Lendy In Administration

Reminds me of of a (partially) titular line from an REM song:  "It's the end of the world as we know it and I feel fine".

Substitute 'world' with 'P2P' and pretty much anything that tightens up platform operations, educates platform users and limits the over-reliance placed on PFs and SMs and I'm of the same mind as Mssrs Stipe, Mills & co.

IMO, there could be a place for P2P platforms of various flavours, but not as it is today.  Too much 'boom-then-bust', especially given the length of some property development (and to a lesser extent bridging) loans, where 'holding to term' is often considered a foolish 'strategy'.

Remove any option for 'strategy' (beyond tons of diversification) and the game changes to the benefit of (almost) everyone.

Yes, PGs are usually worthless. To easy to move assets in general.

Most of lendys Borrower’s don’t seem to have much if any skin in the game.

The loans where borrowers have put in some of their own cash usually turn out quite well. Thinking of the <redacted> cement factory which I wouldn’t have touched had I not been for large personal investment from the borrower.

I agree.but even LB has to rely on experts..and RICS are highly paid experts..it's thier job..a lot of valuations are just wild guessing...no skill required.

I'm not on top of the Lendy situation since my exposure was very small. I don't see this as that similar to COL. With the exception of the "old loans", it's unlikely that lenders in 36H contracts are creditors for a liquidated amount. Perhaps the FCA forced the company to elect for administration due to breach of reg cap rules; perhaps they were just plain insolvent. Yes, administrators have a high charge out rate but their overheads are less since they are just trying to unwind current positions, there will be less staff and overheads etc. I wouldn't assume that RSM is worse than Lendy.

With regard to recovery values. Normally, in bilateral loan agreements, when the lender goes into administration, recovery values fall since the borrowers understand they are in a stronger position; time favours them as the administration cannot be open-ended. Administrators often have to sell the loan books at firesale prices to expedite the position. This situation here is somewhat different, however, since it's the agent that has gone down not the lender. Moreover, it's not clear Lendy was doing a good job at recovery. I'm afraid this is best covered by "prepare for the worst and hope for the best" but again I wouldn't assume you are now in a worse position.

One of the big questions will be essentially "where did all the fees go"? Lendy originated £428mm in loans. From memory, based on their accounts for 15/16 and 16/17, turnover was £29.2m and £32.2m but net profits were just £2.6mm and £0.6mm, respectively (by end FY17 the had originated around £285mm in loans). We have no idea for 17/18 since they transferred ownership of Lendy Ltd to Lendy Group, and the accounts for Lendy Group are late (quelle surprise!). They only originated around £95mm loans during FY17/18 and <£50mm in 18/19, so they may well have registered a loss for both of those years if we extrapolate from 15/16 and 16/17 margins (compressing) and costs (rising). We do know that retained earnings were around £3.4mm for end FY16/17. This was after £1mm was transferred to an offshore entity, Wealth Protection International Remumeration Trust, with LB and TG as beneficiaries, and also £820k was owed to Lendy by property development company Teal Capital, which at the time was owned by LB and TG. Frankly, there is a web of companies to deal with here, many of whom seem to have been detached from the HoldCo in recent months/years. Nonetheless, there is still a question of where did the retained earnings go and why were admin expenses so high during their "successful" years. They didn't have that many staff in 15/16 for example. This may be all perfectly legit but having a forensic accountant take a look may be worthwhile.