p2pfan
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Post by p2pfan on Sept 13, 2021 12:50:06 GMT
ablrate , please could you shed some light on how the £826k stock is valued by LRB Ltd, at cost price or retail price, please? Also, with this loan being secured by a debenture on LRB Ltd, what steps (if any) have been taken to avoid LRB Ltd offering its assets as first-charge security for other loans, please? As any first-charge security would take precedence over ABLRate's debenture. I'd also e-mailed these questions to ABLRate, and had the following response back from Emma Clark: "The finance director has confirmed the methodology of stock valuation below: "Stock, in line with IAS2, is valued at the lower of cost or net realisable value. In this case, as the stock is almost all New Season and we expect to sell it for more than it cost us, it is valued at its purchase price. We would never value stock on a balance sheet at Retail Price. "With regards to the security, the debenture captures current and future assets and contains a negative pledge." This answers my questions, but I'm still unsure about investing given the current situation with the A***** F****** loans. Thank you for digging into and sharing your information. I'm totally and utterly fed-up of giving borrowers and their lackeys (the intermediaries) the benefit of the doubt, trusting their words, and then, when they go into Administration, be left with peanuts, discovering that they'd pulled the wool over my eyes. The reality is these shoes will not sell for "more than it cost us". If ABLRate or the borrower believes that, are they willing to put their houses on the line as collateral to support their claim? Not on your nelly. Why? Because they know it's not accurate. The reality is that such shoes go out of fashion quickly (I don't care if my shoes went "out of fashion" in autumn/winter 1999, but that's stupid old me) and depreciate in value. Therefore, in an Administration in one or two year's time, the shoes they have in stock today will be worth far less than they are now. Also, as I've said above, when you try to get rid of stock like this in Administration processes, there are always massive issues, ergo astronomical expenses. I've got experience of such scenarios more than everyone at AblRate and the borrower combined. The debacle with Mr F***man's loans and the V***** ones etc. etc. has proven beyond doubt that ABLRate's borrowers are extremely high risk and this particular loan has got "Stress/Anxiety/Headache in 2023, 2024 and 2025" - when they've blown all the borrowed money - written all over it. They'll simply blame the general election around that time for their "challenges".
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criston
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Post by criston on Sept 13, 2021 13:43:39 GMT
£354k was available; within a minute £268k available.
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agent69
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Post by agent69 on Sept 13, 2021 13:55:32 GMT
No underwriters mentioned. Stock was actually mentioned in Company Accounts as follows, so not an afterthought. 'Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items'Maximum £500k = 57% LTV of stock/assets or 60% of stock Minimum £250k = 28% LTV of stock/assets or 30% of stock Covenant. Stock LTV must not exceed 67% for all tranche outstanding amounts. How that is checked out is another question.Such is the problem with loans secured against stock. It can easily go out the front door (or in the case of AC's Belfast furniture store loan, out the back door).
If the business is struggling then it's the easiest thing in the world to keep going by running the stock down. Unless somebody is going to check regularly, who knows what it is worth.
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Post by Badly Drawn Stickman on Sept 13, 2021 13:59:16 GMT
£354k was available; within a minute £268k available. Reading chicken entrails is not an exact science. Remove everything else from the equation and normally this loan would have filled quickly simply because its 'sibling loans' have traded above par most of the time. Indeed whilst no longer holding any of the other close relatives I would have invested a fair bit in anticipation of turning a quick profit. On this occasion the wish bone is completely in the wrong place to interest me.
