The “Director Background Checks” on the C2F website states:
“…investors can invest safe in the knowledge that our risk team will reject any application where our checks indicate any of the following:
• Any director of the business was also the director of a business which failed from unpaid debt or was the director of a failed business which failed in the same industry in the last 5 years.
The above factors will result in an immediate decline of application”
Man** Hou** Sch*** Director Mr San**p T**nk, was a director of St*neyg*te Coll**** Ltd which was dissolved via Liquidation with no money being returned to Floating Charge Debenture holders, preferential or unsecured creditors.
Acc**s Inst**l Director Mr Le* Sh**n Dick*** was a director of Sail**sh EMEA Ltd which was dissolved via Liquidation with no money being returned to unsecured creditors.
Pl*st*y Limited Director Ter**ce Da**d L**ndes was also the director of Tri-**g Ltd which went into Administration on 26th of June 2012. Secured creditors received back only a third of their debt and unsecured creditors only 16.215p in the pound. Interestingly, Mr L**ndes went on to buy the stock of his failed business and began trading again as Dup**y Limited, which then changed its name to Pl*st*y Limited which he went on to buy the assets of at a knock down price as part of the Administration.
The “Security Review” on the C2F website states:
“The second aspect of our decision to support a loan is a security assessment for the facility. Whilst security isn’t a substitute for a business’s ability to repay their debt, a strong security package will improve the risk profile of the loan and will reduce the level of risk to investors.
Every loan is assessed on a case-by-case basis; however, some sort of security will be required in each instance, ranging from personal guarantees to floating or potentially fixed asset charges.”
During the administration of Pl*st*y Ltd, C2F were found to have failed to have secured the loan with a debenture, having transferred the money to Pl*st*y Ltd before the debenture was created on 12th April 2018. Thus, Crowd2fund became an unsecured creditor and is unlikely to receive a dividend.
C2F noted in an email “Our lawyers are currently taking care of the debenture matter”. However, there is only about 7k left after Administrators fees. Proper due diligence would have shown the Fixed Assets in the business to have little value if sale became necessary. In fact, they have been sold back to the director for £1.1k.
This is a surprise to investors because Fixed assets in the 2017 Balance Sheet displayed for would be investors on the C2F website showed £231k.
However, this balance sheet had £170k switched to Fixed Assets from Current Assets compared to the Balance sheet already filed in Dec 2017 with Companies house. This £170k relates to an “investment” in a classic car purchased on HP with only a “nominal sum of equity” according to the Administrator. This car was returned to the HP company.
The only reason to do this would be to mislead investors and/or C2F. Proper due diligence would have at the very least enabled C2F to display the correct Balance Sheet to investors.
The “Financial Assessment” on the C2F website states:
“In the case of a business applying for debt funding (including loans, mini-bonds or revenue loans), our underwriting team performs an assessment to evaluate the business’s ability to meet repayments over the life of the requested loan.
The primary consideration for our underwriters is the business’s cashflow generation. We look at this in order to gage if they will be able to meet their repayments. Profitability is also considered to assess the business’s longer-term sustainability. We expect a minimum threshold of cash-cover for repayments.”
Integ** Ene*** 2017 Balance Sheet displayed for would be investors on the C2F website had Net Equity of £117k. The Accounts were immediately refiled with Companies house after the loan was arranged showing an actual Net Equity of just £15k.
Proper due diligence would have noted that there was an overdrawn Director’s Current Account included in the Debtors Account. First, this is illegal under the Companies Act something anyone carrying out DD should know. Second there was no reason for it as a dividend paid to the Director to clear the account would not have exceeded retained profit. The only possible reason for this was to improve the account and mislead investors.
The due diligence carried out on Acc**s Inst**l failed to pick up on the fact that Revenue and Current Assets were both overstated in the 2018 accounts by £1.9m, resulting in a Net profit of £281k becoming a Net loss of £670k.
Competent due diligence surrounding the massive increase in Revenue and Debtors would have uncovered an accounting issue which would have undermined the business forecasts and ability to repay the loan.
C***J**** Homes has been restructured into risky balloon payments over a longer period of time with the same interest rate and no extra security without C2F ever having mentioned to investors that the company is in liquidation or recognising it as a default. The payments are being made by a director.
St***ton Trad**g Ltd. appointed a voluntary liquidator on 1st October 2019. C2F acknowledged that the accounts provided on the campaign page were that of H**val Trad**g LLP. it appears that whilst St***ton Trad**g went into Liquidation, H**val Trad**g LLP was never liquidated despite having all the liabilities transferred to Stockton Trading Ltd whilst leaving the cash behind.
O** P**nt S***lies Ltd. Received a loan in Sept 18 and made only 3 payments.
• 28/12/2018 A Default letter was sent
• 11/01/2019 Statutory demand letter was sent
• 19/08/2019 Handed to recovery partners
• 17/09/2019 Email “We are looking at starting legal action” ….. “not cooperating”
• 02/10/2019 Email “Is now in default and passed to recovery”
• 14/11/2019 Written off
The above details show very poor standard of recovery action from C2F but it is worse when you know that the director was made bankrupt on 13/09/2019.
C2F claimed on the website, now removed, that there was nothing left for them from the bankruptcy. I suspect they never even knew the bankruptcy was happening. They would not send me a copy of the Official receiver’s final report to creditors.
The above post are some of the loans where C2F should not have initiated the loans as these loans did not fulfill C2F loans terms & conditions. If you have any of these loans then ask C2F if they can refund you the money. C2F will try to fob you with lots of excuses but keep persisting. PM me if you need any help.