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Post by rhea117 on Jun 15, 2019 13:11:57 GMT
I am no forensic accountant, but I hope RSM gets to the bottom of the provision fund.
In the audited accounts for Lendy Ltd (31 Dec 2017), note 13 of the balance sheet there is £3.7m “provision is made against the potential future default of borrowers” This is a credit in the Balance Sheet. So the debit must be in Cash at Bank OR Working Capital OR some other accounting wizardry.
That post balance sheet event of £850k: the ultimate parent company, Lendy Group Limited, performed a purchase of own shares (26 July 2018) from reserves” (By LB) That does worries me, as does the fact their accounts to 31 Dec 2017 have not been filed and are overdue.
In the audited accounts for Lendy Provision Reserve Limited Ltd (31 Dec 2017), there is £1,992.4k in Cash at bank.
As far as I am aware, this fund (£3.7m and/or £2m) was never used to compensate any defaults since 1 Jan 2018? Anyone?
So where is the £3.7m and/or £2m?
1. How much is left?
2. Was it raided to fund their dwindling cash flow?
3. Was it raided by LB (bonus, loans, dividends or some other accounting wizardry)?
Can we assume most of the £10.17m is from HQ?
The 7th June 2019 updated stated:
Client account monies
As noted in the previous update, if you have recently requested a balance withdrawal which has not yet been received into your bank account, then it will be held within the client account (even if the amount has been deducted from your Available Funds).
Lendy was made subject to an asset restriction by the FCA, which has meant that payments from Lendy's bank account have been restricted and no payments will be released until a full reconciliation has been completed.
This exercise is not finalised; however, we can report that the initial analysis shows that the client account balance matches the sum held in the bank account, being £10.17m. We will provide a further update in this matter next week.
Provision fund
Questions have been asked by Investors regarding the 'provision fund'. The company that holds this fund, Lendy Provision Reserve Limited, has also entered Administration and we are working with the bank to secure the monies held.
Again, legal advice will be sought as to how these monies will be used and a further update will be provided in due course. This is a complex point and is not anticipated to be resolved in the short term.
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Post by rooster on Jun 15, 2019 13:49:08 GMT
To answer your question about payments by/from the provision fund, I have an email from Lendy in my mailbox that confirms the return of capital from DFL035 was insufficient and so 'topped-up' by the provisioning fund. This was around Dec '18/Jan '19.
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ilmoro
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Post by ilmoro on Jun 15, 2019 14:09:57 GMT
I am no forensic accountant, but I hope RSM gets to the bottom of the provision fund. In the audited accounts for Lendy Ltd (31 Dec 2017), note 13 of the balance sheet there is £3.7m “provision is made against the potential future default of borrowers” This is a credit in the Balance Sheet. So the debit must be in Cash at Bank OR Working Capital OR some other accounting wizardry. That post balance sheet event of £850k: the ultimate parent company, Lendy Group Limited, performed a purchase of own shares (26 July 2018) from reserves” (By LB) That does worries me, as does the fact their accounts to 31 Dec 2017 have not been filed and are overdue. In the audited accounts for Lendy Provision Reserve Limited Ltd (31 Dec 2017), there is £1,992.4k in Cash at bank.
As far as I am aware, this fund (£3.7m and/or £2m) was never used to compensate any defaults since 1 Jan 2018? Anyone? So where is the £3.7m and/or £2m? 1. How much is left? 2. Was it raided to fund their dwindling cash flow? 3. Was it raided by LB (bonus, loans, dividends or some other accounting wizardry)? Can we assume most of the £10.17m is from HQ? The 7th June 2019 updated stated:
Client account monies
As noted in the previous update, if you have recently requested a balance withdrawal which has not yet been received into your bank account, then it will be held within the client account (even if the amount has been deducted from your Available Funds). Lendy was made subject to an asset restriction by the FCA, which has meant that payments from Lendy's bank account have been restricted and no payments will be released until a full reconciliation has been completed. This exercise is not finalised; however, we can report that the initial analysis shows that the client account balance matches the sum held in the bank account, being £10.17m. We will provide a further update in this matter next week. Provision fund
Questions have been asked by Investors regarding the 'provision fund'. The company that holds this fund, Lendy Provision Reserve Limited, has also entered Administration and we are working with the bank to secure the monies held. Again, legal advice will be sought as to how these monies will be used and a further update will be provided in due course. This is a complex point and is not anticipated to be resolved in the short term. Used Jan 19 £450K, current balance 1.5m cash on site so that tallies. The £3m plus was creative accounting to include future revenues which obviously won't materialise. All 'disclosed' on the website under how it works including PF usage.
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Post by rhea117 on Jun 15, 2019 14:28:33 GMT
Used Jan 19 £450K, current balance 1.5m cash on site so that tallies. The £3m plus was creative accounting to include future revenues which obviously won't materialise. All 'disclosed' on the website under how it works including PF usage. Thanks. I wonder it that was the only one in 2019 and there was nothing in 2018. Hopefully that £1.5m is still there. That makes sense the £3.7m was creative accounting. Future revenue! Not prudent accounting!
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Post by rhea117 on Jun 15, 2019 14:32:06 GMT
To answer your question about payments by/from the provision fund, I have an email from Lendy in my mailbox that confirms the return of capital from DFL035 was insufficient and so 'topped-up' by the provisioning fund. This was around Dec '18/Jan '19. Thanks.
