Administration - State of Play & Significant Information (L)

TO ALL KNOWN INVESTORS

16 July 2021

Dear Sir/Madam

Lendy Ltd (“Lendy”) and Saving Stream Security Holding Limited – in Administration (together “the Companies”)

The Joint Administrators have updated the respective investor accounts for the interim distributionsin respect ofPBL037, PBL038, PBL039, PBL069, PBL070 and PBL071(“the Receiverships”). A breakdown of each isset out in the table below.

Interim distributions

The Joint Administrators have updated the respective investor accounts for the interim distribution in respect of DFL016 and DFL017. A breakdown for each is set out in the table below.


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

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

Third party costs

The third-party costs for each of the loans listed above were incurred collectively across the six loans, therefore, in the above table the amounts paid have been apportioned to each loan based on its original security value.

Noting the costs in respect of the Loans are considerable, a summary of the issues during the process has been provided below as well as a breakdown of the all third-party costs which were incurred

Background to the Receivership

Damian Webb and Phillip Sykes of RSM Restructuring Advisory LLP (“Joint Receivers”) were initially appointed Joint Receivers of the Properties on 19 September 2016 and immediately post appointment commenced processes to market and sell the site.

A range of offers were received in excess of £3m, but these were rejected by Lendy with the Receivers being informed that only offers in excess of £4m would be accepted.

The Receivers were unable to secure any offers at this level, hence the level of interest from interested parties was limited from 2017 to 2019.

As it became apparent that the Properties would be held for a period of time, the Receivers requested funding from Lendy to maintain and secure the site. Lendy were unable to provide funding support.

This impacted on the maintenance of the site which had been partially refurbished prior to the appointment of the Receivers and led post appointment to the deterioration of the condition of the site.

In addition, to the on-going maintenance issues the Receivership was presented by a range of issues, these included:

• litigation from crowdfunders who had advanced funds to the borrower on an unsecured basis;
• securing vacant possession from the original borrower and his spouse;
• title issues; and
• multiple security and insurance issues.

To address the various legal and insurance matters the Receivers and their agents visited the site in excess of 200 times during the period in which the Properties were held in Receivership from 2016 to 2020.The eventual sale process proved challenging due to the issues associated with the Properties, hence the underlying conveyancing process was time consuming and challenging with a delayed completion timetable

Total Costs

Total costs of £909,198 were incurred during the Receivershipand these are summarised belowin the two tables.

The first table shows the Direct expenses paid at source(‘Third party costs’ column in the table above):


Time costs totalling £200,576 were incurred in the Receiverships. Noting there would have been duplication of work due to the handover of the case to the RSM Bristol office, a discount of £75,576 was applied. The Joint Receivers’ fees totalling £125,000 were approved.

The work undertaken by RSM throughout the process is listed below:

Administration and planning:

• Periodic case reviews, ongoing case planning and strategy;
• Maintaining and updating computerised case management records;
• Dealing with routine correspondence not attributable to other categories of work;
• Ongoing consideration of ethical and anti-money laundering regulations;
• Preparation of receipts and payments accounts, maintenance of cashiering records; and
• Filing of documentation at Companies House and other relevant parties.

Realisation of assets:

• Liaising with the insurance throughout the duration of the case –understanding and actioning requirements, regular updates on the state of the property and the tenancy of the Borrower;
• Liaising with the tenant;.
• Liaising with agents regarding the upkeep of the property and significant time spent fulfilling the insurers requirements;
• Liaising with agents, interested parties and potential purchasers on several aborted sales and the current proposed sale and contract negotiation etc; and
• Liaising with utility suppliers.

Creditors:

• Liaising with the secured creditor, SSSHL, and subsequently the Conflict Administrators.
  

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 support@lendy.co.uk.

The Joint Administrators have agreed a full open extension in providing any outstanding KYC / AML certified copies of documents.

The Lendy Customer Support Team

Please note, the support@lendy.co.uk email address should now be use for KYC / AML related queries only. For all other queries please contact the team on lendy.restructuring@rsmuk.com.

Yours faithfully
for and on behalf of
Lendy Ltd

Damian Webb
RSM Restructuring Advisory LLP
Joint Administrator

KYC / AML -support@lendy.co.uk
All other queries –lendy.restructuring@rsmuk.com

TO ALL KNOWN INVESTORS

8 September 2021

Dear Sir/Madam

Lendy Ltd (“Lendy”) and Saving Stream Security Holding Limited – in Administration (together “the Companies”)

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

Court application for directions

The Joint Administrators have previously set out the legal advice received as to the contractual basis for the proposed loan distributions and informed investors that the Joint Administrators made an application to Court for directions (the “Application”). Please refer to previous progress reports at www.lendy.co.uk which sets out the advice and planned distribution waterfall in accordance with the loan and security documentation, along with the legal issues identified and the financial implications thereof.

