mikes1531
Member of DD Central
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Post by mikes1531 on Jun 1, 2016 21:18:40 GMT
Sorry, but I find your words totally wrong. You are reasoning like this was the 'do it or break it' loan for the company, while you should understand that defaults are unavoidable part of the business. You have an ENORMOUS number of defaults within FC (and most of them with ZERO security behind...) and many other networks. The principal -- and very important -- difference between SS and most other P2P platforms, including FC, is that the other platforms operate as agents for investors, and that insulates them from defaults. Before the New SS Ts&Cs, SS were acting as principal -- we were lending money to SS/Lendy and they were lending money to borrowers. That puts them in a similar position to banks. And when banks make loans that default, they take the hit, not their depositors. That's what caused the bank failures in the recent financial crisis, and people here rightly are concerned how SS/Lendy are going to cope with defaults on loans written under their Old Ts&Cs.
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Post by earthbound on Jun 1, 2016 21:32:26 GMT
Sorry, but I find your words totally wrong. You are reasoning like this was the 'do it or break it' loan for the company, while you should understand that defaults are unavoidable part of the business. You have an ENORMOUS number of defaults within FC (and most of them with ZERO security behind...) and many other networks. The principal -- and very important -- difference between SS and most other P2P platforms, including FC, is that the other platforms operate as agents for investors, and that insulates them from defaults. Before the New SS Ts&Cs, SS were acting as principal -- we were lending money to SS/Lendy and they were lending money to borrowers. That puts them in a similar position to banks. And when banks make loans that default, they take the hit, not their depositors. That's what caused the bank failures in the recent financial crisis, and people here rightly are concerned how SS/Lendy are going to cope with defaults on loans written under their Old Ts&Cs. hi mikes1531 I'm asking you this question because you seem to be a commentator on this default that sees the issues equally from both sides. Being that commercial assets in a very niche market , such as this one, can quite easily only realize 50% of their valuation what is your opinion on... 1. this asset sells for 60% of its valuation. 2. Where do you think SS will stand in the relation to interest payments with regard to sales on the SM, where it states interest will not be paid until the asset has sold.
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Post by meledor on Jun 1, 2016 21:38:24 GMT
Sorry, but I find your words totally wrong. You are reasoning like this was the 'do it or break it' loan for the company, while you should understand that defaults are unavoidable part of the business. You have an ENORMOUS number of defaults within FC (and most of them with ZERO security behind...) and many other networks. The principal -- and very important -- difference between SS and most other P2P platforms, including FC, is that the other platforms operate as agents for investors, and that insulates them from defaults. Before the New SS Ts&Cs, SS were acting as principal -- we were lending money to SS/Lendy and they were lending money to borrowers. That puts them in a similar position to banks. And when banks make loans that default, they take the hit, not their depositors. That's what caused the bank failures in the recent financial crisis, and people here rightly are concerned how SS/Lendy are going to cope with defaults on loans written under their Old Ts&Cs.
It seems like we are going round in circles here.
SS is not like banks under the old T&Cs. I have explained that over the last few days, but some are still struggling to understand. SS have explained it very clearly in its update of PBL20 today and still people are suggesting there is some confusion.
There was no real difference in respect of risk of loss of capital or interest between the old and new T&Cs provided Lendy Ltd continues to operate. The difference was that under the old structure there was risk that the security against a specific loan might not be effective because of something happening to Lendy Ltd and if Lendy became bankrupt than there was a risk that an administrator would treat all creditors as pari-passu.
So the situation is completely different to banks.
All this has been discussed before. See for instance this thread:
p2pindependentforum.com/thread/2639/convinced?page=2
and note Maestro's comment on 14 May 2015
"With regard to say SS sharing the pain of a particular default among all SS investors and not just lenders of that loan, I will not be willing to share this pain as SS Terms & Conditions make it clear that any post default recovery (after their 5% admin fee!) "will be repayable to the Investors (allocated in proportion to the loan amounts funded)". Even SS fees are paid before lenders interest payment. Section 5 and 12 of T&C are interesting."
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shimself
Member of DD Central
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Post by shimself on Jun 1, 2016 21:57:52 GMT
....Sorry, but I find your words totally wrong. You are reasoning like this was the 'do it or break it' loan for the company, while you should understand that defaults are unavoidable part of the business. You have an ENORMOUS number of defaults within FC (and most of them with ZERO security behind...) and many other networks. I don't see your points at all in asking SS to deplate the whole of the PF or their personal resources to cover this default. Even thinking it would be totally CRAZY. . You haven't taken on board the part about it being SS who owe the lenders. I do know, defaults I've had a few and then again..