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blender
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Post by blender on Sept 13, 2021 15:25:03 GMT
I'd also e-mailed these questions to ABLRate, and had the following response back from Emma Clark: "The finance director has confirmed the methodology of stock valuation below: "Stock, in line with IAS2, is valued at the lower of cost or net realisable value. In this case, as the stock is almost all New Season and we expect to sell it for more than it cost us, it is valued at its purchase price. We would never value stock on a balance sheet at Retail Price. "With regards to the security, the debenture captures current and future assets and contains a negative pledge." This answers my questions, but I'm still unsure about investing given the current situation with the A***** F****** loans. Thank you for digging into and sharing your information. I'm totally and utterly fed-up of giving borrowers and their lackeys (the intermediaries) the benefit of the doubt, trusting their words, and then, when they go into Administration, be left with peanuts, discovering that they'd pulled the wool over my eyes. The reality is these shoes will not sell for "more than it cost us". If ABLRate or the borrower believes that, are they willing to put their houses on the line as collateral to support their claim? Not on your nelly. Why? Because they know it's not accurate. The reality is that such shoes go out of fashion quickly (I don't care if my shoes went "out of fashion" in autumn/winter 1999, but that's stupid old me) and depreciate in value. Therefore, in an Administration in one or two year's time, the shoes they have in stock today will be worth far less than they are now. Also, as I've said above, when you try to get rid of stock like this in Administration processes, there are always massive issues, ergo astronomical expenses. I've got experience of such scenarios more than everyone at AblRate and the borrower combined. The debacle with Mr F***man's loans and the V***** ones etc. etc. has proven beyond doubt that ABLRate's borrowers are extremely high risk and this particular loan has got "Stress/Anxiety/Headache in 2023, 2024 and 2025" - when they've blown all the borrowed money - written all over it. They'll simply blame the general election around that time for their "challenges". Sorry p2pfan but while I have problems about stock as security, you must see that valuing new fashionable stock in the books at less than wholesale cost would be rather silly. It would mean that you had bought something you do not expect to sell for a positive margin, let alone a profit after overheads. You just don't buy stock that you can't sell for profit, and if you did then Ablrate lenders would be daft to lend on it. In time some of these fashion items may need to be written down, maybe after a year. You might expect, reasonably, to take a lower figure than valuation when calculating your personal 'LTV' opinion for the loan - but personally I think that the greater danger would be that when it came to the crunch the stock would already have been sold off for whatever it would fetch. In the words of the proverb: 'These boots were made for walking, and that's just what they'll do.' I agree with being very cautious about a wholesaler's stock as security - but that's all they have.
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criston
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Post by criston on Sept 14, 2021 8:36:54 GMT
No underwriters mentioned. Stock was actually mentioned in Company Accounts as follows, so not an afterthought. 'Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items'Maximum £500k = 57% LTV of stock/assets or 60% of stock Minimum £250k = 28% LTV of stock/assets or 30% of stock Covenant. Stock LTV must not exceed 67% for all tranche outstanding amounts. How that is checked out is another question. The ironic thing is, 166, the preceding loan, initially has a security of minus 22% LTV, yet this one has caused more consternation.
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macq
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Post by macq on Sept 14, 2021 8:58:04 GMT
No underwriters mentioned. Stock was actually mentioned in Company Accounts as follows, so not an afterthought. 'Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items'Maximum £500k = 57% LTV of stock/assets or 60% of stock Minimum £250k = 28% LTV of stock/assets or 30% of stock Covenant. Stock LTV must not exceed 67% for all tranche outstanding amounts. How that is checked out is another question. The ironic thing is, 166, the preceding loan, initially has a security of minus 22%, yet this one has caused more consternation. As the saying goes a week is a long time in politics - and p2p
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Post by overthehill on Sept 14, 2021 9:06:12 GMT
No underwriters mentioned. Stock was actually mentioned in Company Accounts as follows, so not an afterthought. 'Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items'Maximum £500k = 57% LTV of stock/assets or 60% of stock Minimum £250k = 28% LTV of stock/assets or 30% of stock Covenant. Stock LTV must not exceed 67% for all tranche outstanding amounts. How that is checked out is another question. The ironic thing is, 166, the preceding loan, initially has a security of minus 22%, yet this one has caused more consternation. I'm more "consternated" about 166 now. Don't think I've ever used that word before...
