Residential development, FelthamTranche A

Very minor, a planning application for trivial points is still pending consideration.

Just mentioned it in passing as I wondered if anyone else had picked up on
anything in loan commentaries.

This loan was partially repaid in the last couple of days, and a smaller amount is currently relisted on the site.

I did a little dd^[1], and was surprised at what I found:

Dec 2014: The development company that would later request the loan was set up by Guy #1 as director and 100% owner. 
Dec 2014: Property acquired
May 2015: Guy #2 is now the director, Guy #1 resigns
Dec 2015: Annual return shows that Guy #2 now owns 100% of the company
Jan 2016: The original Feltham loan is made by LI
Feb 2016: Guy #2 resigns. Guy #1 is now the director again.
May 2016: Guy #1 resigns. Guy #2 is now the director again. 
Aug 2016: Part payment on original loan, and LI creates new smaller loan, available now. 

Guy #1: Newspaper reports exist from 2008 describing him as a property magnate who, along with his wife, had £5m of fraudulently acquired assets taken from them following a High Court order. 

Guy #2: Nothing interesting, c30 years old.

Would anyone have observations on this? Each investor to their own I guess regarding whether to give someone the benefit of the doubt regarding past activities, but the swapping around of directors looks strange to me. Is this to get it past LI's own dd process, or are there normal business reasons why this might happen in a property development? 

[1] My dd process is figure out the location via RightMove listings > Get the owner via The Land Registry > Get company details from Companies House > Start googling. 

Hi Bill,

I wrote to LI about it, quoting the names and including links to newspaper articles. The response I got back today was decent. A key section reads:


We were aware of the situation with the role of director within company and at the point the loan was granted the director(s) had no negative information against them. When the appointment of the new director occurred we made immediate contact with the company and demanded an explanation for the appointment and that we would be enforcing the terms of the loan if the appointment was not revoked. Hence, the reappointment of [guy #2].


I guess this is reasonable. When they did make the loan, guy #1 was not involved. When he did come back into the picture again, LI kicked up a fuss and he was removed. 

With my cynical hat on I can imagine guy #1 is still a connected party in some way, and I also might imagine that the equity profit will find its way to him. On paper at Companies House it is not so, though.

Technically speaking LI say they have not extended a second loan because this is the same loan. In fairness, I would have taken the same actions as LI at each point.

In conclusion I think the loan is actually low risk due to the low LTV, and only some of the units available need to be sold to repay it - and some have already been sold. The stuff regarding guy #1 in the past is more around money laundering and tax evasion, not phoenixing or running away from receivers. 

a) Enter the amount you want to invest.
b) Press the yellow ''Invest Now'' button
c) At that point the agreement comes up and you must select a check box that you acknowledge and have read terms......

Attached is screenshot I took at the time.