Administration - State of Play & Significant Information (L)

Our intention is to allow withdrawal requests to be reinstated as of the close of business on Wednesday 30th October 2019. Thank you for your cooperation in this matter.

TO ALL KNOWN INVESTORS
15 November 2019

Dear Sir/Madam

Lendy Ltd ("Lendy"), Lendy Provision Reserve Limited and Saving Stream Security Holding Limited - all in Administration (together "the Companies")

Further to our prior communications I would like to update you on the progress of the Administration.

Distributions

In line with our investor update on Friday 25th October the Joint Administrators have today updated the respective investor accounts for the interim distributions in respect of the following loans:
• PBL 163;
• PBL 164;
• PBL056;
• PBL 103; and
• PBL 193

As previously advised, the withdrawal facility is available to investors whom have cleared the anti-money laundering checks.

Further Distributions

We expect the interim distributions for PBL 177 and PBL 178 will be processed next week.

Interim Distributions

Please note these are interim distributions and it is anticipated there could be further distributions in respect of these loans.

Zendesk

The Zendesk will have limited cover for the week commencing Monday 18th November. The team will endeavour to respond to queries on a timely basis, but this response time may be longer than normal.

Distribution breakdown

The Joint Administrators will shortly circulate an update explaining how the loan realisations are being distributed, following legal advice received.

Money Laundering Checks

The Lendy team will continue liaising with individuals who currently have not fulfilled the money laundering checks. Please assist the team as this will accelerate the process.

Regrettably these final checks are a manual exercise, hence it will take some time to complete these processes.

To confirm, the email address that investors will receive an email from requesting further documentation from the Verification team is [email protected]

Thank you for your cooperation in ensuring your details are up-to-date and we will be providing further updates on this revalidation exercise in the near future.

Yours faithfully for and on behalf of Lendy Ltd
Damian Webb
RSM Restructuring Advisory LLP Joint Administrator

TO ALL KNOWN INVESTORS
29 November 2019

Dear Sir/Madam

Lendy Ltd ("Lendy") and Saving Stream Security Holding Limited ("SSSHL") - both in Administration (together "the Companies")

As investors will be aware, following realisations on the Lendy loan book the Administrators are now in a position to make an interim distribution of loan proceeds to investors on a number of specific loans.

There are two types of loans, Model 1 and Model 2; as they have very different legal bases the treatment of distributions is different between the two.

The purpose of this letter is to explain how the loan realisations are being distributed, following legal advice received by the Administrators.

Model1

Under Model 1, investors are deemed to have lent money to Lendy who then subsequently lent monies to borrowers as the principal (and not on behalf of the investors). As a result, it has been determined that these recoveries from borrowers sit on the balance sheet of Lendy for the benefit of Lendy. The investors under Model 1 are creditors of Lendy for the value of their investment.

Any recoveries from a Model 1 loan, either as a result of enforcing security and selling a secured asset, or by way of the borrower refinancing, will form part of Lendy's administration estate for distribution to all valid creditors of Lendy in accordance with the statutory requirements set out in the Insolvency Act 1986 ("the Act"). Following realisation of the assets of Lendy, the Administrators will assess and ascertain, in accordance with their statutory duties, which creditors are deemed to be valid creditors of Lendy.

Model2

Under Model 2, investors are deemed to have lent money to the borrowers via Lendy acting as agent with SSSHL acting as security agent for the benefit of both Lendy and the investors.

According to the contractual documentation the following general principles shall apply in relation to any recoveries in relation to Model 2. Please note, each loan has to be reviewed and analysed on its own merit and terms. As a result, there may, in certain circumstances and depending on the terms of the contractual documentation, be some slight variance to these general distribution principles.

Order of Priority

All recoveries from the Model 2 loans, will be held on trust by SSSHL and must be distributed by SSSHL in accordance with the terms of the security documents. The security documents set out an order of priority of payment. In summary, the order of priority will generally be as follows:

1. Firstly, towards the payment of the costs and expenses of Lendy, SSSHL and the investors in connection with the enforcement of the security ("Costs Deduction");
   
2. Secondly, towards the payment of the Secured Liabilities, which are all the sums due to be paid by the borrower(s) to Lendy and the investors in accordance with the contractual documentation ("Dividend Apportionment");
3. Thirdly, in the event that there are sufficient realisations, in payment to the borrower.

Each of the steps identified at points 1 to 3 above shall be collectively referred to as the "Distribution Waterfall". In order to give some indication as to how the Distribution Waterfall operates, we have set out some further guidance below:

Costs Deduction

The costs which are permitted to be deducted as a Costs Deduction under the Distribution Waterfall will include costs directly associated with the enforcement of the relevant borrower's security. Typically, the security documentation will provide/permit the following deductions:

    a) Lendy's service fee for providing services to SSSHL in connection with the enforcement of any security that SSSHL may hold.