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blender
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Post by blender on Sept 14, 2021 10:32:39 GMT
I would not like to be consternated. I rather thought the GDV of 166 was intended as a joke, a sort of parody of the finest traditions of p2p valuations. Did it not come from the borrower, and I don't think Ablrate had a valuation made? These developments are often going to start with an LTV above 100% if they are secured on the property which is going to be part demolished to start with. Think of a demolished Welsh pub where the parrots have come home to roost, and may be nailed to the perch. With some of these loans, including 167, I think it is best to ask myself whether I would lend if it were unsecured, because we do not really want to get into loans which we think will fail. We want repayments, not recoveries. It's academic in my case, until I am convinced that the platform was not complicit in the cash of 165 disappearing (by which I mean not being visible or available to us) on drawdown, and some liquidity is restored.
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criston
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Post by criston on Sept 14, 2021 13:48:08 GMT
I would not like to be consternated. I rather thought the GDV of 166 was intended as a joke, a sort of parody of the finest traditions of p2p valuations. Did it not come from the borrower, and I don't think Ablrate had a valuation made? These developments are often going to start with an LTV above 100% if they are secured on the property which is going to be part demolished to start with. Think of a demolished Welsh pub where the parrots have come home to roost, and may be nailed to the perch. With some of these loans, including 167, I think it is best to ask myself whether I would lend if it were unsecured, because we do not really want to get into loans which we think will fail. We want repayments, not recoveries. It's academic in my case, until I am convinced that the platform was not complicit in the cash of 165 disappearing (by which I mean not being visible or available to us) on drawdown, and some liquidity is restored. Sorry, getting away from 167 here, but if you could believe the 166 gross at £850k with £100k spend, the whole street would be doing it. Most of the development loans I have seen ( a lot from Assetz) have at least some input of funds from the borrower that gives an initial LTV of no more than 70%. It is a strange one indeed. Back to 167, where it appears it starts at a reasonable LTV, presumably totalled from a list of goods, perhaps based on trust without an independent value made but also relies on trust thereafter. But then it is 15% interest !
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Post by df on Sept 14, 2021 20:09:24 GMT
61% filled, not going very fast... I've reinvested my returns, which is very little, and now up to my limit for LAR. I see it as a third tranche of LAR, if any more of LRH being offered in near future I'll have to give it a miss.
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Post by Ace on Sept 14, 2021 20:49:35 GMT
61% filled, not going very fast... I've reinvested my returns, which is very little, and now up to my limit for LAR. I see it as a third tranche of LAR, if any more of LRH being offered in near future I'll have to give it a miss. LAR interest and amortisation payments due on 16th and 24th, so some scope for a bit more reinvesting there without breaking your limit.
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Post by Badly Drawn Stickman on Sept 14, 2021 21:00:28 GMT
61% filled, not going very fast... I've reinvested my returns, which is very little, and now up to my limit for LAR. I see it as a third tranche of LAR, if any more of LRH being offered in near future I'll have to give it a miss. LAR interest and amortisation payments due on 16th and 24th, so some scope for a bit more reinvesting there without breaking your limit. Or he could buy the original a little cheaper currently.....
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Post by Ace on Sept 14, 2021 21:08:01 GMT
LAR interest and amortisation payments due on 16th and 24th, so some scope for a bit more reinvesting there without breaking your limit. Or he could buy the original a little cheaper currently..... Both are being offered at slightly above par as I type.
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Post by df on Sept 14, 2021 21:32:25 GMT
61% filled, not going very fast... I've reinvested my returns, which is very little, and now up to my limit for LAR. I see it as a third tranche of LAR, if any more of LRH being offered in near future I'll have to give it a miss. LAR interest and amortisation payments due on 16th and 24th, so some scope for a bit more reinvesting there without breaking your limit. Yes, some scope, but I think I'm inclined to lower my limits. They are much higher than on any other platform I'm in - not healthy. The current situation with Mr.F's loan/s is a good sign for more vigilance.
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