There has just been posted an updated FAQ on the Funding Secure website, answering many lenders questions.
FS FAQ Updates as at 14 November 2019
(Please note that the following questions have been raised by the representatives of the “FundingSecure Action Group” and are included in the form in which they have been asked for the benefit of all Investors and Creditors).
18. When will the lenders have access to their liquid client funds, and allowed to remove funds from the client account?
The timing of the distribution of the liquid funds currently held will depend upon the approval of the Proposals sent to creditors on Monday 11 November 2019 and via email to Investors on Tuesday 12 November 2019 (“the Proposals”) and the contents of the Advice and/or the outcome Directions Application detailed therein. The Administrators are working to facilitate an early distribution of these funds but need to do so in a way which is not open to legal challenge subsequently. As detailed at paragraph 1.2 of the Proposals, in any Advice or Directions Application, the application of the relevant CASS rules under the appropriate FCA Handbook and Guidelines will be taken into account.
19 If the administrators’ and legal firm’s fees are being paid indirectly from proceeds and recoveries of the lenders’ loans, are they both acting for the lenders’ sole benefit? If acting for anyone else’s benefit, please elaborate how they are receiving their fees from the third parties?
The Proposals set out in detail the Administrators proposals to deal with fees, costs and expenses at section 8. The Administrators are acting in the interests of all creditors and Investors and the Proposals set out the detail of how they propose to address the issues affecting the Company they have uncovered since their appointment on the 23 October 2019.
20. If there are breaches in FCA regs, the FCA should know about it (not that they will do anything...). Have these matters been reported by the company under their self-reporting requirements?
The Administrators have updated the FCA on all their findings to date and continue to liaise on a regular basis.
21. Raj is in constant communication and attendance with the administrators’ team, is this not a conflict of interest, considering he has supposedly many loans on the platform, yet “joe-bloggs” lenders, who have far more loans cumulatively lent than the Directors, are not represented? Is there not the chance that the Directors will push their own loan recoveries above those of the lenders?
No. Directors (and former Directors) have a statutory obligation to cooperate with the Administrators and it is this context that the Administrators are engaging with all Directors and former Directors of the Company. All creditors and Investors will be treated fairly and transparently throughout this process and no Director or former Director (who is also an Investor) will be treated differently by the Administrators.
22. What is happening with the case against Luxmore? - I'm presuming that the alleged misappropriation of funds is his reputed 200k company loan to his ex-wife.
The litigation (and the benefit of the freezing orders obtained) has been secured by the Administrators pending the review of the litigation which is ongoing. It would be inappropriate for the Administrators to comment further at this stage in open forum.
23. I understand that Luxmore's assets of ca. £1.5M have been frozen. Whilst trying to avoid a witchhunt, I have some concerns that Raj remains heavily involved and close to CG because he may want to maximise the creditor pot if he has a lot of claim on that.
Please see the answers above regarding the involvement of Directors and former Directors. The position of the Investors and creditors claims and potential claims is to be addressed as set out in the Proposals.
24. Are the administrators going to close all overdue loans as soon as possible? If not, what metrics will they utilise to decide which loans to close and which to allow to continue?
The Administrators are continuing to review the loans on an individual basis and will take the appropriate steps in each case to maximise the returns for Investors and/or creditors as set out in the Proposals.
25 The “art loans” are a concern to many investors, not only the HNW. Can you please provide an initial update on your planned way forward?
This is under review. It would be inappropriate for the Administrators to comment further at this stage in open forum
26. What will happen to those loans where FS did not register a charge on the underlying property (e.g. 1079396222), and subsequently promised to fully reimburse investors?
The Administrators are not in a position to comment on individual loans in open forum at this stage. All appropriate steps are being taken to secure and realise assets for the benefit of Investors and/or creditors of the Company.
27. Some borrowers have made some payment towards the interest on their loans, but these payments haven't yet been processed into lender accounts. (MM has been supplied examples as sent in from lenders). When will these amounts be released to the lenders?