    In practice, whilst SSSHL hold the security for Model 2 loans, Lendy, under the supervision and management of the Administrators, is the operational entity responsible for overseeing the recovery of the remaining loan portfolio. Lendy has proposed to Grant Thornton as conflict administrators of SSSHL a new service agreement, at standard market rates in connection with undertaking this enforcement work ("Service Agreement").

    In accordance with the terms of the service agreement, Lendy's fee for providing enforcement and recovery services to SSSHL is proposed to be 3% per annum of the gross realisations from the date of the default capped at a maximum of 10% of the gross realisations. This arrangement will replace any other fee arrangement that Lendy had in place prior with SSSHL and is considered by the Administrators to be reasonable, proportionate and market standard. It is subject to final approval by the conflict administrator.

    Notwithstanding the above comments, the sums to be paid to Lendy pursuant to the Service Agreement will be held by Lendy pending further consideration and determination by the Administrators. If the Administrators determine that there are sufficient realisations in the administration of Lendy to pay the Administrators' costs and expenses in full, the sums deducted under the Service Agreement will be distributed to the relevant Model 2 investors.

    b) The costs and expenses of any appointed receivers or administrators of borrowers relating to the recovery of the borrower's assets or in relation to any refinance of the borrower's assets;

    c) To the extent that there are any, the costs of the Security Agent; and

    d) Valuation Fees.

Dividend Apportionment

As the Administrators of Lendy are obligated under the Act to maximise recoveries available to creditors of Lendy, the Administrators are obligated to ensure that all payments due to Lendy under certain terms of the contractual documentation are recovered for the creditors of Lendy. In practice, this means that all sums payable as part of the Dividend Apportionment in the Distribution Waterfall will be paid to investors and Lendy on a pro rata basis (in the event that there is a shortfall), after the Costs Deduction. The Administrators do not have any discretion to alter Lendy's contractual entitlement under the documentation and the Administrators will need to apply the terms of the contractual documentation to maximise the returns for the benefit of Lendy's creditors.

The following section illustrates the Distribution Waterfall mechanism using a hypothetical example. This is a fictional example and the figures have been inserted for demonstration purposes only, and do not reflect the actual figures which may be due and payable under the Model 2 loans any similarity to any existing Model 2 loans are purely coincidental:

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Consideration by the Administrators of the enforceability of certain contract terms in favour of Lendy

The contractual documentation provides for interest, default charges and/ or exit fees to accrue to Lendy. Those sums would form part of Lendy's administration estate for distribution to all valid creditors of Lendy. Despite this, for the time being all sums accruing to Lendy under the Dividend Apportionment will be deferred and held pending further consideration by the Administrators and their legal advisors as to the enforceability of the contractual terms in favour of Lendy, and whether Lendy is the correct beneficiary in accordance with the legal position. In the event that the Administrators determine that Lendy is not legally entitled to all or part of such sums, a further distribution of any deducted sums will be distributed to the relevant Model 2 investors.

To avoid any undue delay in making distributions to investors, the Administrators have taken the view to process Waterfall Distributions where possible for certain loans, pending further consideration of Lendy's entitlement, rather than waiting for a final determination and to pay investors such amounts as are unequivocally theirs, and not Lendy's. The Administrators are committed to resolving this in a timely manner, subject to any claims that they may receive in the administration of Lendy.

In relation to all other sums which accrue to Lendy, such sums will form part of Lendy's administration estate and be available for the creditors of Lendy as a whole.

Conclusion

The above waterfall will be applied to all Model 2 loans, subject to certain sums accruing to Lendy being put on hold pending the Administrators review of the enforceability of certain terms. We acknowledge that there will be variances in the loan and security documentation for each Model 2 loan, as well as fact specific matters which may change how the Distribution Waterfall operates for that loan.

To the extent that any investor suffers a shortfall following the Distribution Waterfall, those investors will be at liberty to file a proof of debt against Lendy, fully setting out their claim for the Administrators' consideration. The investor's rights will not be affected by filing a proof of debt.

Distributions

The Joint Administrators have today updated the respective investor accounts for the interim distributions in respect of the following loans:

    • PBL 177;

    • PBL 178; and

    • DFL032.

As previously advised, the withdrawal facility is available to investors whom have cleared the anti-money laundering checks.

Interim Distributions

Please note these are interim distributions and it is anticipated there could be further distributions in respect of these loans.

Platform updates

The Administrators are unable to provide any material update on other loans until such time as a property sale or refinance has concluded so as not to prejudice the outcome. Accordingly, platform updates will no longer be posted monthly, but only on individual loans once the sale or refinance is concluded.

The Administrators will shortly be providing further detail on the loans that have been realised and where distributed have been made, setting out the position in accordance with the principles above.

