shimself
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Post by shimself on Jan 6, 2016 20:55:32 GMT
On another Loan (place between Bradford and Sheffield) we are told today A question has been posed on the Q&A tab of this loan asking when default interest will apply. Application of default interest is discretionary and so, pending any proposals from this Borrower, we will not be accruing default interest.
Does it really say that in the loan agreement? If so at AC's discretion or lenders?
ACs as our agent, its only if they need to amend the Loan Agreement or the Security that they need to seek lenders authority and then only if it alters rate, term, capital repayment schedule or security. In the event of a default they need to consult on enforcement or legal action, relase of security without full repayment, a waiver or restructuring. Therefore much as it frustrates me as long as the loan agreement says applying default interest is discretionary (which I assume it does though never seen one) its their call AFAIUI. However, the vote to allow a one month extension was on the basis that ' during this period, should repayment not be made, default interest would accrue'. Well payment has not be made so I would argue that AC should be charging default interest as that is the mandate they have from lenders. Furthermore, as we are now four months further on from the agreed extension and the loan remains in default that they need a further mandate from lenders. The agreement on another loan that I have seen says If the borrower fails to make any payment due ..on the due date for payment ...Then default interest on the unpaid amount shall accrue from the date of non-payment to the date of actual payment or rectification...
The omissions don't change the meaning. Nothing there about discretionary. I've tweaked their tail on the loan Q&A
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Post by andrewholgate on Jan 7, 2016 13:27:07 GMT
These comments are tracking old ground and AC will not make any further comment on this. We have stated the position several times in the course of the the discussion.
Andrew
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sl75
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Post by sl75 on Jan 7, 2016 16:52:51 GMT
The agreement on another loan that I have seen says If the borrower fails to make any payment due ..on the due date for payment ...Then default interest on the unpaid amount shall accrue from the date of non-payment to the date of actual payment or rectification...
The omissions don't change the meaning. Nothing there about discretionary. I've tweaked their tail on the loan Q&A As I understand it, it is the lenders' discretion whether to agree to a borrower's proposal (collectively via a vote), or to charge default interest (which presumably would be back-dated to the date of non-payment). Until the borrower has had the opportunity to present a proposal to lenders, and failed to do so, it seems to me that AC cannot (yet) apply the default interest to the loan. Right now, on this loan, I would interpret it as some kind of superposition between the two states "default interest is accruing because no acceptable proposal will be received", and "default interest is not accruing, because lenders will find the proposal that will be received from the borrower acceptable". Does it fundamentally matter whether AC initially accrue default interest, and then (once an acceptable proposal is received) remove the accrued-but-not-paid default interest from lenders' balances, or initially NOT accrue default interest and then (once no acceptable proposal is received) back-date the default interest to the original default event?
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ablender
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Post by ablender on Jan 7, 2016 17:16:47 GMT
These comments are tracking old ground and AC will not make any further comment on this. We have stated the position several times in the course of the the discussion. Andrew Andy do you mind pointing me to the relevant info with a link for the benefit of new comers like myself? Thanks.
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ilmoro
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'Wondering which of the bu***rs to blame, and watching for pigs on the wing.' - Pink Floyd
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Post by ilmoro on Jan 7, 2016 17:21:40 GMT
These comments are tracking old ground and AC will not make any further comment on this. We have stated the position several times in the course of the the discussion. Andrew Andy do you mind pointing me to the relevant info with a link for the benefit of new comers like myself? Thanks. if you read this thread from the start youll see the various points. There's a link in chris's post on the first page to another thread with a detailed comment from Andrew
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ablender
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Post by ablender on Jan 7, 2016 17:24:14 GMT
Thanks.
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Post by andrewholgate on Jan 7, 2016 17:26:03 GMT
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ablender
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Post by ablender on Jan 7, 2016 17:38:08 GMT
I read through the links with interest, especially this one.If I am understanding this well, it is similar to when SS extends a loan past its original date as long as the borrower keeps on paying interest. Another way I see this is in terms of a refinancing loan. Is this correct? |
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shimself
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Post by shimself on Jan 7, 2016 19:15:57 GMT
These comments are tracking old ground and AC will not make any further comment on this. We have stated the position several times in the course of the the discussion. Andrew I think the discretionary (at AC's discretion) bit is new. I don't see that AC have any say whatsoever (in the loan agreement that I have seen). Your reasoning for not wishing to apply the contractual enhanced interest on delayed payments is definitely old groundCould you explain what authority you have to declare Application of default interest is discretionary and so, pending any proposals from this Borrower, we will not be accruing default interest without recourse to lenders?
