shimself
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Post by shimself on Oct 22, 2016 12:28:35 GMT
Yes that's what I meant. The conflict of interest is inescapable There might be a conflict of interet morally, but legally not. Any appointed receiver acts, legally, as agent for the company, although in all practical terms they really act for the chargeholder. It is not an uncommon for a shareholder to take a charge in respect of loans made to the company they (part) own. This is a usual occurance in Private Equity deals eg an "investor" such as a finance house will sy they have invested £10 million in XYZ Limited but in reality that is £1million Share Capital (representing x% of the equity) and £9million loan, this is accompanied by a complex agreement so that the Private Equity "partner" gets not only interest on the loan but a share in the success of the company, sort of "skin in the game." If it all goes wrong they rely on the security (charge) they have taken to get as much back of £9 million as possible. Other common instances of this is where a principal shareholder takes a charge in respect of money loaned to his own company. Often unsecured creditors protest about such arrangements but in reality unless there was some irregularity in the loan/charge there is little they can do about it. In both scenarios the Finance House/principal shareholder can appoint a receiver and frequently do. But the difference here is that if there had been an upside it's not the lender that makes the profit it's the "custodian", it's Lendy Ltd. But for this undisclosed interest perhaps they would not have offered the loan in the first place, perhaps they would have pulled the plug earlier, their focus was not solely on lenders interests and of course it should have been.
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ablender
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Post by ablender on Oct 22, 2016 12:45:06 GMT
But the difference here is that if there had been an upside it's not the lender that makes the profit it's the "custodian", it's Lendy Ltd. But for this undisclosed interest perhaps they would not have offered the loan in the first place, perhaps they would have pulled the plug earlier, their focus was not solely on lenders interests and of course it should have been. Do you see them handling this in a different way than they do with other loans?
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shimself
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Post by shimself on Oct 22, 2016 12:49:47 GMT
But the difference here is that if there had been an upside it's not the lender that makes the profit it's the "custodian", it's Lendy Ltd. But for this undisclosed interest perhaps they would not have offered the loan in the first place, perhaps they would have pulled the plug earlier, their focus was not solely on lenders interests and of course it should have been. Do you see them handling this in a different way than they do with other loans? Impossible to say. How do we know what loans they turn down (as it now seems that this one should have been)
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ablender
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Post by ablender on Oct 22, 2016 12:52:19 GMT
Do you see them handling this in a different way than they do with other loans? Impossible to say. How do we know what loans they turn down (as it now seems that this one should have been) Why should they have turned it down? It looked like a good loan at the time it was issued. It turned sour but it is not the only one across the various platforms. Do you think that there were issues from the start that were not disclosed?
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Post by dualinvestor on Oct 22, 2016 13:03:38 GMT
There might be a conflict of interet morally, but legally not. Any appointed receiver acts, legally, as agent for the company, although in all practical terms they really act for the chargeholder. It is not an uncommon for a shareholder to take a charge in respect of loans made to the company they (part) own. This is a usual occurance in Private Equity deals eg an "investor" such as a finance house will sy they have invested £10 million in XYZ Limited but in reality that is £1million Share Capital (representing x% of the equity) and £9million loan, this is accompanied by a complex agreement so that the Private Equity "partner" gets not only interest on the loan but a share in the success of the company, sort of "skin in the game." If it all goes wrong they rely on the security (charge) they have taken to get as much back of £9 million as possible. Other common instances of this is where a principal shareholder takes a charge in respect of money loaned to his own company. Often unsecured creditors protest about such arrangements but in reality unless there was some irregularity in the loan/charge there is little they can do about it. In both scenarios the Finance House/principal shareholder can appoint a receiver and frequently do. But the difference here is that if there had been an upside it's not the lender that makes the profit it's the "custodian", it's Lendy Ltd. But for this undisclosed interest perhaps they would not have offered the loan in the first place, perhaps they would have pulled the plug earlier, their focus was not solely on lenders interests and of course it should have been. Lendy Ltd undoubtedly has a conflict of interest in this loan that they should have declared a long time ago, even prior to listing it and it has been discussed before, as far as I know they still haven't acknowledged it and the only evidence of it is on the Annual Return of the debtor filed at Companies House where Lendy Finance is shown as a 10% shareholder. But none of that prevents them appointing a Receiver, in fact if the Administrator fails to sell the property I think they have a fiduciary duty to appoint one. The matter of the undisclosed shareholding either at the time of the loan, before the making of the Administration Order or since is entirely separate from the best possible recovery against the security and may be the subject of separate procedings if an investor loses money (including accrued interest) having relied upon disclosure and the absence of disclosures by Lendy. If you haven't seen it the secured creditor (Lendy Ltd) is shown as £2.841million on the Administrators Statement of Affairs but the platform loan is only £1.7million. As the Chinese proverb goes "may Lendy Ltd live in interesting times"
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shimself
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Post by shimself on Oct 22, 2016 13:08:56 GMT
Impossible to say. How do we know what loans they turn down (as it now seems that this one should have been) Why should they have turned it down? It looked like a good loan at the time it was issued. It turned sour but it is not the only one across the various platforms. Do you think that there were issues from the start that were not disclosed? I'll defer to my learned friend dualinvestor
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mikes1531
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Post by mikes1531 on Oct 22, 2016 20:03:13 GMT
Why should they have turned it down? It looked like a good loan at the time it was issued. It turned sour but it is not the only one across the various platforms. Do you think that there were issues from the start that were not disclosed? ISTM that it looked like a good loan at the time because of the £2.43M valuation. What has happened since then that has made it seemingly impossible to sell the security at a price even close to the amount of the £1.7M loan? (Not to mention the £280k of interest that has accrued or been paid to investors in the ten months since the loan matured, and any further interest/fees owed to Lendy.) IIRC, it has been suggested that perhaps the valuation was overgenerous, and perhaps that ought to have been detected by Lendy at the time of the loan application. If that's the case -- and I haven't a clue whether it is or isn't -- then perhaps Lendy should have declined to make the loan. Might Lendy's decision to make the loan have been influenced by their undisclosed equity in the deal?
