pikestaff
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Post by pikestaff on Aug 23, 2020 10:43:22 GMT
RYIs are indeed continuing, but at a reducing rate. I was rather late to join the queue and will be agreeably surprised if I get out before the Metro takeover. Like davee39 p2pindependentforum.com/post/400571/thread I expect the p2p loan book to be closed to all new investment (including reinvestment) after the takeover, at which point RYIs will cease and lenders will be stuck in until the loans are repaid or sold. I think that's what the FCA will want to happen, in order to protect [re]investors. I also think there is a risk that (for the same reason) the FCA might demand that the closure be brought forward - if not immediately, then as soon as the Metro takeover becomes more certain,
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chris1200
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Post by chris1200 on Aug 23, 2020 10:59:06 GMT
I think that's what the FCA will want to happen, in order to protect [re]investors. I also think there is a risk that (for the same reason) the FCA might demand that the closure be brought forward - if not immediately, then as soon as the Metro takeover becomes more certain, I thank you for being the first to actually answer my question as to why it is presumed that re-investment (and, therefore, RYIs) will be cut off come completion! As you may have seen above, I'm less certain on this. I think I'm right in saying that the FCA will have approved RS's current wind-down plan. This plan does not shut off re-investment and RYIs, and yet the FCA approved it. As I've said above, we don't know if RS will follow this plan, but in terms of the FCA's thoughts, I don't see why a takeover being the trigger of it would suddenly change minds that re-investment and RYIs would be problematic in a wind-down scenario.
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Greenwood2
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Post by Greenwood2 on Aug 23, 2020 11:27:27 GMT
I think that's what the FCA will want to happen, in order to protect [re]investors. I also think there is a risk that (for the same reason) the FCA might demand that the closure be brought forward - if not immediately, then as soon as the Metro takeover becomes more certain, I thank you for being the first to actually answer my question as to why it is presumed that re-investment (and, therefore, RYIs) will be cut off come completion! As you may have seen above, I'm less certain on this. I think I'm right in saying that the FCA will have approved RS's current wind-down plan. This plan does not shut off re-investment and RYIs, and yet the FCA approved it. As I've said above, we don't know if RS will follow this plan, but in terms of the FCA's thoughts, I don't see why a takeover being the trigger of it would suddenly change minds that re-investment and RYIs would be problematic in a wind-down scenario. There are also borrowers still relying on further RS funding to complete projects. The FCA will also be looking at whether they are treated fairly and that may require further lending. Would Metro take that on? It doesn't seem like it as they have only mentioned personal loans and said they won't take on the risk of the existing RS loan book.
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chris1200
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Post by chris1200 on Aug 23, 2020 11:31:28 GMT
I thank you for being the first to actually answer my question as to why it is presumed that re-investment (and, therefore, RYIs) will be cut off come completion! As you may have seen above, I'm less certain on this. I think I'm right in saying that the FCA will have approved RS's current wind-down plan. This plan does not shut off re-investment and RYIs, and yet the FCA approved it. As I've said above, we don't know if RS will follow this plan, but in terms of the FCA's thoughts, I don't see why a takeover being the trigger of it would suddenly change minds that re-investment and RYIs would be problematic in a wind-down scenario. There are also borrowers still relying on further RS funding to complete projects. The FCA will also be looking at whether they are treated fairly and that may require further lending. Would Metro take that on? It doesn't seem like it as they have only mentioned personal loans and said they won't take on the risk of the existing RS loan book. Trying to avoid (or at least minimise) this problem is also why I'm sneakily and selfishly hoping that (certain types of) lending is/are slowed down in the run-up to completion, allowing more RYI processing. Gotta keep on dreaming.
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pikestaff
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Post by pikestaff on Aug 23, 2020 13:55:32 GMT
I thank you for being the first to actually answer my question as to why it is presumed that re-investment (and, therefore, RYIs) will be cut off come completion! As you may have seen above, I'm less certain on this. I think I'm right in saying that the FCA will have approved RS's current wind-down plan. This plan does not shut off re-investment and RYIs, and yet the FCA approved it. As I've said above, we don't know if RS will follow this plan, but in terms of the FCA's thoughts, I don't see why a takeover being the trigger of it would suddenly change minds that re-investment and RYIs would be problematic in a wind-down scenario. There are also borrowers still relying on further RS funding to complete projects. The FCA will also be looking at whether they are treated fairly and that may require further lending. Would Metro take that on? It doesn't seem like it as they have only mentioned personal loans and said they won't take on the risk of the existing RS loan book. Fair points both. To address chris1200's point first, allowing reinvestment makes a Plan B possible if the Metro deal does not go ahead. I think the FCA would probably see some benefit in that. Once the deal is nailed on, there's no need for a Plan B and so, if the loan book could be closed cleanly, they might well favour putting an end to reinvestment. But I also agree that there will be borrowers requiring funding to complete projects. It will usually be in both their and lenders' interests that they do. So the reinvestment tap probably has to stay open until either those projects have been funded or alternative funding is arranged.