Money Laundering Checks

The Lendy team will continue liaising with individuals who currently have not fulfilled the money laundering checks. Please assist the team as this will accelerate the process.

Regrettably these final checks are a manual exercise, hence it will take some time to complete these processes.

To confirm, the email address that investors will receive an email from requesting further documentation from the Verification team is [email protected]

Thank you for your cooperation in ensuring your details are up-to-date and we will be providing further updates on this revalidation exercise in the near future.

Frequently Asked Questions ("FAQ")

We anticipate that this update will lead to a significant volume of investor queries. Please continue to submit your queries through the [email protected], we will collate the questions and provide answers on a FAQ document which will be circulated in due course. Please note, response time for queries may be delayed for this period.

Yours faithfully for and on behalf of Lendy Ltd
Phillip Sykes
RSM Restructuring Advisory LLP Joint Administrator

TO ALL KNOWN INVESTORS

20 December 2019

Dear Sir/Madam

Lendy Ltd ("Lendy"), Lendy Provision Reserve Limited and Saving Stream Security Holding Limited - all in Administration (together "the Companies")

Further to our prior communications I would like to update you on the progress of the Administration.

Lendy offices - Christmas closure

The Lendy offices will be closed from 24 December 2019 to 2 January 2020. There will be no cover on the support desk ([email protected]) for this period.

The team will endeavour to respond to all queries received in this period as soon as possible once the office reopens.

Joint Administrators' first progress report

The Joint Administrators' first progress report for the period 24 May 2019 to 23 November 2019 was uploaded to our website on 19 December 2019 in accordance with the provisions of the relevant legislation. To access the website you will require the following case code and a password which are specific to this particular matter:

Web address: rsm.insolvencypoint.com
Case Code: 1084885
Password: i9hubnCB

The report has also been uploaded to the Lendy website.

Please note that a hard copy of any document uploaded to this website can be requested by telephone, email or in writing at the contact details above.

Lendy Wealth

The Joint Administrators are working with our lawyers to finalise the position on the Lendy Wealth accounts. Once this has been signed off available funds will be distributed to the Investors' platform account. Investors will then be able request a withdrawal, provided they are Anti-Money Laundering verified.

Frequently Asked Questions ("FAQ")

The FAQ document will be issued in the New Year.

Withdrawals

The last withdrawals this year will be processed on Monday 23 December 2019. The next date for withdrawals will be Friday 3 January 2020.

Yours faithfully for and on behalf of Lendy Ltd

Phillip Sykes
RSM Restructuring Advisory LLP Joint Administrato

30 March 2020

TO ALL KNOWN INVESTORS

Dear Sir/Madam

Lendy Ltd(“Lendy”), Lendy Provision Reserve Limitedand Saving Stream Security Holding Limited –all in Administration(together “the Companies”)

Further to our prior communications I would like to update you on the progress of the Administration.

Covid-19

The coronavirus pandemic is causing disruption and uncertainty across the globe and many businesses are facing unprecedented challenges. The Joint Administrators and Lendy team will continue to provide regular updates throughout this period and appreciate investors continued patience.

Office closures

Following the recent government guidance, all RSM and Lendy staff are now working remotely from home and all offices have now been closed. Our staff have the technology support in place to be able to continue to work remotely. The well being of our staff and duty of care to our clients is naturally of utmost importance to RSM. With the current concerns about coronavirus and the evolving situation, I am writing to provide confidence that we have the appropriate continuity plans in place to minimise any risks and continue to provide the service you would expect from our people.

Loan book

A number of the asset sales which were being progressed, have now been postponed. It is uncertain as to when the conveyancing market will re-commence. It is also unclear whether the impact on the economy will result in current property sales being abandoned and potentially be a barrier to future property sales being secured.

The Joint Administrators are therefore anticipating that the Covid-19 pandemic will cause the asset realisation process to be significantly pro-longed.

The team will continue to work hard to progress recoveries and maximise realisations.

Money Laundering Checks

The Lendy team will continue liaising with individuals who currently have not fulfilled the money laundering checks. Please assist the team as this will accelerate the process.

Regrettably these final checks are a manual exercise, hence it will take some time to complete these processes.

To confirm, the email address that investors will receive an email from requesting further documentation from the Verification team is [email protected]

The Joint Administrators have agreed a full open extension in providing any outstanding KYC / AML certified copies of documents. This will eliminate the need to leave home and get documents certified until after the UK Governments Covid-19restrictions have been lifted.

Any certified documentation received in the meantime at our offices, will be processed once the Government restrictions have been reduced or removed. Scanned copies cannot be accepted.

Thank you for your cooperation in ensuring your details are up-to-date and we will be providing further updates on this revalidation exercise in the near future.

Yours faithfully
for and on behalf of Lendy Ltd

Damian Webb
RSM Restructuring Advisory LLP
Joint Administrator