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Post by wiseclerk on Jun 26, 2018 7:28:46 GMT
Yes but I read it, that that was based upon the suggestion of the FCA. (maybe I got it wrong?)
The question is the same: Is there a tender requirement the FCA has to follow to "suggest" a company for this.
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ilmoro
Member of DD Central
'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 27, 2018 11:19:18 GMT
BDO has just sent out a FAQ. Will be uploaded to website shortly
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Post by moorfields on Jul 4, 2018 13:01:28 GMT
Please find below Moorfields' summary of the Administrators’ proposals in the matter of Collateral (UK) Ltd, Collateral Security Trustee Ltd and Collateral Sales Ltd (collectively known as the ‘Companies’) (the ‘Proposals’). This is only a summary of the Proposals and is not to be considered as legal advice. Investors and creditors are recommended to seek their own legal advice.
Background
The Companies operated as a peer to peer lenders and following a dispute with the FCA, the directors took steps to put the Companies into administration on 28 February 2018. Mr Gordon Craig of Refresh Recovery Ltd was initially appointed as an Administrator.
On 15 March 2018, the FCA applied to court to seek a declaration that the appointment of Gordon Craig was invalid and that Shane Crooks and Mark Shaw of BDO LLP (‘BDO’) be appointed as replacement administrators. This order was made at a hearing on 27 April 2018 and the fees paid to Refresh Recovery have been repaid to the estate.
It would appear that due to the undertakings provided by Gordon Craig, no steps were taken in regard to the Companies’ affairs between 28 February 2018 and 27 April 2018. Following BDO’s appointment, they have completed the following:
1. Seized the cash at bank - £383,243 and £429,307 in the office and client accounts, respectively;
2. Attended Companies’ premises;
3. Met with the directors – Mr Andrew Currie and Mr Peter Currie, along with Gordon Craig;
4. Recovery of books and records;
5. After initial difficulties regarding recovery of the electronic data, the Companies’ servers have been secured and are being interrogated.
Current findings
BDO has established that there were two loan books, one dealing with loans secured on property and another where the loans are secured on chattels. Prima facie, both loan books are secured against the value of the assets. Many of the loans are overdue and borrowers will need to re-finance to enable repayment. This is likely to cause a delay in realisations.
Key determination
One of the key concerns on the P2P forum was the classification on whether investors were considered creditors or whether there was some trust status created. BDO advise they have taken legal advice and provided positive news that their preliminary view is that investors have ‘trust’ status and that in the event that the loans are not repaid in full from the realisations of the loan books, then any shortfall can included as an unsecured creditor. Therefore, investors have vastly improved prospects of recovery when there are two opportunities to claim.
Prospects of recovery
The news is generally positive that investors are likely to recover some of their investments, but BDO has correctly managed expectations in raising concerns about the quality of the loan book, the levels of security, the accuracy of the Companies’ books and records and whether litigation is required. BDO have confirmed there is no secured creditor, therefore in essence, once the costs of realisations are deducted from the realisations, the balance is available for distribution.
It is standard practice for Administrators to be unable to provide an estimate at this stage of the likely outcome as it is still relatively early in the Administration process.
BDO Fees
BDO are seeking to be paid on a time-cost basis and are seeking approval from either the general body of creditors, or a Creditors’ Committee (if created). They have confirmed that payment of their fees will be paid from any ‘non-trust’ realisations or as agreed with the Creditors’ Committee.
This proposal is beneficial in that the fees are not deducted from trust assets, but it is likely to substantially reduce, if not extinguish, the funds available to unsecured creditors. BDO have incurred £102,417 in Work In Progress (WIP) to date and have estimated their total WIP to be £533,276. If the basis of remuneration and estimate are approved by creditors (or Creditors’ committee), this estimate becomes a cap and BDO cannot exceed this limit without seeking further approval from creditors.
Whilst it is accepted that BDO should be paid for the work they undertake, Creditors should be aware that there are other forms of remuneration, which could be a percentage of recoveries which incentivises the administrators and avoids inefficiency or alternatively apply a fixed fee, thereby providing certainty to creditors, knowing that once that amount has been paid, all additional realisations will be available for distribution. It is also possible that Creditors approve a combination, for example, a fixed sum of ‘X’ to cover statutory work and ‘Y%’ in realising assets. In the absence of an agreement with creditors, the Administrators can apply to court for approval.