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chris1200
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Post by chris1200 on Aug 27, 2020 11:21:35 GMT
There are so many threads where this is potentially relevant, now - this one seems as good as any.
Had a bit of back and forth with RS about post-acquisition plans. As expected, they were very coy (stressing that at the present time there are no changes, so nothing to report to investors etc. etc.). When I asked a more specific question about the wind-down plan and Clause 20 of the T&C, I received an interesting response, though. They stressed that there is a difference between the loanbook going into 'wind-down' and being 'run off' (I don't recall hearing the latter before?). While, obviously, there was no commitment to which would be followed post-acquisition, I was told that - 'hypothetically' - if the loanbook were to be 'run off' then RS would expect no re-investments and all repayments diverted to holding account; while a 'wind-down' would follow Clause 20 of the T&C and the wind-down plan (see my previous posts on this one).
So, make of that what you will. The criteria for which path is pursued is obviously entirely opaque still, but it's interesting to know, at least, that RS have in mind two different procedures here and we should keep an eye out for the language used in any comms from now on, I suppose.
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macq
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Post by macq on Aug 27, 2020 11:46:12 GMT
There are so many threads where this is potentially relevant, now - this one seems as good as any. Had a bit of back and forth with RS about post-acquisition plans. As expected, they were very coy (stressing that at the present time there are no changes, so nothing to report to investors etc. etc.). When I asked a more specific question about the wind-down plan and Clause 20 of the T&C, I received an interesting response, though. They stressed that there is a difference between the loanbook going into 'wind-down' and being 'run off' (I don't recall hearing the latter before?). While, obviously, there was no commitment to which would be followed post-acquisition, I was told that - 'hypothetically' - if the loanbook were to be 'run off' then RS would expect no re-investments and all repayments diverted to holding account; while a 'wind-down' would follow Clause 20 of the T&C and the wind-down plan (see my previous posts on this one). So, make of that what you will. The criteria for which path is pursued is obviously entirely opaque still, but it's interesting to know, at least, that RS have in mind two different procedures here and we should keep an eye out for the language used in any comms from now on, I suppose. i have normally called it a run-off as i assumed in a takeover that it would be a orderly(ish) process and wind down would be the bad news decision if it falls through - so kinda makes sense
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chris1200
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Post by chris1200 on Aug 27, 2020 11:57:12 GMT
i have normally called it a run-off as i assumed in a takeover that it would be a orderly(ish) process and wind down would be the bad news decision if it falls through - so kinda makes sense I suppose I meant more in the sense of that I haven't heard this phrase from RS themselves or in relevant documents etc. The Clause 20 wind-down plan would also be 'orderly' - that's sort of the whole point of it; the FCA got these platforms to put this stuff in place to avoid a messy collapse in the event that they're not viable anymore. So I'm not sure that we can say that one is 'orderly' and one is not. In any event, these aren't technical terms - so all that's important is how RS uses them, really. I've followed up asking them to confirm which sections of the T&C allow what they suggest would come with a 'run-off'. If there isn't anything, I'll be interested to know on what legal basis they believe they can ditch the formalised wind-down plan for something else.
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ceejay
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Post by ceejay on Aug 27, 2020 12:29:32 GMT
i have normally called it a run-off as i assumed in a takeover that it would be a orderly(ish) process and wind down would be the bad news decision if it falls through - so kinda makes sense I suppose I meant more in the sense of that I haven't heard this phrase from RS themselves or in relevant documents etc. The Clause 20 wind-down plan would also be 'orderly' - that's sort of the whole point of it; the FCA got these platforms to put this stuff in place to avoid a messy collapse in the event that they're not viable anymore. So I'm not sure that we can say that one is 'orderly' and one is not. In any event, these aren't technical terms - so all that's important is how RS uses them, really. I've followed up asking them to confirm which sections of the T&C allow what they suggest would come with a 'run-off'. If there isn't anything, I'll be interested to know on what legal basis they believe they can ditch the formalised wind-down plan for something else. An interesting distinction, and one that makes sense, I think. If RS (under their new ownership) is still a viable business with all of the departments necessary to administer live loans, then surely running off - that is to say, simply not issuing any new loans (to retail lenders) - requires no special permissions or conditions at all. The loans repay, we get paid, end of story. I don't think there is anything in their current terms that says they have to issue new loans. The wind-down plan covers the case where RS were no longer able to function properly for whatever reason, so need to hand over to administrators - with all the costs that go with that. One imagines that this plan remains in place for the scenario it was intended for.
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chris1200
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Post by chris1200 on Aug 27, 2020 12:39:05 GMT
An interesting distinction, and one that makes sense, I think. If RS (under their new ownership) is still a viable business with all of the departments necessary to administer live loans, then surely running off - that is to say, simply not issuing any new loans (to retail lenders) - requires no special permissions or conditions at all. The loans repay, we get paid, end of story. I don't think there is anything in their current terms that says they have to issue new loans.
