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See the coverage of last week's court case by the whiskered one which basically was addressing that very point.

From Lisa on FB:
***Great news. We won!***

Sorry this is so long but it's great news. I'd like to thank Mike, Norm and our counsel for all they've done.

Here's the technical bit.
The Judgment in the Application to Court for Directions brought by the Administrators has just been published.
While there remain certain “deferred issues” (as to which see below), the outcome could hardly have been better for Model 2 Investors / Transferees (“M2 Lenders”).
A full list of the matters determined by the Court is provided below, but in summary:
• The Court has found that no part of the Deferred Interest belongs to Lendy: it is all the property of M2 Lenders.

• The “waterfall” (whereby anything payable to Lendy from loan proceeds should take priority to amounts payable to M2 Lenders) is unenforceable (as it was not brought to the attention of M2 Lenders and in any event amounted to a breach of duty by Lendy.

• Although unnecessary (given the prior conclusions), the Court also found that Lendy’s conduct was such that its discretion to apply the waterfall must be exercised by prioritising M2 Lenders.

This means:

(i) that there will need to be an analysis of the cash at bank at the date of the Administrators’ appointment (approximately £900,000) to discover what part of that can be “traced” to recovered Default Interest.

(ii) The Administrators will need to review all recoveries to date and apply the Default Interest recovered to the relevant loan part holders.

• M1 Investors’ claims in the administration should be calculated by reference to actual recoveries (or estimated recoveries if a dividend is to be distributed earlier than all recovery avenues are exhausted) in each relevant loan.

There remain the three deferred Issues, namely

(a) whether M2 Lenders are unsecured creditors (and if so, how to quantify their claims),

(b) who are the proper beneficiaries of the “third party claims” (ie, against professional, possibly negligent valuers) and

(c) what amounts should the Administrators should be allowed to deduct money from M2 loan recoveries to cover the costs incurred in administering, recovering and distributing the loans, and if so on what basis.

On this last point, it is inevitable that the Administrators will be entitled to be paid something for these tasks. This is not covered by the regime for Administrators’ fees and expenses payable from the Company’s own (or “free”) assets which is set out in the Insolvency Act and Rules. The legal questions go to whether the free assets of the Company should be used before any deductions are made to the M2 Lenders’ recoveries, how the amount should be calculated and (if being “paid” for by M2 Lenders), how these payments should be applied between syndicates.
These matters wills now be considered further by the respective legal teams in the light of the Judgment, and either resolved by agreement or referred back to the Court for determination.

Determined Issues:
Model 1
1. The Model 1 Investors (in their capacity as such) do not have any claims other than unsecured provable claims against Lendy.
2. The proceeds of security in respect of the Model 1 Loans form part of Lendy’s general estate.
3. Lendy is liable to each Model 1 Investor only to the extent that Lendy is repaid by a borrower under, or makes recoveries in respect of, the relevant Model 1 Loan which that Model 1 Investor has funded. Accordingly, the provable contractual claim of a Model 1 Investor is limited to, or capped by, the amounts repaid to or recovered by Lendy in respect of the relevant Model 1 Loan which that Model 1 Investor has funded.
4. The Model 1 Investors’ contractual claims are to be valued in an amount equal to the gross proceeds received by Lendy on the relevant Model 1 Loan, without any deduction for the costs of realisation.
Model 2
1. Lendy did not breach any of its fiduciary duties by charging fees or standard/non-default interest for its own account in connection with the Model 2 Loans.
2. The M2 Lenders do not have a legal or equitable proprietary interest in any standard/non-default interest or fees payable by a Model 2 Borrower to Lendy under a Model 2 Loan.
3. The M2 Lenders have an equitable proprietary interest in any default interest Lendy received in respect of the Model 2 Loan in which they participated, or any traceable proceeds of that default interest.
4. In the alternative to an equitable proprietary claim, the relevant M2 Lenders are entitled to an account of profits from Lendy; but any such account, being a personal remedy, will rank as an unsecured provable claim in Lendy’s administration.
5. The full amount of Default interest payable by Model 2 Borrower is required to be paid to the relevant M2 Lenders.
6. To the extent that, before the Administration Date, Lendy received default interest under a Model 2 Loan and used such default interest for its own purposes and did not account to the relevant M2 Lenders for those sums, Lendy acted in breach of its fiduciary duties to the relevant M2 Lenders.

7. Lendy is not entitled to an equitable allowance in respect of any acts that it undertook in connection with the Model 2 Loans before the Administration Date.

8. The proceeds of any security realised in respect of a particular Model 2 Loan must be applied towards discharging the Secured Liabilities owing to the relevant M2 Lenders who participated in that Model 2 Loan in priority to the Secured Liabilities owing to Lendy.

going back over all these loans will probably add many,many hours to administration costs.this has all been caused by LBs ducking and diving and LB/LENDY should pay these costs from the  lendy fees/ lendy contract entitlement etc that has been seeing the best part of any returns of our funds.well done to lisa and the gang but can we now go for the jugular on these scamming bar*tards.

Yep, a tremendous effort and result. Thanks so much for fighting the cause, I am truly grateful.
It appears that there may be justice in this world after all!

Yes, a magnificent achievement. However, it really shouldn't have been incumbent on us lenders to fund a court case to achieve justice.