Significant Resignations at Funding Secure + ADMINISTRATION

I only have minimal exposure to these loans, so my comments based upon the partial knowledge I have of the proceedings to date.


Points to note: This is subject to there being enough left after reimbursement to the lenders, for the costs to also be paid back to FS. Have any monies been deposited to the Court by MG yet for costs?


General creditors: I do not believe that the lenders are “general creditors” at this point, my stance in this matter is that we are the ultimate secured lenders of the loans. The excess monies/"costs" will therefore be repaid to FS kitty, which will then be disbursed to the shareholders and suppliers to FS who are owed monies or have secured charges against FS.


On consideration, a litigation funder might find the art loans a viable project to continue funding, as that would remove the cost implication from the Administrators and ultimately reduce their costs. One caveat, there were a few T&C’s in the last agreement between MG&FS that were not to my liking, and wont be to the liking of any litigation funder. At the time I could not fathom why FS had agreed, now all is becoming clearer.

Legal action has already been hugely expensive and although I do not wish to get entangled in some sunk-cost fallacy debate, the truth is that:

1) Legal action would not have continued to such an advanced level if there was no prospect of recovery - FS has no obligation to score moral victories on our behalf, this was purely about money and the "fraud" aspect was only ever tangential at best.

2) The current position the case is in, as far as I can tell, has the fraudulent borrower backed into a corner with a possible extradition to the US looming large.

3) It cannot be denied that this one litigation alone probably expedited FS's insolvency by several months if not half a year or more. However, a discontinuation of proceedings at such a late stage would surely result in proceedings against the administrators for fiduciary negligence.

The troublesome loans are as follows:

• Loans where the borrower or FS management misappropriated money, allowed the borrower to abscond with parts of the security or in other ways lied about the ownership, value, condition or disposability of the asset. In all these cases, the borrower and management should be pursued for fraud AND AN EXIT FROM BANKRUPTCY DENIED! The Art Loans, Whitehaven and Lytham St Annes loans are the most obvious examples but in the C****** House loans as well, FS allowed the borrower to sell off part of the security that formed the foundation of the loan without any mechanism for this money to be returned to lenders. To deliberately depreciate the asset is outright fraud and should be pursued as such. 
  
  
• Loans where FS never perfected the security, either deliberately or negligently - both the borrower and the former management should be pursued in county court and disbarred from holding directorship in a company, going beyond bankruptcy if fraud is proven. These would be the Burnley and Barnoldswick BTL loans (1764214549, 1079396222, 3139320212)
  
  
• Loans where FS perfected the security but purposely deceived lenders about the structure of the loan, deliberately misappropriating and misapplying funds to create a legal fiction to the detriment of lenders. These would be the 1st Charge (8010286828) and 2nd Charge (2861004433) Barnoldswick loans.

It may be possible to find completion funding, the Administrators would need to take a view on the value in doing so.

I noted a short while ago that one tranche of a dev loan seemingly went to a single investor.  Could be that if sufficient 'whales' are tied to these dev loans, they may be amenable to continue funding if it improves the chances (and speed) of successful return on their whole investment.

Alternatively, the Administrators could seek funding elsewhere.

I only did it as a validation of my instinct/a warning to others - looks like of the 41 loans 39 have come good and only a very few if any others will do the same. Well, sadly, looks as if I was not a million miles away! Feel very sorry for those with substantial sums in this farce - also disgusted no word nor apology from the new directly who have just run away.

I think P2P has a good future but it will need new legislation and an effective FCA before I go back in.

This whole thing is just so depressing now I am glad it is coming to an end.

Well Lendy went pop on 24/05/19 and the first e-mail I had mentioning the administration was 31/05/2019 so perhaps it's just something that companies don't do. 

Agreed, surprised they found an insolvency company to take it on at all! If the administrators can't take any proceeds from the loans, then assuming there are very limited assets left at the company then what is their incentive? Add to that they will have the FCA sniffing around and hundreds of investors complaining. I can't imagine any administrator wants an action group set up which will look through everything they are doing.