merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Dec 6, 2013 10:13:39 GMT
"We have been notified that two of the guarantors have been declared bankrupt and a third has entered an IVA. We are continuing to assess the financial position of the fourth guarantor." So says the statement on FC. Not what I was hoping to hear I must say! Going to cost me dear this one but at least I had written off the chances of getting much back awhile ago. For me this is a case of heart ruling head, I had thought that I should put some cash into this as it was in my Capitol, Cardiff and it looked like a good proposition given the business growth in that part of the City. Live and learn they say, sure have with this one!
Some you win and some you loose but my experience is I loose more with FC than I do anywhere else!
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Post by andrewholgate on Dec 6, 2013 10:55:52 GMT
Thanks. Just to add, this is not an AC problem.
A
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pikestaff
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Post by pikestaff on Dec 6, 2013 11:45:21 GMT
Moderator - thanks for moving this to the right place. You might consider now deleting both this post and Andrew Holgate's!
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Dec 24, 2013 16:38:17 GMT
What must seem to be the final act in this sorry saga has been a notice by FC stating that the last of the so called guarantors has called it a day and entered an IVF. I have burbled on about this loan several times before and a few other lenders have also joined in. However what seems to escape all of us is how it was that FC passed this loan in the first place if all four of the guarantors where so fragile financially. Yes there were elements of this loan that made it look a little risky at launch, including the lack of answers to important questions but that is often a common factor shared by many of the loans on FC. But it still begs the question as to how much and how good was the due diligence undertaken by FC on the guarantors?
Finally, can we as investors take it that the amount and quality of the due diligence undertaken by FC on this loan is representative of all other loans on FC? This is a question that I put to FC on their forum a while back but mysteriously it disappeared into cyber space! Given that there was no response to my question I can only assume that this is likely to be the case. So buyer beware if you are trusting in so called personal guarantees because they may not be worth the paper they are written on and you would be better advised to look towards lenders who do provide hard assets to back their loans.
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blender
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Post by blender on Dec 24, 2013 17:04:07 GMT
To give my experience, which is only three defaults but I would rather not be able to give something statistically valid. On one default the two guarantors immediately took out IVAs which somehow meant that we would not get anything, and FC gave up as hopeless. The other who was trading as another company, FCRL hounded him to court - to their credit- and he paid in full eventually.
The third is that large B loan which made 2 payments and went into liquidation giving us half back. This is a third category (other than personal guarantors and assets) which has a guarantor company which is presumably still trading. It is about time that we heard how FC are doing with getting the other half from this company. No comments since September. If a borrower company needs a guarantor company then the guarantor (parent) company really must be prepared to cough up. Or what is its purpose? I am assuming that no news is bad news on this one, though surely FCRL cannot give up on over £200k after two repayments and leave the guarantor company trading?
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oldgrumpy
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Post by oldgrumpy on Dec 24, 2013 17:18:05 GMT
blender
The Big One...(23 Dec) The administration process is ongoing. We are awaiting the details of the progress report, which will be received in March 2014.
Four guarantors, now all failing to guarantee .... all helps to undermine FC's use of "personal guarantees" as anything especially trustworthy. That includes FC's decision about whether they trust the guarantee accepted and then present it to us.
Remember "Breadth of Fresh Pair"?.... the guarantor has made an low offer which has been refused by FC (good for FC!!). Why should a guarantor change his mind about his guarantee, having borrowed £60K and defaulted after just one payment.
FC needs to strengthen its security to improve its own reputation but don't try to tell them on its own forum.
Then there's the one FC chucked out themselves recently .... " Auction Rejected as the borrower will no longer provide the necessary Guarantee. Thanks, FC. " The borrower wanted our money but didn't want to guarantee they'd give it back! Priceless... FC hadn't established that before launching the auction (or had they, and don't want to upset the borrowers by blaming them?) I didn't cry into my £100K of tissues!
We just need to accept that WE take the risk, and no-one compels us to!
Come to think of it... are "personal guarantees" enforceable in law?
