pip
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Post by pip on Nov 1, 2019 9:20:45 GMT
I think there is some confusion on this forum as to what administrators are and the role we can reasonably hope they will play in the process for the loan book to be wound up? I would strongly urge people to read uk.practicallaw.thomsonreuters.com/7-385-3012?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1 as it offers a very good oversight. Their role is strictly limited by statute. It does not include any obligations to lenders, in fact their role is limited to efficiently continuing or winding up the company to the benefit of creditors. And despite what people claim P2p investors are not creditors. Saying that we may be creditors as we may have been missold an investment doesn’t make you a creditor as the company is now protected from any claims against it. I’m not even sure we want to be creditors either, the company itself is likely to have next to no assets apart from the loan book which the FCA approved was ringfenced for lenders benefit. Personally I think a fair few people on this forum are hoping for things from the administrator which I would be amazed if they do. If people think they are going to hang around for 5 years diligently winding down the loan book on investors behalf’s while being paid by looking for any money which fell down the back of the sofa’s in a staff room, well I just can’t see it. What we do need is for the FCA to tell us what the plan is they signed off on for the loan book to be ringfenced and managed if FS go bust. If that just comprised of hoping the administrators would do it, well god help us all! If that is the case we should go after the FCA for signing off such a flawed plan. What is needed is some serious funding to pay for the long and expensive process for the loan book to be worked through. For me let’s wait a month see what materialises, maybe the FCA has a cunning plan. But really doubt it. I know others have been against the idea but maybe we shouldn’t be so opposed to the idea of the loan book just getting flogged off to the highest bidder and the proceeds distributed. I honestly can’t see a long drawn out process benefitting anybody but those charging the fees. If people really want compensation then they should go after the FCA for approving this company as regulated when it was clearly a basket case with horrendous controls at every level. |
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sundown
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Post by sundown on Nov 1, 2019 11:11:25 GMT
What lessons can be learned from the Lendy administration? I believe lenders are starting to get repaid there, with some early repayments returning 98% of capital.
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thedog
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Post by thedog on Nov 1, 2019 12:00:21 GMT
A few thoughts (sorry this has grown longer than planned):
- You're absolutely correct that the Administrators have a duty to the "Creditors" of the company not "investors" (or if you want to make it clearer "customers").
- And I absolutely agree that there does seem to be an odd belief that the book is "ring-fenced" from the Administrators' costs but that they will still kindly collect it out for us, paid solely from fees which would have been due to FS and not from our recoveries (and I think we all know those fees will be limited if they are only levied after full recovery to "investors").
BTW - "Creditors" per the last filed accounts (Mar 2018 so pretty stale) were principally our cash deposits. Since then RK has had a charge executed so I assume he's lent some money to the company. Creditors in the accounts would not include the Trust structure noted below.
BUT
I believe that the legal structure is that FS acted as "Security Trustee" (in some other P2Ps it's not the main entity but a separate vehicle, in FS I think it was the main entity). This is pretty arcane lending law and I won't claim to know all the details but essentially this means FS stood in our shoes holding the "Security" (the mortgages etc) "in Trust" for us.
(As an aside, this structure is widely used between banks making loans to large companies).
This may be the route through which the collection can operate. If it is though, everyone should be very clear that Administrators will not do this for free and that they are able to claim the costs of monetising this security before passing what remains on to the beneficiaries of the Trust - ie us. (I do not know if or how that would square with the claim that the book was ring-fenced - perhaps it is ring-fenced from the Administrators of the Company, but they would resolve the Trust in a different capacity. Just guessing).
Also, as you noted FS was obliged by the regulators to have a plan for the collection of the book in the event of their insolvency. They were, predictably, perhaps understandably and like most P2P firms, "reluctant" to share that plan when I asked about it. (And I still invested so how stupid am I and more to the point how stupid would anyone be to listen to my thoughts???). There may therefore be an agreement with a firm (perhaps the same firm as the Administrators??) for them to step in as what is known as a "back-up servicer" to collect the book out and that agreement may give them rights to be paid from recoveries).
What I think we have seen (Lendy, Coll but I'm not close to either) is that loan books have not so far been abandoned with no-one trying to collect the money - the nightmare scenario for investors.
So what do we do? - First I agree that we have to give it a little while to see how things play out. The Administrators make a report within 8 weeks (they will almost certainly use the full time) and it's all guesswork before that.
- Could / should the portfolio be sold? Perhaps BUT: 1) IF ANYONE THINKS THIS IS A WAY TO AVERAGE OUT RECOVERIES ON ALL LOANS THEY SHOULD FORGET IT. If the book is sold the buyers should and would be asked to split their bid by asset. SO THAT MOTIVATION / OBJECTION IS EASILY DEALT WITH.
