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Post by ron on Nov 4, 2019 16:23:04 GMT
Of all the loans you could have possibly picked where fraud has entitled lenders to become de-facto creditors of the company, you are choosing the strongest possible case - the arts loans - to say that lenders are not entitled to anything? The courts have already determined that fraud did occur, that the defendant is not credible and in contempt. The defendant can be jailed at any time should the court, at the behest of the plaintiff, choose to enforce this judgement. There is absolutely no doubt that lenders were defrauded here and FundingSecure as a company is liable. The option to enforce this judgement is open to the administrators (as lawful representatives) even if they fail to honour the unsecured lawyers fees that helped this to come about. In other words, given that the legwork has already been done and a legally enforceable judgement obtained at no expense to CG & Co, why would they suddenly drop everything - would this be in the best interest of creditors? No, of course it would not be. In your scenario, you are describing the prerogative of the Administrators that is like a venture capital fund picking through the carcass of an acquisition, being able to pick and choose what obligations they want to honour and which ones get discarded by the wayside. True, this would be the case if there had been no foul play, no deliberate mismanagement and all debts were unsecured. However, the fact that this business was entirely based on SECURED debts throws this conventional narrative out the window, by virtue of debts not being secured the sceptre of fraud and criminal negligence overrides any prerogative for the CG & Co to simply "wipe their hands clean of us" as you stated. A fundamental aspect of Administrators is to look into the mismanagement of the previous executives and recommend them for prosecution or disqualification - there are a litany of examples for this, FundingSecure clearly traded while insolvent and even released new products while insolvent, which should disqualify all of the "new" management, let alone all the old cronies who strung us up to begin with. Thanks for your response. Unfortunately I disagree with your conclusions. Do I think investors would have a good claim against FS for them having been negligent when issuing this (and many other loans). Absolutely yes. However unfortunately "There is an automatic moratorium which means that it is not possible for a creditor to bring or pursue legal proceedings against the company or its assets" - see uk.practicallaw.thomsonreuters.com/7-385-3012?transitionType=Default&contextData=(sc.Default) i.e. you are not a creditor by virtue of having a good legal case against the company. This may be unfair but this is the law. Therefore I really think the assumption that lenders are creditors is just not legally correct. Investors are not secured creditors of Funding Secure, but they had loans which were secured against third party assets. This does not make investors secured creditors of FS, even if FS was negligent in securing these loans. Legally I really don't think there is even an official relationship between the administrators and investors. The administrators sole aim is to manage the affairs of the company to efficiently achieve the best outcome for creditors. It is the FCA who signed off on FS' plan if it went out of business. I suggest we see what that says. Surely it can't be denied that those investors in loans where FS forgot to register the charge, and promised to reimburse investors, are indeed unsecured creditors. Some of those investors also invested in the art loans (myself being one). So - even purely from a creditors' point of view - it would make sense to pursue the art loans' legal case IF it has reasonable chances of bringing some recoveries.
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pip
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Post by pip on Nov 4, 2019 16:40:26 GMT
Thanks for your response. Unfortunately I disagree with your conclusions. Do I think investors would have a good claim against FS for them having been negligent when issuing this (and many other loans). Absolutely yes. However unfortunately "There is an automatic moratorium which means that it is not possible for a creditor to bring or pursue legal proceedings against the company or its assets" - see uk.practicallaw.thomsonreuters.com/7-385-3012?transitionType=Default&contextData=(sc.Default) i.e. you are not a creditor by virtue of having a good legal case against the company. This may be unfair but this is the law. Therefore I really think the assumption that lenders are creditors is just not legally correct. Investors are not secured creditors of Funding Secure, but they had loans which were secured against third party assets. This does not make investors secured creditors of FS, even if FS was negligent in securing these loans. Legally I really don't think there is even an official relationship between the administrators and investors. The administrators sole aim is to manage the affairs of the company to efficiently achieve the best outcome for creditors. It is the FCA who signed off on FS' plan if it went out of business. I suggest we see what that says. Surely it can't be denied that those investors in loans where FS forgot to register the charge, and promised to reimburse investors, are indeed unsecured creditors. Some of those investors also invested in the art loans (myself being one). So - even purely from a creditors' point of view - it would make sense to pursue the art loans' legal case IF it has reasonable chances of bringing some recoveries. Ron. I don't dispute that FS were hugely negligent in this and many other cases. I don't dispute that if you raised a FOS claim or legal claim against FS than ultimately you would have been successful. However...FS is now in administration and under the law there is a moratorium preventing claims against the company. This includes any claims from investors that they were mis-sold loans. In light of this you may in theory have a watertight claim against FS, but you won't be able to bring it and therefore are not a creditor. I don't particularly like the conclusion I have come to, and I don't suspect others will either, but based on my research I think it is correct. I do however think that a much better line of attack is to argue that the FCA must ensure that loans are diligently managed as they signed off FS' recovery plan. I highly doubt it will be the administrator who manages this. The administration of a p2p company is pretty new territory. It's not like a bank where depositors are definite creditors and where their first £85k is protected by a scheme. Here we are into the murky world of trusts, ring-fenced accounts and FCA approved plans in black boxes. Maybe things are not as bleak as they appear, all in my opinion I would urge is people stop thinking the Administrators will be our savour and hold the FCA to account.