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Post by mikeyb999 on Jun 16, 2019 20:07:23 GMT
Hopefully that £1.5m is still there. That makes sense the £3.7m was creative accounting. Future revenue! Not prudent accounting! The provision fund is gone AFAIK - they borrowed £1m from metro bank and gave them a charge over the provision fund, so most (if not all after costs) will go back to Metro bank - I'm not expecting us to see anything out of that pot
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sl75
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Post by sl75 on Jun 17, 2019 7:17:52 GMT
The provision fund is gone AFAIK - they borrowed £1m from metro bank and gave them a charge over the provision fund, so most (if not all after costs) will go back to Metro bank - I'm not expecting us to see anything out of that pot One of the many points that I'm sure the administrators will want to investigate is whether Lendy had the legal authority to offer such a charge over a segregated fund being held for and on behalf of customers...
For those asking about usage of the provision fund, this is still visible at the bottom of lendy.co.uk/how-it-works which shows £431,661 being paid out w.r.t. DFL035 and £12,653 w.r.t. DFL025 both in January of this year.
Further up the page also shows the PF balance as £3.4M, consisting of £1.55M representing cash and £1.87M representing "... amounts that the firm is confident in its ability to recover through legal channels."
In addition it is also stated that "we are currently transitioning to an all cash based Provision Fund with a target date of mid 2019." (implying those claims through legal channels were due to be finalised soon), and also "Lendy Ltd does not access monies in this account for anything other than the purpose of provision. This money is segregated from Lendy's operational accounts.", which implies to me that any charge over the account would be either invalid or a result of misappropriation of funds.
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adrianc
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Post by adrianc on Jun 17, 2019 7:28:50 GMT
"Lendy Ltd does not access monies in this account for anything other than the purpose of provision. This money is segregated from Lendy's operational accounts.", which implies to me that any charge over the account would be either invalid or a result of misappropriation of funds. There's a world of difference between "does not (simply cannot)" and "does not (could, but chooses not to)".
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sl75
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Post by sl75 on Jun 17, 2019 8:00:42 GMT
"Lendy Ltd does not access monies in this account for anything other than the purpose of provision. This money is segregated from Lendy's operational accounts.", which implies to me that any charge over the account would be either invalid or a result of misappropriation of funds. There's a world of difference between "does not (simply cannot)" and "does not (could, but chooses not to)". ... and also between "is segregated" (because it's convenient to keep it in a separate pot) and "is segregated" (because we have a legal responsibility to keep it segregated).
As I say, it's one of many things that I'm sure the administrators and other involved parties will need to investigate properly before they complete their report - e.g. whether Lendy did in fact have a legal responsibility to treat the provision fund as another form of client money, whether customers were intentionally misled into believing they did, etc.
It will need to be determined what Lendy were legally permitted to do with those funds and what, if anything, Metro Bank have a valid charge over when the full history of Lendy's actions and authorisations is taken into consideration.
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sydb
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Post by sydb on Jun 17, 2019 8:39:43 GMT
In addition it is also stated that "we are currently transitioning to an all cash based Provision Fund with a target date of mid 2019." (implying those claims through legal channels were due to be finalised soon), and also "Lendy Ltd does not access monies in this account for anything other than the purpose of provision. This money is segregated from Lendy's operational accounts.", which implies to me that any charge over the account would be either invalid or a result of misappropriation of funds. It could be argued that putting a charge on a pot of money is not accessing it; it's the creation of a possible access in the future. They use, 'does not', rather than 'will not'. Lendy is no longer 'operational'. As an aside, do we have a definition of 'provision'?
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garfield
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Post by garfield on Jun 17, 2019 8:46:44 GMT
As an aside, do we have a definition of 'provision'? I thought provision fund meant a food bank in case we all went hungry...
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Post by masquedefer on Jun 18, 2019 19:41:37 GMT
I wonder at which point the administrators will call in the fraud squad to carry out a full, impartial criminal investigation?
Or perhaps investors already have enough evidence to present to the Police now to persuade them to commence an immediate fraud investigation to be carried out in parallel with the winding up process and any FCA investigation ?
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Post by Deleted on Jun 18, 2019 20:07:50 GMT
The administrators are paid and trained to be impartial. One of them specialises in cases of fraud and misappropriation.
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Post by billy169 on Jun 18, 2019 20:17:56 GMT
Unfortunately, fraud ( illegal) can often be disguised as incompetence ( legal).
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Post by nitpicker on Jun 20, 2019 10:48:06 GMT
Isn't Companies House wonderful? Loads of information - some useless (Liam's birthday last Sunday week), and some intriguing.
Where did the £850,000 that Lendy Group Ltd paid Tim Gordon for his half share in the Lendy empire come from? And the £4250 stamp duty?
Why did Liam not sell 98% of his share at the same time? He only needs one share. (Maybe he did but it has not yet been filed).
What is Wealth Protection International Remuneration Trust, to which has been paid £600,000 and £400,000 in 2016 and 2017? Sounds like some sort of tax avoidance scheme.
Why does the man who wholly owns this shebang advance Lendy money under a registered charge? And why would the FCA not flag this as a danger sign?
Is it going to turn out that L.Brook is the biggest creditor of Lendy for a loan he made to the company in order to pay himself a bonus?
Answers on a postcard please.
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