2) IF the book were to be sold it is too diverse to go to one buyer. It should be split in to a few portfolios of similar loans and sold accordingly - for instance litigation cases to a litigation specialist, development sites to someone with a land-bank, half-completed sites to a developer, decent property loans to a property lender. Bling should either have repaid or been sold at auction / to a bullion dealer before then anyway.
3) Collection costs will be factored in to the price paid by the buyers. They might be cheaper that Administrators so it might save us money but we'll still pay indirectly. 4) Remember that you NEVER get fair value as a distressed seller. Buyers know the can pay bottom-dollar so will and they will be bidding with limited knowledge (or have to spend a lot of time reviewing what are in their terms relatively small loans) and factor that into their bids. Especially if there is a lot of "just get rid of it" comment on here.....
Portfolio sale might therefore be a way to close things off once those situations which can be resolved relatively quickly (receivorships with the property sold) have been.
By the way a portfolio sale will also take time, say 6 months....
As we've got into some legal stuff here a disclaimer. I'm NOT a lawyer or an Insolvency Practitioner, I've not read the relevant contracts, this is my layman's understanding of the position, I make no claims to expertise and the above is speculative (I've highlighted just some of the uncertainties and guesswork above). If you want legal advice hire a lawyer, don't read a bulletin board!
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pip
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Post by pip on Nov 1, 2019 12:28:58 GMT
As we've got into some legal stuff here a disclaimer. I'm NOT a lawyer or an Insolvency Practitioner, I've not read the relevant contracts, this is my layman's understanding of the position, I make no claims to expertise and the above is speculative (I've highlighted just some of the uncertainties and guesswork above). If you want legal advice hire a lawyer, don't read a bulletin board!
Agree with that. I am a Chartered Accountant but wouldn't claim to be an expert on insolvency and this area of law is highly complex. I give no advice but only my opinion, which may well be wrong or others may disagree with. Please do not take any action based on what I say. If people want to hire a lawyer to get decent advice, then go for it, unfortunately it will cost you an arm and a leg and I suspect many firms will simply not know the answers as handling the administration of a p2p company is an evolving area with probably a lot of grey areas.
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Greenwood2
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Post by Greenwood2 on Nov 1, 2019 13:40:42 GMT
A few thoughts (sorry this has grown longer than planned):
- You're absolutely correct that the Administrators have a duty to the "Creditors" of the company not "investors" (or if you want to make it clearer "customers")......
And the customers are actually the borrowers who pay the P2P company for a service, something I only recently realised.
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thedog
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Post by thedog on Nov 1, 2019 16:08:15 GMT
I've copied below Mucho P2P's posting on the "Resignations and Administration" thread dated 31st Oct 2019 which covers similar ground to the above.
In particular reads as if the Trust(s) will be the route to recovery and will be wound be separately (presumably with a fee arrangement). (And I'm delighted to have been too pessimistic about the speed of the mandatory report).
"Update:
We (FundingSecure Action Group) now have opened channels of communications with the administrators C*&*o, the legal firm offering advice to C* (specialist in debt recovery) and the ex-Directors.
1. Any members who has any questions for either C*&*o or the law firm assisting in the administration, please forward them to me, by PM. The questions will be collated in a general group of questions to be sent to the administrators and their law firm at the start of next week. CG will then respond to the main set of queries in their next FAQ update.
Please note: They will not entertain individual questions/concerns at this time, however they will entertain “General queries” or queries on process that can be placed into the next FAQ.
2. C*&*o are seeking to provide their mandatory statement well within the 8 weeks’ time limit, hopefully within the next 2 weeks.
3. C*&*o have advised that the various trusts holding the ringfenced assets will need Court approval to be managed, liquidated and returned to lenders. An email will be sent out to all lenders regarding this matter in due course. A positive response will be required from the lenders to facilitate and expedite this matter. Please bear this in mind when reading their request.
MP2P"
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pip
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Post by pip on Nov 1, 2019 16:16:02 GMT
- Could / should the portfolio be sold? Perhaps BUT: 1) IF ANYONE THINKS THIS IS A WAY TO AVERAGE OUT RECOVERIES ON ALL LOANS THEY SHOULD FORGET IT. If the book is sold the buyers should and would be asked to split their bid by asset. SO THAT MOTIVATION / OBJECTION IS EASILY DEALT WITH. I will readily admit my FS loan book is so thoroughly rotten that I would happily average out all recoveries!
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adrian77
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Post by adrian77 on Nov 1, 2019 17:24:11 GMT
I find all this very arcane- to me the simple question and one maybe we can put to the auditors is simply - how are they going to get paid? I guess they will manage the loans that are not yet late and liquidate the others pretty quickly? I presume once the loan book is closed then will we get our money back (after the mother of all hair cuts) but I am not sure if the administrator will add his cut here so we will get even less back?
