I don't like Thurdays

In April 2015 one of the borrower’s main suppliers went into administration and £150,000 was taken off the borrower’s credit line overnight. Previously supportive paper merchants also decided to reduce the borrower’s credit line, with one supplier reducing a £180,000 credit limit down to £60,000. With the company’s credit line halved and with the business growing exponentially, supporting the growth of the company became impossible. Cash flow became tight, and investment in the borrower in previous months had left the company vulnerable. Producing less work was not an option due to asset based lending that had been undertaken, and steps were taken by the directors to place the company into creditors’ voluntary liquidation. We are contact with an advisor acting on behalf of the guarantor, and our negotiations regarding how the loan will be repaid are ongoing. We are therefore defaulting this loan in order to protect your position by crystallising the liability of the guarantor. Defaulting will also enable us to commence legal proceedings against the guarantor, should the guarantor become uncooperative. On a RAG (Red, Amber, Green) rating system, we would give this loan a Red status, as the prospect of recovery is uncertain at this point, however we are hopeful that this rating will improve once we have a better understanding of what the guarantors can afford to repay. For your reference, the original risk band for this loan was an A rating.

29 Oct 2015 This is a standard comment relating to the default of this loan. The reason for this default is set out in our next comment. Defaults are an expected part of lending to a portfolio of businesses, and defaulting a loan enables our highly experienced Collections & Recoveries team to take steps to minimise your potential losses. The process starts with a legal step called novation where we transfer the relevant loan parts to a subsidiary company of Funding Circle. This enables us to enter into fair and affordable payment plans with the borrower/guarantor, or commence legal or formal insolvency proceedings. We will transfer into your Funding Circle account all recoveries that are allocated to you in accordance with our Terms & Conditions. You don’t need to do anything, as we’ll manage this for you. However, please be patient as the recoveries process varies from case to case and may take several months before payments start. You can be assured that we work hard to get a sustainable arrangement in place and payments in as quickly as possible. We will keep you up to date with our progress in this comments section. To discuss this default, or query our recoveries process, please email us at contactus@fundingcircle.com.

19 Oct 2015 Following the Borrower's liquidation, we are in discussions with the loan guarantor has regards repayment of the loan. The Borrower has indicated that he will not be in a position to meet the contractual loan repayments in full as he is curently unemployed. We are in negotiations with the guarantor, via his financial advisor, as regards a potential repayment plan. We will update investors on the position in due course.

23 Sep 2015 We have downgraded this loan as we have received formal notice that the company is convening a meeting of its creditors in order to enter insolvent liquidation. We anticipate that one of our agents will attend the meeting on our behalf.

We are currently in the process of negotiating with the guarantor directly to ascertain how the loan will be repaid. On a RAG (Red, Amber, Green) rating system we would give this loan a Red status, as we are currently unable to estimate the result of these negotiations. We will provide an update to investors once we have more information.