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Post by ron on Nov 4, 2019 18:36:54 GMT
Surely it can't be denied that those investors in loans where FS forgot to register the charge, and promised to reimburse investors, are indeed unsecured creditors. Some of those investors also invested in the art loans (myself being one). So - even purely from a creditors' point of view - it would make sense to pursue the art loans' legal case IF it has reasonable chances of bringing some recoveries. Ron. I don't dispute that FS were hugely negligent in this and many other cases. I don't dispute that if you raised a FOS claim or legal claim against FS than ultimately you would have been successful. However...FS is now in administration and under the law there is a moratorium preventing claims against the company. This includes any claims from investors that they were mis-sold loans. In light of this you may in theory have a watertight claim against FS, but you won't be able to bring it and therefore are not a creditor. I don't particularly like the conclusion I have come to, and I don't suspect others will either, but based on my research I think it is correct. I think you're possibly missing my point here. It's not about bringing new claims: as you said, there is a moratorium preventing new claims after the company went into administration. Yet, well before the administration started, FS already acknowledged that the investors in the loans with no registered charge are creditors. For example, in loan 1079396222, this is what FS wrote last January: "We have previously confirmed (12 Dec 18) that if we fail to recover all funds due on this loan then Fundingsecure will stand behind the loan and repay all investors." This clearly means that FS owes capital and interest to those investors, and that therefore those investors are (unsecured) creditors of FS.
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pip
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Post by pip on Nov 4, 2019 19:04:46 GMT
Ron. I don't dispute that FS were hugely negligent in this and many other cases. I don't dispute that if you raised a FOS claim or legal claim against FS than ultimately you would have been successful. However...FS is now in administration and under the law there is a moratorium preventing claims against the company. This includes any claims from investors that they were mis-sold loans. In light of this you may in theory have a watertight claim against FS, but you won't be able to bring it and therefore are not a creditor. I don't particularly like the conclusion I have come to, and I don't suspect others will either, but based on my research I think it is correct. I think you're possibly missing my point here. It's not about bringing new claims: as you said, there is a moratorium preventing new claims after the company went into administration. Yet, well before the administration started, FS already acknowledged that the investors in the loans with no registered charge are creditors. For example, in loan 1079396222, this is what FS wrote last January: "We have previously confirmed (12 Dec 18) that if we fail to recover all funds due on this loan then Fundingsecure will stand behind the loan and repay all investors." This clearly means that FS owes capital and interest to those investors, and that therefore those investors are (unsecured) creditors of FS. Ron - the example you give was a one off for a small amount and would have been discretionary. Unfortunately what they said before administration now is pretty irrelevant, the administrators are not bound by what they promised. So maybe maybe one may make a weak argument for holders of the loan you cite being unsecured creditors, the others I can’t see any legal argument with weight. What I think though is irrelevant, whether you are a creditor or not will not depend on what I say. Put in your claim with the creditor and see what they say. I’m only giving my view of the law, if you disagree you are entitled to that. Just my opinion that pursuing the administrators is not my chosen route, I am going after the fca. That’s assuming there isn’t a good plan and things are not as bad as we think
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wuzimu
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Post by wuzimu on Nov 5, 2019 2:22:24 GMT
pip the position is a little more nuanced than you make out..... When a company enters administration, there is a statutory moratorium on creditors starting legal process to recover debts owed by the company. However that does not mean the party who asserts their creditorship cannot bring their claim to the administrator and have their position as a creditor accepted by the administrator to be entered into the Outcome Statements.