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Post by earthbound on Jun 1, 2016 22:47:28 GMT
I'm out - eight loan parts totalling £1020, all gone. Good luck to those that bought them. I'm sure they'll be OK, but meanwhile I have one less concern in my collection.  Well done uncletone , wise decision, unfortunately i don't think the buyers on the SM will be ok, i sincerely hope this pans out well for them, but i really do fear the worst. 
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nick
Member of DD Central
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Post by nick on Jun 2, 2016 0:01:23 GMT
....Sorry, but I find your words totally wrong. You are reasoning like this was the 'do it or break it' loan for the company, while you should understand that defaults are unavoidable part of the business. You have an ENORMOUS number of defaults within FC (and most of them with ZERO security behind...) and many other networks. I don't see your points at all in asking SS to deplate the whole of the PF or their personal resources to cover this default. Even thinking it would be totally CRAZY. . You haven't taken on board the part about it being SS who owe the lenders. I do know, defaults I've had a few and then again..SS does owe the lenders, but that debt is only repayable if repaid by the related onward loan, ie it was always clear (to me anyway) that investors took on the credit risk of the underlying loans. The old T&C's, which provide the contractual relationship between lenders and SS, is also fairly clear about this so it is difficult to argue that it is a simple unconditional debt repayable by SS. The change in structure to the new T&Cs was to insulate investors from SS' own credit risk and did not fundamentally alter the fact that investors are and always were exposed to the credit risk of the underlying loans. It is unfortunate that SS's communications on changing from the old to new T&C's implied that SS retained credit risk relating to underlying loans - I suspect this was written by their marketing folk without proper scrutiny by their commercial or legal team. This has led to much of the confusion and was blatantly misleading.
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Post by harvey on Jun 2, 2016 1:29:30 GMT
Well fortunately I'm not invested in this loan. I was in the early days but sold out of it a long time ago. All I would observe is that saving stream seem to have got themselves in a bit of a pickle over this one because of the confusion between the Old original non peer to peer terms and the later terms when they moved to a peer-to-peer model because of FCA requirements I think. One of the few facts I can establish from this is that this loan dating back to 2014 was issued under the old original terms where by investors for lending to Lendy and not the end borrower. Therefore it seems clear to me and I'm not a lawyer, that lendy must be responsible for losses to the investors because that is where the contractual relationship was set and the borrower is lendys Creditor.
Looking at it from a practical point of view I would say it matters little provided lendy deal with this with the administrator as well as possible to recover as much of the loan as they can. However there is an argument I would have thought that if they have the difference between the recovery amount and the loan amount they must be liable to pay that in full to the investors In the loan.
The bigger issue here is the depletion of the provision fund which may occur or may not we don't know yet and will that affect the solidity of the platform going forward particularly when there are bigger loans than this still written under the Old terms.
I could be wrong but I get the impression saving stream are going to keep as low a profile as possible while this process is in hand and perhaps partly to avoid having to deal with some of the confusion and difficult questions raised here.
Given the doubt whether new investors will get all of their capital and interest back it does surprise me that sale of loan parts in this are still allowed on the secondary market because purchases are not clearly aware of the applicable terms and conditions. I'm not comparing rebs to saving stream but they do suspend trading on the secondary market when a loan is put in default and it does surprise me a little that people can still by parts of this loan even when there is doubt about what they will get back. I'm glad for the people selling that there is still some movement in it for their sake but logic tells me that it's a game of pass the parcel and if the Music Stops and it goes into default when you are holding the parcel then that is the risk and to be able to offload your risk onto a perhaps ill informed buyer does not seem like cricket
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james
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Post by james on Jun 2, 2016 2:22:47 GMT
You haven't taken on board the part about it being SS who owe the lenders. I do know, defaults I've had a few and then again..SS does owe the lenders, but that debt is only repayable if repaid by the related onward loan, ie it was always clear (to me anyway) that investors took on the credit risk of the underlying loans. The old T&C's, which provide the contractual relationship between lenders and SS, is also fairly clear about this so it is difficult to argue that it is a simple unconditional debt repayable by SS. The change in structure to the new T&Cs was to insulate investors from SS' own credit risk and did not fundamentally alter the fact that investors are and always were exposed to the credit risk of the underlying loans. It is unfortunate that SS's communications on changing from the old to new T&C's implied that SS retained credit risk relating to underlying loans - I suspect this was written by their marketing folk without proper scrutiny by their commercial or legal team. This has led to much of the confusion and was blatantly misleading. To quote Lendy in relation to their change of conditions to a more P2P structure: " Because of the fact that this will now be a true P2P platform, the onus of repayment lies with the borrower and is no longer covered by Lendy Ltd’s corporate guarantee. However the Provision Fund will continue to provide discretionary reimbursement for any losses.