Next Steps
BDO are inviting creditors to agree their proposals to allow them to continue to manage Companies’ affairs and to exit the Administration by Creditors’ Voluntary Liquidation. Due to the change in Insolvency Rules, these proposals will be passed unless creditors object. In order to object you will need to complete Appendix 7 – Creditors’ request for a decision.
However, BDO require a positive response for their fee proposal to be passed. This can be arranged either by the general body of creditors or by a creditors’ committee. If you wish to participate either by accepting / rejecting the fee estimate or be a member of the Creditors’ committee, you need to complete Appendix 10 – Notice of Convening a Decision Procedure For Creditors by Correspondence.
Conclusion
I hope investors / creditors find this summary useful and prima facie, there is a real prospect that investors will recover an element of their investments. Clearly recovery will take time and it maybe sometime before investors see any repayment. Ordinary, unsecured creditors do not fare quite so well in so far as BDO propose to be paid from realisations which otherwise would have been paid to unsecured creditors.
Administrators are required to provide a progress report every six months and if a creditors’ committee is formed, the members will be entitled to reports no less than every two months. A creditors’ committee will also be able to fix the basis of remuneration.
Questions from the P2P forum
A number of questions have been raised on various threads on the P2P Collateral Forum. Regrettably not all questions can be answered in this summary, but a selection have been chosen that have the most relevance.
1. Are Moorfields connected in any way to Refresh Recovery Ltd?
No – Moorfields is an independent firm of Insolvency Practitioners and have no relationship with Refresh.
2. Will BDO be re-valuing the business if the Company is being wound up rather than sold on?
BDO are obliged to maximise assets on the basis that the Company is being wound up.
3. Do BDO have an obligation to treat all investors fairly?
It would appear that investors will be treated as a separate class of creditor, via a trust arrangement and be paid from assets unavailable to ordinary, unsecured creditors.
4. If creditors do not agree with the pre-filled proof of debt form, what is acceptable evidence?
You can send BDO evidence i.e. bank statements, ledgers, emails or correspondence etc of the correct figure.
5. Will creditors who submit claims have their personal details in the public domain?
If you have concerns regards your personal data, please direct those to BDO.
6. What would happen if majority of investors disagree with the proposals?
The matter would need to be reported to court and ultimately, the administrators could make an application to court for directions and it is possible that the court could order the Winding Up of the Company and appoint new liquidators.
7. If more than 5 nominations are received by BDO for a creditors’ committee, what happens?
For a Committee to come into being, generally, there must be a minimum of three investors and / or unsecured creditors who are willing to act. The maximum number of creditors who may sit on the Committee at any one time is five, so if more than five unsecured creditors express an interest in being on the Committee there must be a vote. This vote will be managed by BDO, and other unsecured creditors will be given the opportunity of deciding which of the interested creditors get to form the Committee. You have to agree in writing to sit on the Committee so you will never be voted onto a Committee without your knowledge or agreement.
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dandy
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Post by dandy on Jul 4, 2018 13:17:14 GMT
Excellent summary. Thank you. "trust status" "fees are not deducted from trust assets" "After initial difficulties regarding recovery of the electronic data, the Companies’ servers have been secured and are being interrogated" All this is hugely positive. Not sure we could ask any more than that. I think FCA/BDO have done very well to get a grip on this.
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blender
Member of DD Central
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Post by blender on Jul 4, 2018 13:56:11 GMT
Excellent summary. Thank you. "trust status" "fees are not deducted from trust assets" "After initial difficulties regarding recovery of the electronic data, the Companies’ servers have been secured and are being interrogated" All this is hugely positive. Not sure we could ask any more than that. I think FCA/BDO have done very well to get a grip on this. Yes, very helpful. If fees are not to be deducted from trust assets, and the non-trust assets are mainly or fully extinguished by the £500k of fees, then it is important to know, a. what are these non-trust assets and do they include any cash which lenders were hoping to get back? And b. how will BDO be paid if their fees exceed the non-trust assets? Presumably, important roles for the creditors' committee.
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