The purpose of the Application was for the Court to consider the legal issues we had identified and direct us, as Administrators of Lendy, as to how any asset realisations should be distributed between Model 1 investors, Model 2 investors and (if applicable) Lendy’s unsecured creditors.

Outcome of the first directions hearing and next steps

Following a five-day trial, which commenced on 28 June 2021 a Judgment was handed down by the Judge on 12 August 2021 which deals with the first part of the issues in the Application.

Importantly for investors, in the Judgment, the Court held that Model 2 Loan realisations fall outside of the Lendy estate and are held by Lendy solely for the benefit of the Model 2 investors.

However, the final amount of these realisations that will be distributed to Model 2 investors is not yet certain as the applicable costs and expenses which Lendy has incurred in collecting and realising these funds still needs to be agreed. We have set out below the next steps that we intend to take to agree this with the relevant parties.

The Joint Administrators, the Lendy team and their advisors are currently reviewing the current and historic cost structure of Lendy in light of the Judgment. As part of this review, we are considering how the costs of realising the Model 2 Loans will be met (i) in line with the Court’s direction, and (ii) with the interests of Lendy’s creditors in mind.

Upon completion of the above analysis, the Joint Administrators intend to produce a f ee proposal which will be shared and discussed with the Lendy Action Group and the Conflict Administrators of SSSHL. The three categories of costs which this fee proposal will consider are as follows;

1. Direct costs and expenses of the Model 2 Loans which can be directly attributed to a particular Model 2 Loan, for example legal conveyancing costs, LPA Receivership and insurance costs, etc;

2. Costs and expenses of realising the Model 2 Loans that cannot be directly attributed to a particular Model 2 loan, for example general staffing costs that are necessary to service the Model 2 Loans, these including processing investor withdrawals, sanctioning conveyancing, interacting with borrowers/ advisors, etc; and

3. Costs and expenses of the Lendy administration, these being the general enforcement and recovery costs, investor correspondence, statutory reporting duties etc.

As part of this process it is anticipated the Joint Administrators are likely to also consult with the Financial Conduct Authority and the Creditors’ Committee of Lendy in order to seek their views on the fee proposal. A final decision on this will be taken once discussions with the Lendy Action Group and the Conflict Administrators have commenced.

Please note, as the Judgment only deals with some of the issues in the Application, there are further issues which still require a final determination by the Court. Once the fee proposal has been agreed, the Joint Administrators will then consider, the most efficient way in which to seek the Court’s determination to these remaining issues in the Application.

Distributions of funds held

The Joint Administrators have previously paid interim distributions on the majority of loans that have been realised and funds remain held in the client account in respect of loans that have not yet been distributed. Please note, no further distributions will be processed until a cost structure (detailed above) has been agreed regarding the Model 2 loans.

Lendy Wealth ("LW")

Lendy Wealth (“LW”) As previously communicated on 30 July 2021, all LW investors should have now received statements detailing their gross balances and the makeup of the LW365 and LW60 investment portfolios.

The poor recordkeeping of the Company prior to Administration required the Joint Administrators to carry out a review of all available data for LW and take this recordkeeping in house. For further details of this review please refer to previous progress reports at www.lendy.co.uk. This review has rendered the LW website redundant, and it will therefore be closed on 30 September 2021. Further statements will be shared for LW investors following distributions from LW loans.

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 support@lendy.co.uk.

The Joint Administrators have agreed a full open extension in providing any outstanding KYC / AML certified copies of documents.

The Lendy Customer Support Team

Please note, the support@lendy.co.uk email address should now be use for KYC / AML related queries only. For all other queries please contact the team on lendy.restructuring@rsmuk.com.

Yours faithfully
for and on behalf of
Lendy Ltd

Damian Webb
RSM Restructuring Advisory LLP
Joint Administrator

KYC / AML -support@lendy.co.uk
All other queries –lendy.restructuring@rsmuk.com

TO ALL KNOWN INVESTORS

5 January 2023

Dear Sir/Madam

Lendy Ltd (“Lendy”) and Saving Stream Security Holding Limited – in Administration (together “the Companies”)

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

General update
Please refer to the Joint Administrators’ recent progress reports for details in respect of the Court Judgment following the application for directions and the steps taken thereafter. These can be found at ‘www.lendy.co.uk’.

The Joint Administrators, their legal advisors and various stakeholders agreed that the parties would seek to agree a Cost Protocol (‘Protocol’) in the form of a draft Court order for the Court’s approval. Following considerable work and correspondence, the terms of the Protocol are now agreed, subject to the terms being documented. Once the drafting of the Cost Protocol is complete, the Joint Administrators will share details of the Protocol with the creditors, investors and the FCA. Following which, the Joint Administrators will make the application to Court to approve the Protocol.