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ablender
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Post by ablender on Oct 22, 2016 22:43:19 GMT
Why should they have turned it down? It looked like a good loan at the time it was issued. It turned sour but it is not the only one across the various platforms. Do you think that there were issues from the start that were not disclosed? ISTM that it looked like a good loan at the time because of the £2.43M valuation. What has happened since then that has made it seemingly impossible to sell the security at a price even close to the amount of the £1.7M loan? (Not to mention the £280k of interest that has accrued or been paid to investors in the ten months since the loan matured, and any further interest/fees owed to Lendy.) IIRC, it has been suggested that perhaps the valuation was overgenerous, and perhaps that ought to have been detected by Lendy at the time of the loan application. If that's the case -- and I haven't a clue whether it is or isn't -- then perhaps Lendy should have declined to make the loan. Might Lendy's decision to make the loan have been influenced by their undisclosed equity in the deal? I understand your point.
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Post by jordan on Oct 26, 2016 16:03:02 GMT
Hi All,
We are planning on covering Saving Stream in our content schedule in the next couple of days. As part of this updated review of the platform, we are keen to speak with Saving Stream and address any specific questions/concerns retail investors have - namely around the default loan.
Thus, I come to you!
Please let me know if there's anything you would like clarified and I will raise the points with Saving Stream directly.
Cheers,
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Post by charliebrown on Oct 27, 2016 12:32:24 GMT
Hi All, We are planning on covering Saving Stream in our content schedule in the next couple of days. As part of this updated review of the platform, we are keen to speak with Saving Stream and address any specific questions/concerns retail investors have - namely around the default loan. Thus, I come to you! Please let me know if there's anything you would like clarified and I will raise the points with Saving Stream directly. Cheers, My question would be why was the valuation so wildly wrong? Do investors or SS have any recourse against the valuer? Wouldn't it be prudent for SS to get say 3 valuations and compare/ take an average. Even at a 70% LTV this one looks like if/ when it does get sold it will fetch nothing anywhere close to the valuation. Very very worrying.
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Post by Deleted on Oct 27, 2016 17:17:10 GMT
Hi All, We are planning on covering Saving Stream in our content schedule in the next couple of days. As part of this updated review of the platform, we are keen to speak with Saving Stream and address any specific questions/concerns retail investors have - namely around the default loan. Thus, I come to you! Please let me know if there's anything you would like clarified and I will raise the points with Saving Stream directly. Cheers, 1) The bridging loan particulars state clearly that the retail site already has "full planning permission for extensive redevelopment and increase of the garden center" (sic). 2) They also state that the borrower "has had numerous in-depth discussions with local planners who have not raised any objections and indicate a very high probability certain plans will be approved" 3) The first update on 18/8/15 states that "planning permission for 6 timber residential properties has been submitted". Can SavingStream share evidence of research to support these statements, which in turn support the valuation and investors' decisions? Kind regards, 49.
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Jeepers
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Post by Jeepers on Oct 27, 2016 17:45:28 GMT
Hi All, We are planning on covering Saving Stream in our content schedule in the next couple of days. As part of this updated review of the platform, we are keen to speak with Saving Stream and address any specific questions/concerns retail investors have - namely around the default loan. Thus, I come to you! Please let me know if there's anything you would like clarified and I will raise the points with Saving Stream directly. Cheers, I know what Saving Stream will be thinking... Oh god, not another James Hurley... 😆
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Post by jordan on Oct 27, 2016 19:21:14 GMT
Hi All, We are planning on covering Saving Stream in our content schedule in the next couple of days. As part of this updated review of the platform, we are keen to speak with Saving Stream and address any specific questions/concerns retail investors have - namely around the default loan. Thus, I come to you! Please let me know if there's anything you would like clarified and I will raise the points with Saving Stream directly. Cheers, I know what Saving Stream will be thinking... Oh god, not another James Hurley... 😆 No, I doubt that.. We know Saving Stream well, as we aggregate P2P platforms. 
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Post by GSV3MIaC on Oct 27, 2016 19:57:27 GMT
/mod hat off
I'd personally like to know when, and why, SS acquired a 10% (?) equity stake in the company they were lending to, and how come that was not considered worth telling us about at the time ..
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am
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Post by am on Oct 28, 2016 9:29:54 GMT
/mod hat off I'd personally like to know when, and why, SS acquired a 10% (?) equity stake in the company they were lending to, and how come that was not considered worth telling us about at the time .. In those days, when we lent to Lendy and Lendy lent to the borrower, the resulting conflict of interest was less obvious that such an equity investment would be now. If Lendy are on the hook for shortfalls on this loan I'm not sure that there was any conflict of interest. It's still a material fact, in that it any evaluation of platform risk would take it into account. (It made Lendy's exposure to borrower failure more concentrated than we knew.)
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