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shimself
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Post by shimself on Jan 7, 2016 19:22:33 GMT
I read through the links with interest, especially this one.If I am understanding this well, it is similar to when SS extends a loan past its original date as long as the borrower keeps on paying interest. Another way I see this is in terms of a refinancing loan. Is this correct? We wouldn't know if SS have penalised the borrower and upped the interest, it's always 12%. Nor (I think) have SS ever suspended a loan leaving lenders stuck with it, which is the case here. My argument is not in any case about loans extended by agreement in advance, it is about late payments
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sl75
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Post by sl75 on Jan 7, 2016 20:07:33 GMT
I think the discretionary (at AC's discretion) bit is new. As per my previous post, it seems to me that it is the lenders discretion whether to waive interest, and AC is merely allowing them the option to do so by not pre-empting that decision before a vote can occur.
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mikes1531
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Post by mikes1531 on Jan 7, 2016 23:18:52 GMT
Does it fundamentally matter whether AC initially accrue default interest, and then (once an acceptable proposal is received) remove the accrued-but-not-paid default interest from lenders' balances, or initially NOT accrue default interest and then (once no acceptable proposal is received) back-date the default interest to the original default event? I accept that the answer to the question posed above is no, but in my experience those aren't really the options because I don't think AC could get away with backdated default interest unless they made it clear to the borrower from the beginning that they would do that if the borrower doesn't come up with an acceptable proposal.
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Post by chris on Jan 8, 2016 6:34:48 GMT
Does it fundamentally matter whether AC initially accrue default interest, and then (once an acceptable proposal is received) remove the accrued-but-not-paid default interest from lenders' balances, or initially NOT accrue default interest and then (once no acceptable proposal is received) back-date the default interest to the original default event? I accept that the answer to the question posed above is no, but in my experience those aren't really the options because I don't think AC could get away with backdated default interest unless they made it clear to the borrower from the beginning that they would do that if the borrower doesn't come up with an acceptable proposal. Is that not exactly what we do though? Work with the borrower to try and make sure all capital and interest is repaid with the least risk possible, backdating default interest if that process fails or if the borrower fails to work with us.
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mikes1531
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Post by mikes1531 on Jan 8, 2016 23:51:08 GMT
I accept that the answer to the question posed above is no, but in my experience those aren't really the options because I don't think AC could get away with backdated default interest unless they made it clear to the borrower from the beginning that they would do that if the borrower doesn't come up with an acceptable proposal. Is that not exactly what we do though? Work with the borrower to try and make sure all capital and interest is repaid with the least risk possible, backdating default interest if that process fails or if the borrower fails to work with us. : It may be what AC intend to do in this case but, if so, it hasn't been made clear to us -- well, me anyway. On other occasions, AC have said that if the borrower doesn't come up with an acceptable proposal then default interest would be charged and would start back when the default occurred. In this case, we've been told only that AC consider default interest to be discretionary and that AC won't apply it while they are waiting to hear from the borrower. They've not said they've told the borrower that the default interest could start at a date in the past if an agreed way forward can't be found, and they've not told us they're even considering doing that. It's all about communication, I'm afraid. AC may have a definite plan in mind, but they've not made it clear to me. I can draw conclusions only from the information I have.
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shimself
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Post by shimself on Jan 9, 2016 13:52:06 GMT
I think the discretionary (at AC's discretion) bit is new. As per my previous post, it seems to me that it is the lenders discretion whether to waive interest, and AC is merely allowing them the option to do so by not pre-empting that decision before a vote can occur. As lenders we can waive anything, we could vote to halve the interest rate whatever. Until that time the agreement should be operated as written - in this instance enhanced interest (+3%) should be imposed on the delayed repayments. The difficulty is that AC seem to have had advice that to charge (what is quite a modest penalty) amounts to armaggedon. Other platforms seem to manage it.
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