This will be addressed as detailed in the Proposals.
28. What is CG&co intended course of action with regard to recovery of outstanding loans? Did FS make arrangements for a “backup provider”, as FCA rules seem to require? Will FS staff be kept on (guided by administrators) or will this be carried out by the administrators, if so, how will they be paid? Is Raj continuing to be paid whilst he assists the administrators? Have any funds been set aside for this purpose?
Please see the Proposals. Staff (which are retained for the purpose of the Administration) are being paid by the Administrators. The Director at the date of the Administration (Nigel Hackett) has been retained by the Administrators to work full time for a limited period and will be remunerated at the rate agreed with the Administrators. No former Directors are working full time or receiving any payment by the Administrators and they are cooperating with the Administrators in accordance with their statutory obligations.
29 Do the administrators intend to use independent receivers for each individual loan or keep it "in house", if so, will they be sticking to the 5% of recovered funds rule for charges that I heard existed?
The Administrators will not be taking any appointments as Receivers appointed by the Company. This would be a breach of the Administrators ethical guidelines. They will continue to use independent Receivers appropriate to each case to maximise the recoveries made.
30. One generic question is confirmation that all litigations under way or required will be continued /launched or accelerated under administration. Whitehaven comes to mind!
This is confirmed. All appropriate litigation will be issued, managed and/or pursued if it is the best interests of the Investors and/or creditors of the Company.
31. Have the administrators a strategy or process to close loans that are near completion so that funds don’t "evaporate/disappear"? Will these be distributed in full as soon as possible, or will monies be retained to cover cost/expenses of other loans and loan parts that I do not hold?
The Administrators will take all necessary steps to enhance the recoveries for Investors and/or creditors and will apply the realisations as set out in the Proposals (subject to their approval) as quickly as possible.
32. Will the IFISA status remain unchanged during administration and as such, when the payments system is up and running again, will investors be able to transfer their IFISA to another provider (i.e. with the cash in the account)?
Subject to the appropriate regulatory advice and based on the approval of the Proposals, the Administrators intend to facilitate this approach as soon as possible.
33. If CG sell a security property in a loan to the borrower or refinance a loan for the borrower, and there remains a debt (either capital or interest or both), can we be assured that CG, acting in the interests of creditors and lenders, will not carry out the sale/refinance on a “full and final settlement” basis and will as such leave the door open to investors to pursue the borrower for the outstanding debt after the administrators have done their work?
All steps taken in realising assets will be in the best interests of Investors and/or creditors
FundingSecure Limited (‘the Company’) (in Administration) – FAQs
34. On the FS platform, a number of loans have been marked up as “recovered”. However, that is not strictly true as FS class a loan as recovered if the “capital” has been recovered. Therefore, some of these loans still have interest outstanding. I have raised this with FS some time ago but nothing seems to have changed. Will CG be investigating these loans and pursuing the borrowers and valuers for the outstanding debt?
Yes. This is currently being reviewed and we will update Investors and/or creditors on individual loans affected as soon as possible.
35. FS have closed some loans with losses, claiming no further recovery is possible. Will CG be checking that there are no possible further recovery options available on these closed loans?
Yes. This is currently being reviewed and we will update Investors and/or creditors on individual loans affected as soon as possible.
36. What should Investors do to participate at the forthcoming Creditor’s Meeting on 28 November?
Investors are requested to:-
a. Complete the appropriate forms indicating the total value of their investment in the Company (as at the date they complete the forms);
b. Indicate on the Voting Resolution Form whether they wish to approve the Proposals or otherwise;
c. State whether they intend to attend the meeting or complete the Proxy Form appointing the Chairman or a named third party to vote as the Investor instructs (or at their discretion); and
d. Please return these forms to CG&Co as soon as possible by email ([email protected]) or via post to Stephanie Adams, CG&Co, Greg’s Building, 1 Booth Street, Manchester M2 4DU