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Dec 24, 2013 18:36:38 GMT
blender
.......... Come to think of it... are "personal guarantees" enforceable in law? Yes, I think they are in one way or another. I have no legal background but I understand that under the Theft Act there is the subject of "gaining a pecuniary advantage". I came into contact with this some years ago where a person had made a statement on paper knowing it to be false in order to get a second person to lend them money. Then when person 2 got the money they promptly did a bunk. Subsequently person 2 was charged under the Theft Act with "gaining a pecuniary advantage by offering a document to the lender as an inducement to lend knowing it to be false". Person 2 was found guilty and went to prison and was also order to repay the money.
My guess is that there must be more like this and if FC had some really switched on lawyers they could turn the screw on some of the defaulters who have "gained money by false pretences" which is another part of the Theft Act. However it is not in FC's interests to go legal as it would become very public and would probably frighten off some of the potential borrowers.
Lets face it some of the defaults must be verging on the criminal and especially the ones that go bad within in few months of going live. However a legal friend of mine pointed out that FC have a duty of care when dealing with our money and there therefore could be a case for a class action against FC for not doing adequate due diligence. I would have thought that 1718 would be a case in point where either those providing the guarantee could be sued or FC for lack of care in the first instance.
Are there any criminal or civil lawyers out there who could chip in their valuable knowledge on this one?
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blender
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Post by blender on Dec 24, 2013 22:34:16 GMT
Thanks old grumpy - I had not noticed yesterday's update. Should have checked, and it is in administration as you say, not liquidation. I will not spend the anticipated recoveries just yet.
Yes personal guarantees are enforceable in law, otherwise they are really not worth having. But we are talking civil law for debt, which is where FC took the guarantor who paid up at the last moment. We stopped imprisoning debtors in the C19th, and failing to pay a debt is not a fraud. The remedy is bankruptcy (with the intermediate options such as IVA). Criminal fraud does not really come into it.
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merlin
Minor shareholder in Assetz and many other companies.
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Post by merlin on Dec 24, 2013 23:07:42 GMT
Blender you have missed the point. I guess from your reply you are not fully cognoscente of the Theft Act 1968. However the Hire Purchase Companies, Banks and other financial institutions are, and if you make a false statement in the course of undertaking a financial transaction you can very quickly get to learn the finer points of the law pertaining to the Theft Act. Gaining a pecuniary advantage is very much part of this act and it strikes me that when a loan goes bad within a few months of being taken-up either FC have screwed up or they have been deliberately misled by the borrower. In which case this can be construed as "taking a pecuniary advantage" or, how about "obtaining money by false pretences" or "the making of a false statement by a company director" all covered within the theft act as well as several more which IMHO could be applied in this type of situation.
Unlike debtors no longer going to prison for their sins, if you are found guilty under the Theft Act there is a high probability of such a penalty. In the case of 1718, £70k has vanished, with as FC have stated very little chance of any recovery. Now to put is slightly differently, but without making a direct comparison, if four people had conspired to steal £70k from a business and were caught, do you think they would face a prison sentence or would they just get a slap on the wrist?
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duck
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Post by duck on Dec 26, 2013 8:14:00 GMT
are you excluding Members of Parliament?
I agree with you merlin regarding the Theft Act and it is (from my researches) not commonly used in prosecutions. Argument is commonly based around 'intent' which is inherently difficult to prove. I believe there are only a couple of absolute offences currently in play, speeding and drunkenness in the eyes of a police officer.
From my losses on FC there appears to be two different types of guarantors, those that try to honour (and don't always succeed) and those that have no intention. One of my loans (lawyers company) went after 3 payments and is imho not quite straight up.
The issue is that Contract Law in this country is very convoluted and this will determine if the guarantee is worthless. It draws on many other laws (for instance the Law of Property (Miscellaneous Provisions) Act 1989) so whilst taking the bull by the horns and hitting the guarantor with the Theft Act might be attractive (revenge?) the guarantor would have to be proved to have committed the 'theft' which of course is not the action he/she has taken by not honouring the guarantee.
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