...
Lenders lent to Lendy Ltd who then lent to the borrower
...
When you invested in a loan, we kept detailed records of this, but an administrator may consider it a pari passu risk (http://www.investopedia.com/terms/p/pari-passu.asp) in the event of Lendy Ltd’s (highly unlikely) bankruptcy. One bad loan, could in theory, undermine the rest.
...
Lendy Ltd was responsible for covering all repayments and shortfalls as it was both the borrower and the lender
...
Lendy Ltd no longer have any direct responsibility for covering any shortfalls. Lendy Ltd will return to the Lenders whatever comes back in following disposal of the asset.
...
If a loan went into Default, Lendy Ltd continued to pay interest at the normal rate of 1% per month.
...
NEW STRUCTURE
SS Lenders will continue to earn interest, but it will accrue, rather than be paid on a monthly basis out of Lendy Ltd’s working capital." Those statements by Lendy appear to be an accurate statement of the position as Lendy represented it for old loans like this one, correctly identifying the responsibilities to pay, the corporate guarantee and that Lendy will continue to pay the interest. The old terms and conditions are inconsistent with this description and it is this description that Lendy was presenting as factual at the times these old loans were made. "We will make you whole... don't look at the contract we're asking you to accept and will later claim is an accurate representation of what we agreed that says we won't" is not a happy situation. It's fine to mention the old T&C. But now explain what the explicit corporate guarantee and explicit undertaking to pay the interest each month mean and whether you think that a P2P platform can with impunity say that those guarantees exist then use the contract to say they don't really exist after all. Which appears to be the situation today: Lendy apparently asserting that its statements about corporate guarantee and monthly interest payment were worthless.
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mikes1531
Member of DD Central
Posts: 6,453
Likes: 2,320
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Post by mikes1531 on Jun 2, 2016 3:19:45 GMT
The principal -- and very important -- difference between SS and most other P2P platforms, including FC, is that the other platforms operate as agents for investors, and that insulates them from defaults. Before the New SS Ts&Cs, SS were acting as principal -- we were lending money to SS/Lendy and they were lending money to borrowers. That puts them in a similar position to banks. And when banks make loans that default, they take the hit, not their depositors. That's what caused the bank failures in the recent financial crisis, and people here rightly are concerned how SS/Lendy are going to cope with defaults on loans written under their Old Ts&Cs. It seems like we are going round in circles here.
SS is not like banks under the old T&Cs. I have explained that over the last few days, but some are still struggling to understand. SS have explained it very clearly in its update of PBL20 today and still people are suggesting there is some confusion. : That's one thing we can agree on -- we are going around in circles! The posting by james at the top of this page explains my position better than I can. And at this point we probably ought to agree to disagree.
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mikes1531
Member of DD Central
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Post by mikes1531 on Jun 2, 2016 3:31:01 GMT
hi mikes1531 I'm asking you this question because you seem to be a commentator on this default that sees the issues equally from both sides. Being that commercial assets in a very niche market , such as this one, can quite easily only realize 50% of their valuation what is your opinion on... 1. this asset sells for 60% of its valuation. 2. Where do you think SS will stand in the relation to interest payments with regard to sales on the SM, where it states interest will not be paid until the asset has sold. I'm no expert, so all I can do is express an uneducated opinion. 1. That's certainly possible. 2. I don't see that letting interest accrue on defaulted loans rather than paying it monthly would be a big problem, since it's easily understandable. But when the asset eventually is sold I hope they decide that what's best for them and the long-term future of the platform is to cover all losses, including all accrued interest, using the PF. And then to work toward rebuilding the PF balance back to the 2% level. The positive impact that would have on investor confidence in, and commitment to, the platform for the long term could be worth all it costs SS in the short term -- and then some. But that's JMHO, and perhaps I'm being wildly optimistic. 
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Post by meledor on Jun 2, 2016 5:51:14 GMT
SS does owe the lenders, but that debt is only repayable if repaid by the related onward loan, ie it was always clear (to me anyway) that investors took on the credit risk of the underlying loans. The old T&C's, which provide the contractual relationship between lenders and SS, is also fairly clear about this so it is difficult to argue that it is a simple unconditional debt repayable by SS. The change in structure to the new T&Cs was to insulate investors from SS' own credit risk and did not fundamentally alter the fact that investors are and always were exposed to the credit risk of the underlying loans. It is unfortunate that SS's communications on changing from the old to new T&C's implied that SS retained credit risk relating to underlying loans - I suspect this was written by their marketing folk without proper scrutiny by their commercial or legal team. This has led to much of the confusion and was blatantly misleading. To quote Lendy in relation to their change of conditions to a more P2P structure: " Because of the fact that this will now be a true P2P platform, the onus of repayment lies with the borrower and is no longer covered by Lendy Ltd’s corporate guarantee. However the Provision Fund will continue to provide discretionary reimbursement for any losses.
