Scottish Boatyard Loan.

I have emailed FS twice this week asking questions regarding this .....   just silence

Positive decisive action is needed .

Gladly I am not in this one, but I just read the story and it doesn't look like there will be a happy ending any time soon.

Worrying.

Update has been posted , ultimatum for borrow to pay interest by 20/5 or receiver will be appointed , at last some action , should have been done a while ago tho.

Mike. Quite correct re typo, but if I'm honest it was just a mistake.  Should have said smaller rather than greater.

Good news that FS is going to take action if there's no interest payment before the end of next week.

I don't think that the borrower will pay the interest. If they could have found the money I think they would have paid it sometime between January and the present - hope I'm wrong.

I hope you're right, but I fear you're not.  

My feeling is that if they could have, they would have done so months ago, when the amount needed to renew would have been much smaller.  Now, in addition to having to come up with a larger sum, FS may have reduced faith in them and/or the asset and want them to pay more for the next six months than they did for the first six months.  (I haven't a clue whether FS can do that.  The original loan could have a built-in right to renew on the same terms.  OTOH, FS might not be bound by such a clause any more because of the borrower's failure to renew on time.)

FS also are in a bit of an awkward situation if the loan is renewed.  Normally when a loan is renewed 70-80% of the original lenders roll their investment into the renewal, and FS only have to find takers for the remaining 20-30%, which generally isn't difficult.  In the current environment, however, with over £2M of loans still needing funding, trying to find investors for a Boatyard renewal could be problematic in the best circumstances.  Furthermore, the borrower's performance on the current loan won't encourage new people to invest -- presuming they look deeply enough to see the saga of the first loan -- and I'd expect the percentage of existing investors willing to renew would be significantly reduced as most will take the opportunity to get out of this loan at renewal time and invest their money in other loans rather than taking their chances with the renewal.  I'd be surprised if more than 20% of current investors still have the 'renewal' option ticked.

If the borrower does come up with the funds required for renewal, what FS will want to avoid is the situation they're in now with two of the current NI loans needing funding.  That case wasn't strictly a renewal because the original loan covered two properties and, now that they've been redeveloped, the old loan was replaced by two separate loans (one for each property) with an increase (from £360k to £630k) in the total amount borrowed.  Because it wasn't officially a renewal, investors were repaid fully and then were free to take their money elsewhere, or put it straight into the replacement loans, or put it into other FS loans.  Most must have taken the first or third options, because the funding of the replacement loans currently totals about £250k, and that has increased noticeably in the past few days.  I expect that the borrower never actually repaid any of the £360k borrowed the first time around, so FS will have repaid investors with their own money.  I haven't a clue whether any of the additional £270k has been paid across to the borrower yet, but if it has then that will have had to come out of FS's pocket as well.  Meanwhile, FS have committed to paying interest on the new loans from 5/May.

FS, of course, will be well aware of current Boatyard investors' renewal settings, and know what they're up against.  If very few have opted to renew, and if FS feel they'll have trouble funding any follow-on loan, the best course for them might be to wind up the Boatyard loan now, before they are sucked in any further.

This one is going to be interesting, and I just hope it doesn't put a significant dent in FS's business plan.

[Mod hat off]

That strikes me as one of the dafter posts I've read for a while. I appreciate from your other posts that this potentially is your first ever P2P loss (always an eye-opening experience) but why do you lay all the blame at FS's door and none at your own? Presumably you made sure you understood fully how FS loans operate before you started out with them? Presumably you read the valuation report before you lent on this loan and appreciated that the loan sum and the 90 day valuation were the same figure? Presumably you factored this risk into your decision over how much (if any) to lend?

"Their reckless valuation", as you put it, is a formal valuation from a RICS surveyor and its accuracy has yet to be tested. Why exactly do you think that FS should be responsible for any shortfall in proceeds? I'm afraid you are deluding yourself if you genuinely believe that.

It seems clear to me that the best chance lenders have of recovering most / all capital (let alone any interest) is via repayment from the borrower, who clearly has other assets even if they are illiquid. FS appear to think the same and have been keeping us informed throughout on their regular communications with him. Whilst the threat of beginning legal recovery is clearly now merited, I hope that FS will ignore your (and others') highly vocal criticism and continue to take a patient, measured approach.

All P2P lending involves accepting losses and if you can't cope with that, I suggest you perhaps consider whether P2P is right for you.