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Post by brightspark on Nov 1, 2019 19:54:07 GMT
Surely the Administrators by deducting healthy fees from realisations will build up a holding account more than ample to cover their costs. This will be added to the relative small amount of money generated from any realised assets of the platform. Once the necessary momentum is built up interim payments will start to flow to relevant lenders as and when investments are liquidated or after repayments by borrowers. At the end of Administration/liquidation any relatively small amount of surplus money left in their holding account will be distributed to investors pro rata.
An alternative is for the whole loan-book or parts of the loan book to be sold. Fees to cover their costs would have to be negotiated with buyers of the loan book. Some where in those negotiations between loan book buyers and sellers some investor money will go to cover the bill for the fees.
The poor quality of many of the securities coupled with the firesale way of the disposal means for many investors a very substantial hit.
In general terms I really don't see any other way of it happening. It can be dressed up with jargon and other such but the reality is that FS at the best managed the loan book horribly badly and at worst in conjunction with some conniving borrowers feathered their own nests.
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bulletbill
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Post by bulletbill on Nov 2, 2019 4:28:43 GMT
Whatever the p2p question is the answer is always lenders lose money and everyone else offering “services” will do ok.
if you look at the state of the loan book and the incompetence of FS you’d have realised the money was lost the minute we invested. We are now facing up to our losses but the fact is the money was lost long ago. The Administrators are only here to feed on the last scraps. The way a limited company can create total carnage and misery and then just throw the towel in and walk away into the sunset is all wrong. I believe any financial institution should be regulated, I mean properly regulated. We shouldn’t be able to set up a financial institution in our garden shed with zero experience, this is just not sensible.
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smee
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Post by smee on Nov 2, 2019 9:06:50 GMT
Like most people, I have a large number of loans all of which are way overdue with little chance of recovery. I was well aware of the risks of p2p investing and am not looking to blame anyone for loans which have been presented fairly and then failed. I didn’t expect FS to be infallible, but I find it amazing that an FCA regulated company was allowed to present loans in a way that amounts to genuine mis-selling. My particular bugbear is the Lytham loan which was listed as having an LTV of 17.7%, the fact which persuaded me to invest much more than my usual amounts. I have a vague recollection of the administrators of either L or FS asking for investors to contact them with any concerns about mis-selling or fraud. Does anyone remember which?
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Post by brightspark on Nov 2, 2019 11:04:28 GMT
In their initial correspondence with investors both the Administrators of Lendy and Funding Secure invited information of matters of concern to be provided to them.
Thus for Funding Secure "if you have any specific matters or concerns you wish to raise about the conduct or operation of the Company, please write to us setting out your information."
And for Lendy "We shall also be pleased to receive any useful information concerning the Companies, its dealings or conduct, which may assist us in our investigation into their affairs."
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Post by brightspark on Nov 2, 2019 11:21:30 GMT
Whatever the p2p question is the answer is always lenders lose money and everyone else offering “services” will do ok. if you look at the state of the loan book and the incompetence of FS you’d have realised the money was lost the minute we invested. We are now facing up to our losses but the fact is the money was lost long ago. The Administrators are only here to feed on the last scraps. The way a limited company can create total carnage and misery and then just throw the towel in and walk away into the sunset is all wrong. I believe any financial institution should be regulated, I mean properly regulated. We shouldn’t be able to set up a financial institution in our garden shed with zero experience, this is just not sensible. You make it all sound rather amateurish but that could not have been the case. The individuals who set up the operation had a good grounding in their work and employed others of like mind to construct an edifice which eventually crumbled. The finger of blame tends to be pointed at the principals but from the top down gullible and not so gullible investors were fed misinformation by employees of the company. I am in the powerboat loan amongst others as an example and the drivel, procrastination and outright lies that were spouted in the form of updates to ward off concerned investors defies all credibility. What is frustrating is that it had been obvious to all and sundry for a very long time that the loan book was rotten yet the FCA for whatever reasons did not step in earlier to stem the inflow of investor capital.
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Post by investor1925 on Nov 5, 2019 11:43:37 GMT
I've just had a loan (2866739292) completed & closed & the cash is now showing in my account, with interest
I wonder when they are going to turn the tap on & let me withdraw it ?
Could this be my first yuletide present, fingers crossed !!!!!!!!!!!
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arby
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Post by arby on Nov 5, 2019 11:53:00 GMT
I've just had a loan (2866739292) completed & closed & the cash is now showing in my account, with interest I wonder when they are going to turn the tap on & let me withdraw it ? Could this be my first yuletide present, fingers crossed !!!!!!!!!!! Instead of receiving a diamond ring for christmas you've got a screenshot of a notional repayment from one... I got it too- I'm guessing it's a good sign that some creaky wheels are still turning....
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