In fact this is exactly what should happen, and it is exactly what FSAG will be doing ... watch this space..... Of course nobody expects there to be many or any £'s in FS at the close of the administration to pay out to creditors as a diividend. But that is not the aim. The aim is to frame the administration and any 3rd partiy litigation etc, to the benefit of lenders (who should also be considered creditors).
That is the only solution that embodies equity in these P2P platform failures.
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adrian77
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Post by adrian77 on Nov 5, 2019 7:57:18 GMT
This one is losing me - however granted we can bring a claim to the administrator would I be correct in thinking it would be towards the end of a very long queue and that is assuming they accept the claim which is not guaranteed? In short is any claim basically worthless?
I am still very annoyed not only about how grossly incompetent and cluess FS have been but also the fact they are cowards who have run away without a single word of apology.
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Mucho P2P
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Post by Mucho P2P on Nov 5, 2019 8:19:03 GMT
This one is losing me - however granted we can bring a claim to the administrator would I be correct in thinking it would be towards the end of a very long queue and that is assuming they accept the claim which is not guaranteed? In short is any claim basically worthless? I am still very annoyed not only about how grossly incompetent and cluess FS have been but also the fact they are cowards who have run away without a single word of apology. adrian77 the aim is to effectively get a seat at the administrators table on behalf of all lenders, after all, it is our money that everyone is fighting over! It is not so much to be in line for the creditors payouts, FS is effectively bust. The aim is to observe that what is done with our cash is realistic and controlled and that the administrators, lawyers and whoever else is in line do not overly remunerate themselves with our cash when it is disbursed from the dissolved trusts. <-amongst other items....
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adrian77
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Post by adrian77 on Nov 5, 2019 9:05:35 GMT
Good move! This is coming clearer to me now - thanks a lot and good luck.
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Mousey
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Post by Mousey on Nov 6, 2019 11:39:06 GMT
Just found this update on another chattel loan: De ja vu
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adrian77
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Post by adrian77 on Nov 6, 2019 12:21:36 GMT
Pip - thanks for all your input over this one - sadly I have to agree with your conclusions.
Any chance of details of this other chattel loan being posted in FS DD?
I see no excuse whatsoever for assets disappearing; does e.g. James in "Posh Pawn" etc lose his and get taken for a fool - does he hell!
Thanks a lot -
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paulb
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Post by paulb on Nov 6, 2019 13:09:03 GMT
adrian77, unless that's a new update, I suspect that update relates to the racing cars, as it looks somewhat familiar. I'm in some of these, and fully expect zero return.
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Mucho P2P
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Post by Mucho P2P on Nov 6, 2019 13:35:34 GMT
Pip - thanks for all your input over this one - sadly I have to agree with your conclusions. Any chance of details of this other chattel loan being posted in FS DD? I see no excuse whatsoever for assets disappearing; does e.g. James in "Posh Pawn" etc lose his and get taken for a fool - does he hell! Thanks a lot - does e.g. James in "Posh Pawn" etc lose his and get taken for a fool <- Of course not, as he takes POSSESSION! Why does he take possession? (a) its his own capital, and (b) Possession is nine tenths of the law!
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adrian77
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Post by adrian77 on Nov 6, 2019 16:31:57 GMT
exactly - and he knows what he is doing - granted being in property it was obvious to me that FS were clueless in this field but I never thought they would have such a lack of business acumen to lend money against a glorified OIU for e.g. the art loans and not even take possession - hardly take up a lot of space do they - wonder if the one thought to be in Dubai will ever turn up?
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Mousey
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Post by Mousey on Nov 12, 2019 14:19:32 GMT
The legal firm instructed by FS is owed £110,000 according to the list of creditors in the administrators report
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michaelc
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Post by michaelc on Nov 12, 2019 14:47:03 GMT
The legal firm instructed by FS is owed £110,000 according to the list of creditors in the administrators report Presumably that could be spread among other cases too?
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