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Post by dualinvestor on Dec 9, 2017 13:26:47 GMT
Why take the risk? Even if your calculations appear to prove that a build out should provide a better result apart from general economic concerns ask yourself this. Would you buy from a Receiver in a project that previously failed? For most people the answer will be no, for the rest, if you give me a large enough discount.
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Post by dualinvestor on Dec 9, 2017 14:10:08 GMT
Even if the figures do "stack up", the cost iover-run, the sales don't materialise amd the money goes down a black hole.
People who believe a project can be built out by the funder (or receiver) are simply deluding themselves. In theory good in practise it NEVER ends well.
One of the definitions of insanity is to try something over and over and get the same result, that will happen here, a massive loss that will, in retrospect, make the current offer of a 35% shortfall, nirvana.
Most of you are computer/IT contractors, would you take over a part completed project without more or less starting from scratch? For those of you who say yes, I don't believe you.
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littleoldlady
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Post by littleoldlady on Dec 9, 2017 16:45:55 GMT
One of the definitions of insanity is to try something over and over and get the same result No that's perseverance not insanity. Insanity is expecting a different result.  But seriously, I do agree with your main point. I would sell my investment for 65% without hesitation if there was a market.
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ingwer
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Post by ingwer on Dec 9, 2017 17:07:05 GMT
What is needed a decision rather than dithering for months (as has already happened). Lendy's view may be clouded if this is a painful hit for their PF. For me, an early & full capital repayment is better than totting up the sums due for the interest and accrued interest especially (as i cant see that will ever happen) and be stuck for the next 1 or 2 years. It is a shame that Lendy cannot make an offer to investors if they want out.
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littleoldlady
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Post by littleoldlady on Dec 9, 2017 17:30:11 GMT
IMO it is not dithering. It is a deliberate policy of not crystallising a loss so as to be able to say that 'no investor has lost money'. The brutal truth is that many investors have almost certainly lost a lot of money in practice, but as long as Lendy say they are chasing some repayment at some unspecified date in the future with some unspecified but in actuality vanishingly small chance of success then AFAICS they can continue to make this claim.
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Post by dualinvestor on Dec 9, 2017 17:35:59 GMT
......................... And never say never. Quite frankly I have not even read your reply, it is far vtoo long and probably seeks to justify your position. I speak from not inconsiderable practical experience of these situations and whilst you are right to say "never say never" it has about the same chaance of winning the jackpot on the lottery of as ending with a successful outcome, it is rose coloured spectacles that on meeting with realities quickly fade into disaster.
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Post by dualinvestor on Dec 9, 2017 17:43:31 GMT
What is needed a decision rather than dithering for months (as has already happened). Lendy's view may be clouded if this is a painful hit for their PF. For me, an early & full capital repayment is better than totting up the sums due for the interest and accrued interest especially (as i cant see that will ever happen) and be stuck for the next 1 or 2 years. It is a shame that Lendy cannot make an offer to investors if they want out. Although there is some doubt that it is enforceable a hit of 35% on £9million, plus costs is more than Lendy has made, according to the draft accounts, and they may be liable as principal in the loan. That couldd explain their dithering. The old maxim, "the first loss is the best loss" may be something that Lendy and the "investors" in this loan may rue not following.
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Post by dualinvestor on Dec 9, 2017 20:03:56 GMT
30 years as an Insolvency Practitioner and seeing practical outcomes where seemingly better outcomes were "guaranteed " but never materialised.
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mikes1531
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Post by mikes1531 on Dec 9, 2017 20:15:30 GMT
I agree that the numbers need to be worked out in order to see whether a build-out is feasible. If it is, and a builder/developer could be found to take on the project, then it's worth considering. But the source of the necessary funds obviously has to be part of the investigation, as would be the likely market for the finished product. If the projected result is a lot better than the 'dump now' option, then it's worth thinking about. If the likely result isn't much of an improvement, then the additional risk probably isn't worth taking.
A complicating factor would be if the dump now option would mean letting the borrower laugh all the way to the bank. In that case, I'd probably be willing to take on a bit more risk rather than giving in to them. I accept that would be adding emotion to the decision, and that may not produce the best result economically, but sometimes it's more important to do the right thing than to make the most money.
One thing I would suggest to the enthusiastic build-out supporters would be to look at PBL081. Lendy built that one out and the apparent result isn't looking particularly good. But that doesn't mean deciding not to abandon the project was wrong, since the loss likely to result from the build-out still might be less than the loss that would have resulted from abandonment.
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littleoldlady
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Post by littleoldlady on Dec 10, 2017 9:09:33 GMT
I am a simple soul and not as clever or experienced as some here, but it seems to me that if a build out is viable then it is best done by a developer with the experience and construction contacts needed rather than by a couple of amateur sailors. But IMO Lendy are motivated more by delaying the inevitable for as long as possible than getting the best return (almost certainly a haircut). If the borrower is the person best placed to do this then the head says 'take the hit' even if it goes against the grain.
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Post by dualinvestor on Dec 10, 2017 10:26:17 GMT
30 years as an Insolvency Practitioner and seeing practical outcomes where seemingly better outcomes were "guaranteed " but never materialised. Ouch. That must have been frustrating. 30 years of participation and seeing the same thing happen over and over but never seeing a different outcome... It's not frustrating because in the vast majority of situations (probably 99 out of 100) the IP carefully considers the option, takes account of all of the factors and then disregards the build out. In this particular case (as in PBL081) the general considerations are Time delay Selling as a distressed vendor Not knowing what the previous developer has don/not done (even with a surveyors report problems don't become apparent ubtil work starts) Inability to give warranties (rule 1 of a Receiver, no warranties, rule 2 if a warranty is requested rule 1 applies) Inability to answer purchasers sollicitors enquiries before contract NHBC certificates What will the general market be like at the time of sale etc etc Add to that the three (known) problems with this particular project Over-priced Lack of parking Access You are deluding yourself if you think this is going to be the exception before you consider who, in their right mind, is going to fund it.
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ingwer
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Post by ingwer on Dec 10, 2017 12:07:15 GMT
What about affordable housing ? Must be a demand for that surely.
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Post by dualinvestor on Dec 10, 2017 14:52:24 GMT
I agreed with your phrase "never say never" but I also stand by mine "you are deluding yourself if you think this is the exception"
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garfield
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Post by garfield on Dec 10, 2017 15:43:04 GMT
Raise the additional funding by floating a new, separate DFL loan with an increased rate of return and giving this priority over the existing loan repayment. I couldn't agree with this. I wouldn't like to see the funds for a build-out coming from Ly investors. And I'd quite like to keep my place in the queue TVM!
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mikes1531
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Post by mikes1531 on Dec 10, 2017 17:48:45 GMT
Building this project out will increase the return for all lenders. It may not return outstanding interest and may even still produce a capital loss. But it is easier and far more lucrative to sell a completed project than half built sheds. I can see why it might be felt necessary to give the new investors priority, but surely the original investors would need to approve such a change to their position. And considering that this would change them from being first charge holders with a probable loss to second charge holders with a higher risk of an even more variable result that might range from a complete loss to a complete recovery, I suspect it would appeal only to gamblers and therefore might have difficulty achieving the necessary approval. Investors views obviously will depend on the numbers. If the potential return range from the build-out (BO) option would be something like 0-120% of invested capital, then how would that compare to the 'get out now' (GON) option? If GON is expected to return 70% of capital, people will think very differently than if the GON expectation is 20%. Similarly, if the BO expectation is 0-80% that would affect people's thinking. IMHO, a rational decision can't be made until the results from the possible ways forward have been quantified.
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