Interim distributions
The Joint Administrators have agreed with the relevant stakeholders that now the terms of Protocol are agreed (and whilst the parties are waiting for the Court to consider the Protocol) the Joint Administrators will now recommence interim distributions of 65% of net realisations on loans that have been recovered, but not yet distributed, likely in the below order:

1. DFL005
2. DFL006
3. DFL015
4. DFL024
5. PBL084
6. PBL101
7. PBL102
8. PBL156
9. PBL157
10. PBL158
11. PBL199

The Joint Administrators have updated the respective investor accounts for the interim distributions in respect of DFL005. This distribution is interim distributions and there will be a further distribution in respect of this loan. A breakdown of DFL005 is set out in the table below.


Please note, this loan is subject to the information barrier as RSM UK Restructuring Advisory LLP office holders were appointed. Therefore, the loan has been overseen by Helen Dale and Chris Laverty of Grant Thornton UK LLP, the appointed Conflict Administrators of SSSHL, with the support of the Lendy staff.

Investors are advised to check Companies House (https://www.gov.uk/get-information-about-a-company - A*****m Devon (RLH) Ltd (CN:****)) where progress reports have been filed by the appointed office holder. The progress report will provide specific details regarding this loan and the recoveries therein.

Withdrawals
The balance you are able to withdraw following this distribution of loan DFL005 will be shown as your ‘Available Balance’ on your Lendy account.

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

The team are likely to receive a considerable number of withdrawal requests. As previously noted, the remaining team consists of skeleton staff and therefore investors should expect an extended lead time for withdrawal requests to be processed and payments made.

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 support@lendy.co.uk.

Change in bank account details
If your bank account details have changed from the one registered on your Lendy account, please inform us using the support@lendy.co.uk email address.

Please ensure you provide evidence (such as a copy of a recent bank statement) to allow us to update your account details accordingly.

The Lendy Customer Support Team
Please note, the support@lendy.co.uk email address should be used for Know Your Customer / Anti-Money Laundering related queries only. For all other queries please contact the team on lendy.restructuring@rsmuk.com.

Yours faithfully
for and on behalf of
Lendy Ltd

Damian Webb
RSM Restructuring Advisory LLP
Joint Administrator

KYC / AML -support@lendy.co.uk
All other queries –lendy.restructuring@rsmuk.com

TO ALL KNOWN INVESTORS

19 January 2023

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Interim distributions
The Joint Administrators have agreed with the relevant stakeholders that now the terms of Protocol are agreed (and whilst the parties are waiting for the Court to consider the Protocol) the Joint Administrators will now recommence interim distributions of 65% of net realisations on loans that have been recovered, but not yet distributed, likely in the below order following today’s distributions:

1. PBL101
2. PBL102
3. PBL156
4. PBL157
5. PBL158
6. PBL199

The Joint Administrators have updated the respective investor accounts for the interim distributions in respect of DFL024 and PBL084. These distributions are interim distributions and there will be further distributions in respect of these loans.
A breakdown of DFL024 and PBL084 are set out in the table below.




*The gross asset realisation includes £1,074.70 of remainders from a pre-appointment distribution.

Please note, PBL084 is subject to the information barrier as RSM UK Restructuring Advisory LLP office holders were appointed. Therefore, the loans have been overseen by Helen Dale and Chris Laverty of Grant Thornton UK LLP, the appointed Conflict Administrators of SSSHL, with the support of the Lendy staff.

Investors are advised to check Companies House (https://www.gov.uk/get-information-about-a-company) where progress reports have been filed by the appointed office holder, which will provide specific details regarding this loan and the recoveries therein:

• DFL024 - R****** H***s Ltd (CRN:08*****02)
  
• PBL084 – K***** E****e Limited (SC5****9)

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TO ALL KNOWN INVESTORS

2 February 2023

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Interim distributions
Following today’s distributions, the Joint Administrators have processed all interim distributions of 65% of net realisations on loans that have been recovered, but not previously distributed.

The Joint Administrators will update investors in due course regarding the strategy for future interim distributions. The immediate priority will be processing withdrawal requests.

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

• PBL101;
• PBL102;
• PBL156;
• PBL157;
• PBL158; and
  
• PBL199

These distributions are interim distributions and there will be further distributions in respect of these loans.
A breakdown is set out in the table below:



In respect of PBL156 – Q*** **3 Limited (formerly M**** P****l Ltd) (CRN: 0*****42), Investors are advised to check Companies House (https://www.gov.uk/get-information-about-a-company) where progress reports have been filed by the appointed office holder, which will provide specific details regarding this loan and the
recoveries therein.

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