The wind-down plan covers the case where RS were no longer able to function properly for whatever reason, so need to hand over to administrators - with all the costs that go with that. One imagines that this plan remains in place for the scenario it was intended for. My point isn't about issuing new loans, it's about disabling re-investment and RYI functionality. Such changes to the operation of the platform would ordinarily have a basis set out in the terms of operation of the platform (I haven't looked through these in detail at this stage, and am just leaving it for them to explain). It's not so much about 'special permission'. Also, just to be clear, the wind-down plan does not involve administrators. It plans for the process to be dealt with completely in-house by RS.
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Greenwood2
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Post by Greenwood2 on Aug 27, 2020 12:39:45 GMT
I suppose I meant more in the sense of that I haven't heard this phrase from RS themselves or in relevant documents etc. The Clause 20 wind-down plan would also be 'orderly' - that's sort of the whole point of it; the FCA got these platforms to put this stuff in place to avoid a messy collapse in the event that they're not viable anymore. So I'm not sure that we can say that one is 'orderly' and one is not. In any event, these aren't technical terms - so all that's important is how RS uses them, really. I've followed up asking them to confirm which sections of the T&C allow what they suggest would come with a 'run-off'. If there isn't anything, I'll be interested to know on what legal basis they believe they can ditch the formalised wind-down plan for something else. An interesting distinction, and one that makes sense, I think. If RS (under their new ownership) is still a viable business with all of the departments necessary to administer live loans, then surely running off - that is to say, simply not issuing any new loans (to retail lenders) - requires no special permissions or conditions at all. The loans repay, we get paid, end of story. I don't think there is anything in their current terms that says they have to issue new loans. The wind-down plan covers the case where RS were no longer able to function properly for whatever reason, so need to hand over to administrators - with all the costs that go with that. One imagines that this plan remains in place for the scenario it was intended for. Rs's wind down plan says RS will do the wind down themselves, the wording of the wind down sounds like a run off, no new loans old loans gradually pay back as per contracts. Edit: Crossed with last post. Edit: Actually the difference might be that in a run off they could continue to fund existing borrowers (development loans) from funds on the platform, rather than returning all repayments to lenders as stated in the wind down plan.
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ceejay
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Post by ceejay on Aug 27, 2020 13:10:55 GMT
An interesting distinction, and one that makes sense, I think. If RS (under their new ownership) is still a viable business with all of the departments necessary to administer live loans, then surely running off - that is to say, simply not issuing any new loans (to retail lenders) - requires no special permissions or conditions at all. The loans repay, we get paid, end of story. I don't think there is anything in their current terms that says they have to issue new loans.
The wind-down plan covers the case where RS were no longer able to function properly for whatever reason, so need to hand over to administrators - with all the costs that go with that. One imagines that this plan remains in place for the scenario it was intended for. My point isn't about issuing new loans, it's about disabling re-investment and RYI functionality. Such changes to the operation of the platform would ordinarily have a basis set out in the terms of operation of the platform (I haven't looked through these in detail at this stage, and am just leaving it for them to explain). It's not so much about 'special permission'. Also, just to be clear, the wind-down plan does not involve administrators. It plans for the process to be dealt with completely in-house by RS. Same thing, surely? If there are no new loans then it would be dodgy to allow passive lenders to keep reinvestment turned on: and with no new loans and no reinvestment there won't be any RYI.
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chris1200
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Post by chris1200 on Aug 27, 2020 13:13:55 GMT
Actually the difference might be that in a run off they could continue to fund existing borrowers (development loans) from funds on the platform, rather than returning all repayments to lenders as stated in the wind down plan. Think it’s the opposite. RS described ‘run-off’ as all repayments being diverted to holding account (see above). I also don’t think the wind-down plan says that. It says RYIs should ideally keep happening, which means re-investment must be occurring (see my posts above on this).
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beagle
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Post by beagle on Aug 27, 2020 13:24:30 GMT
Actually the difference might be that in a run off they could continue to fund existing borrowers (development loans) from funds on the platform, rather than returning all repayments to lenders as stated in the wind down plan. Think it’s the opposite. RS described ‘run-off’ as all repayments being diverted to holding account (see above). I also don’t think the wind-down plan says that. It says RYIs should ideally keep happening, which means re-investment must be occurring (see my posts above on this). that's the same answer i recieved. It will run down not wind down.
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Greenwood2
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Post by Greenwood2 on Aug 27, 2020 13:30:19 GMT
Actually the difference might be that in a run off they could continue to fund existing borrowers (development loans) from funds on the platform, rather than returning all repayments to lenders as stated in the wind down plan. Think it’s the opposite. RS described ‘run-off’ as all repayments being diverted to holding account (see above). I also don’t think the wind-down plan says that. It says RYIs should ideally keep happening, which means re-investment must be occurring (see my posts above on this). The wind down plan says no new loans. I guess lenders could continue to buy old loans from RYIs if they wanted to, but no new loans implies that existing borrowers wouldn't be able to get another tranche of funds for a development. Although maybe they wouldn't label them as new loans. All clear as mud as usual. I guess we will have to wait and see what happens.
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