rule breaking), but no good suing a bankrupt company that you are creditor too! Anyway, I did get full value back after several years, but it demonstrated to me that regulation does make things safer, but far from risk free and I always make sure I could ultimately stomach a 100% in the worst case scenario when making any investment. Anyway, enough of my ranting.........
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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 Sept 25, 2014 15:52:37 GMT
Lurking in the background is a wealthy individual who has put up the seed capital. I think this may be the owner of the superyacht, as he is said on this forum to have a floating charge over Lendy, so will be paid before us. If the capital is in the form of a loan rather than equity he may be in a position to pull the plug at any time, leaving us to share out any dregs left. I really hope that someone will tell me I'm wrong. Charge was released when first Superyacht loan was repaid, I believe. Its referred to in the latest superyacht thread & in more detail elsewhere if I recall EDIT. Quick check of Companies House lists 1 charge as satisfied May 2014
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nick
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Post by nick on Sept 25, 2014 16:02:01 GMT
This is interesting I for one will be seeking more clarification regarding the exact purpose and scope of this insurance as I struggle to understand how it fits in. Under the structure as I understand it, we are lenders to Lendy Ltd with repayment conditional on performance of notationally underlying loans, including realisation of any security value in the event of default. However, we do not have any formal recourse to the security (as we have no formal relationship with the end borrowers and security can not be reassigned trivially). Thus, in the event of Lendy folding, the company will continue to be owed by its underlying borrowers and will itself have payment obligations to ourselves as creditors. We do not have any direct recourse to the borrower. Normally an administrator would be appointed to either run-down the business and realise the most value for creditors (us), or look to restructure the business so it can trade out of its difficulties - whichever is most likely to be most beneficial to creditors. Maybe the insurance effectively pays the administrators costs (which can quite expensive and normally comes out of the creditors pot) to minimise value leakage to creditors? Insurance is not a FCA requirement, but it can be used to address some of the prudential requirements imposed on authorised firms so I don't think this is the reason. Perhaps if someone from SS reading this can comment directly on this forum and provide some clarity to the community? Otherwise I will email them and report back with any response. They already have elsewhere ... twice. Heres the quote from further up this thread 'With regards to our run down procedures (again something that no other P2P network publishes). We have insurance in place that will cover the cost of a third party to conduct the orderly administration of contracts in the event the platform ceases to operate.' Only difference to other platforms seems to be that the others have a named intermediatory waiting in the wings to undertake the management of the loan book. If the insurance just covers the cost of the administrator, then that is of very limited value. If Lendy folded, it would be due a material financial deficit/loss rather than a small shortfall the shareholders could shore up. This loss, beyond any capital cushion provided by its shareholders, would be born by us as unsecured creditors. The insurance policy would help the administration process and recovery of debts, but would not address the deficit in Lendy's books caused by whatever reason. If Lendy's activities are limited to the loan book that is visible to us, then the risk appears to be managed by the security packages in place and diversification (and assuming operating costs are controlled). However, it is not clear to me whether Lendy is engaged in any other activities or other risks it may be exposed to beyond the credit risk of the visible loan book. With other true P2P platforms you do not have the same risk - you are directly exposed to the credit of the borrower, and your risk to the platform is limited to the administration of your loan (which can be addressed by insurance to pay for a replacement administrator).
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ilmoro
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Post by ilmoro on Sept 25, 2014 16:13:54 GMT
They already have elsewhere ... twice. Heres the quote from further up this thread 'With regards to our run down procedures (again something that no other P2P network publishes). We have insurance in place that will cover the cost of a third party to conduct the orderly administration of contracts in the event the platform ceases to operate.' Only difference to other platforms seems to be that the others have a named intermediatory waiting in the wings to undertake the management of the loan book. Sept 25, 2014 17:02:01 GMT 1 nick said:If the insurance just covers the cost of the administrator, then that is of very limited value. If Lendy folded, it would be due a material financial deficit/loss rather than a small shortfall the shareholders could shore up. This loss, beyond any capital cushion provided by its shareholders, would be born by us as unsecured creditors. The insurance policy would help the administration process and recovery of debts, but would not address the deficit in Lendy's books caused by whatever reason. If Lendy's activities are limited to the loan book that is visible to us, then the risk appears to be managed by the security packages in place and diversification (and assuming operating costs are controlled). However, it is not clear to me whether Lendy is engaged in any other activities or other risks it may be exposed to beyond the credit risk of the visible loan book. With other true P2P platforms you do not have the same risk - you are directly exposed to the credit of the borrower, and your risk to the platform is limited to the administration of your loan (which can be addressed by insurance to pay for a replacement administrator). I take your point though I think this is something they have addressed elsewhere. However, for those who dont use this board or have the time to hunt, it would certainly be useful if they addressed this clearly & obviously on their site as it seems to be regularly re-occuring issue on these boards.
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ramblin rose
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“Some people grumble that roses have thorns; I am grateful that thorns have roses.” — Alphonse Karr
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Post by ramblin rose on Sept 25, 2014 16:26:39 GMT
Lurking in the background is a wealthy individual who has put up the seed capital. I think this may be the owner of the superyacht, as he is said on this forum to have a floating charge over Lendy, so will be paid before us. If the capital is in the form of a loan rather than equity he may be in a position to pull the plug at any time, leaving us to share out any dregs left. I really hope that someone will tell me I'm wrong. Charge was released when first Superyacht loan was repaid, I believe. Its referred to in the latest superyacht thread & in more detail elsewhere if I recall EDIT. Quick check of Companies House lists 1 charge as satisfied May 2014 Yes, the charge was well discussed on this board in the early days, as was its removal several months ago. Many of the current lenders were waiting for removal of the charge before they started to become involved. It was the owner of the superyacht, as you say. All well and truly in the past.
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Post by savingstream on Sept 27, 2014 7:47:34 GMT
Just to clarify this as I think there is some confusion here. The superyacht owner has borrowed from Lendy before (last year). A separate HNWI loaned Lendy the funds to make this loan (as SS didn't exist) and placed a charge over Lendy for the duration of the loan. When the superyacht borrower repaid, the lender was repaid and therefore removed the said charge from Lendy Ltd in May 2014.
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webwiz
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Post by webwiz on Sept 27, 2014 8:49:03 GMT
Just to clarify this as I think there is some confusion here. The superyacht owner has borrowed from Lendy before (last year). A separate HNWI loaned Lendy the funds to make this loan (as SS didn't exist) and placed a charge over Lendy for the duration of the loan. When the superyacht borrower repaid, the lender was repaid and therefore removed the said charge from Lendy Ltd in May 2014. Which begs the question why the HNWI did not simply lend the money directly to the yacht owner with the boat as security.
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mikes1531
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Post by mikes1531 on Sept 27, 2014 10:40:02 GMT
Just to clarify this as I think there is some confusion here. The superyacht owner has borrowed from Lendy before (last year). A separate HNWI loaned Lendy the funds to make this loan (as SS didn't exist) and placed a charge over Lendy for the duration of the loan. When the superyacht borrower repaid, the lender was repaid and therefore removed the said charge from Lendy Ltd in May 2014. Which begs the question why the HNWI did not simply lend the money directly to the yacht owner with the boat as security. Because Lendy was trying to get the SS business going? And acting as middleman. The HNWI might not have known about the superyacht owner and their desire to borrow. If Lendy was aware of them both and put the deal together, then they're entitled to take advantage of their position/knowledge/contacts. That's what brokers of all types do for a living.
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