...
Lenders lent to Lendy Ltd who then lent to the borrower
...
When you invested in a loan, we kept detailed records of this, but an administrator may consider it a pari passu risk (http://www.investopedia.com/terms/p/pari-passu.asp) in the event of Lendy Ltd’s (highly unlikely) bankruptcy. One bad loan, could in theory, undermine the rest.
...
Lendy Ltd was responsible for covering all repayments and shortfalls as it was both the borrower and the lender
...
Lendy Ltd no longer have any direct responsibility for covering any shortfalls. Lendy Ltd will return to the Lenders whatever comes back in following disposal of the asset.
...
If a loan went into Default, Lendy Ltd continued to pay interest at the normal rate of 1% per month.
...
NEW STRUCTURE
SS Lenders will continue to earn interest, but it will accrue, rather than be paid on a monthly basis out of Lendy Ltd’s working capital." Those statements by Lendy appear to be an accurate statement of the position as Lendy represented it for old loans like this one, correctly identifying the responsibilities to pay, the corporate guarantee and that Lendy will continue to pay the interest. The old terms and conditions are inconsistent with this description and it is this description that Lendy was presenting as factual at the times these old loans were made. "We will make you whole... don't look at the contract we're asking you to accept and will later claim is an accurate representation of what we agreed that says we won't" is not a happy situation. It's fine to mention the old T&C. But now explain what the explicit corporate guarantee and explicit undertaking to pay the interest each month mean and whether you think that a P2P platform can with impunity say that those guarantees exist then use the contract to say they don't really exist after all. Which appears to be the situation today: Lendy apparently asserting that its statements about corporate guarantee and monthly interest payment were worthless.
Any corporate guarantees etc that a company offers over above its T&Cs are not to be treated as contractual and can be withdrawn. And this was the case here. Clearly Lendy is not 'with impunity saying that those guarantees exist' it is saying they do NOT exist anymore as we are no longer operating under the old structure.
It is not just "fine to mention the old T&Cs" it is essential because now the old structure has disappeared that's all you've got.
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Post by dualinvestor on Jun 2, 2016 6:29:33 GMT
Is the accruing interest on this simple or compound? If the latter at what "rests"?
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cooling_dude
Bye Bye's for the PPI
Posts: 2,853
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Post by cooling_dude on Jun 2, 2016 6:40:56 GMT
Is the accruing interest on this simple or compound? If the latter at what "rests"? Simple, not compound. If the investors in this loan normally reinvested all their interest, then they would be losing out each month the loan is not recovered (only slightly though).
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james
Posts: 2,205
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Post by james on Jun 2, 2016 11:52:09 GMT
Any corporate guarantees etc that a company offers over above its T&Cs are not to be treated as contractual and can be withdrawn. And this was the case here. Clearly Lendy is not 'with impunity saying that those guarantees exist' it is saying they do NOT exist anymore as we are no longer operating under the old structure.
It is not just "fine to mention the old T&Cs" it is essential because now the old structure has disappeared that's all you've got.
This loan was made under the old structure, not the new one. Those older assertions are part of what was used to induce lenders to lend to Lendy. If a platform offers such guarantees then withdraws them once they become relevant then I see no reason to use the platform because it will have demonstrated that it can't be trusted to act as it says it will act. In that circumstance I would recommend against use of the platform, citing the change as the reason why the platform can't be trusted. And of course none of my own money would go to via the platform, regardless of how good or otherwise its terms seem, because it would have been demonstrated that the terms can't be relied upon either.
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investibod
Member of DD Central
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Post by investibod on Jun 2, 2016 13:41:31 GMT
Any corporate guarantees etc that a company offers over above its T&Cs are not to be treated as contractual and can be withdrawn. And this was the case here. Clearly Lendy is not 'with impunity saying that those guarantees exist' it is saying they do NOT exist anymore as we are no longer operating under the old structure.
It is not just "fine to mention the old T&Cs" it is essential because now the old structure has disappeared that's all you've got.
This loan was made under the old structure, not the new one. Those older assertions are part of what was used to induce lenders to lend to Lendy. If a platform offers such guarantees then withdraws them once they become relevant then I see no reason to use the platform because it will have demonstrated that it can't be trusted to act as it says it will act. In that circumstance I would recommend against use of the platform, citing the change as the reason why the platform can't be trusted. And of course none of my own money would go to via the platform, regardless of how good or otherwise its terms seem, because it would have been demonstrated that the terms can't be relied upon either. Bait & Switch?
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