tx
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Post by tx on Jul 25, 2018 7:35:35 GMT
That exactly why GDV should not be used in LTV, a project in stress can only be sold at market value that anyone taking the project onboard must take outstanding work into account and discount for the risk given current developer already failed.
Ly continue to use GDV for LTV, which means they systematically understate the risk and provide that to investors and overstate the potential recovery ratio given default.
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invester
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Post by invester on Jul 25, 2018 7:42:47 GMT
The thing is, option 2 just says enforce the security. It doesn't mean go straight to auction.
It would be a bit irresponsible of Lendy IMO if they did not then provide some kind of estimate to finish the project and sell it on the open market. But it seems they have no intention of doing so, probably because it this involves a tonne of work compared to either auctioning or washing their hands of it.
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SteveT
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Post by SteveT on Jul 25, 2018 7:47:35 GMT
I'm struggling a bit with your logic. If you believe the final £1m in 12 months would never materialise (which the borrower remains on the hook for via his PG) then presumably you believe his PG to be worthless. But, in that case, the only logic in voting for Option 2 is if you reckon auctioning the site will yield more than £11m. Is that what you think? Lendy seem to think there is value in the PG for option 1 but not for option 2. A finance company is willing to secure at least £11m on this asset so why wouldn't it achieve that at auction ? OK, now understand where you're coming from at least. I agree the value of the PG is probably very small, but it's inevitably worthless if the borrower is made bankrupt. If the scheme is refinanced and completed, there's at least some chance of seeing the final £1m. As to the likely outcome of an auction, I fear it would be rather a lot less than £11m (compare with MoneyThing's Birkenhead loan, for example) but it's very hard to be certain.
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dovap
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Post by dovap on Jul 25, 2018 7:52:21 GMT
I presume this imagined pursuit of the valuers insurance is already well underway by now? perhaps Ly are just not telling us - hush hush etc
can't say they've clarified owt on Opt1 which is still a p*sstake but each to their own and the chancers can do what they want anyway so
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nsinvestor
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Post by nsinvestor on Jul 25, 2018 7:55:09 GMT
Update on loan vote (24th July 2018) "The following provides an update on the loan vote. Note, however, that we are restricted in the information we are able to release to you in relation to the loan as a result of the risk of waiving Lendy's legal privilege and the adverse consequences this would have on potential claims which exist to recover the outstanding capital balance, accrued interest and bonus accrual. Insolvency and restructuring experts appointed by Lendy following expiry of the loan have advised that, even following the completion of the build, the sale proceeds from the security property will be insufficient to repay the capital invested. Should investors therefore choose to proceed with option 1 and accept the offer of refinance from the borrower in full settlement of the amounts owed by it, Lendy will be bringing additional claims to recover the balance of capital, accrued interest and bonus accrual to increase the return to investors which our legal advisors have confirmed have good prospects of success. In the event that Lendy proceed with option 2, recovery action available to Lendy will be progressed to maximise the return of capital, accredited interest and bonus accrual. This would include a claim against the borrower's personal guarantee. However, we will not be able to truly ascertain the prospect of successfully recovering the outstanding capital, accrued interest and bonus accrual until such time as we obtain further information o the guarantor's updated financial position which has not been made available at this time. For your information, as per the provision fund policy, any claim against the PF will be made only once any possible legal action or claims against any liable third part is assessed, actioned or declined." It is good to know that option 1 doesn't mean an end to any recovery action by Lendy and they are hopeful of recovering the capital shortfall at least, but what "good prospects of success" actually equates to in reality is difficult to assess. How do the lawyers think there are 'good prospects of success' recovering more under option 1 when the explanation for option 2 says the 'prospect of successfully recovering...guarantor's updated financial position which has not been made available at this time'
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mary
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Post by mary on Jul 25, 2018 8:08:35 GMT
I presume this imagined pursuit of the valuers insurance is already well underway by now? perhaps Ly are just not telling us - hush hush etc Maybe, but this pursuit should also have been happening for other loans where the security has already been sold at a huge discount to the supposed valuation, i.e. The Fortified Place. In that instance there was no development, so no future GDV or debate about how complete it is. All one can conclude is that Insurers behind the RICS Valuers are never going to roll over and pay out without a fight, which will likely take years, in which time Lendy hide behind "on-going actions to be concluded" and not dip into the PF, which obviously can't cover all the current disasters.
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dandy
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Post by dandy on Jul 25, 2018 9:29:59 GMT
I do not understand why Lendy are not taking a very different stance here and one that I think any rational lending business would take; which is to appoint an LPA receiver, give them authority to take on senior ranking debt at ~ 3% and get the job finished (this could even be with current borrower completing work if LPA considers them suitable). Keep the borrower on the hook for any shortfall so their interests remain aligned towards successful completion. Lendy seem to be waiving the white flag via option 1 and that being the case option 1 is probably optimal as they are clearly implying they haven’t the know-how to do any better. Option 2 would seemingly be taking them out their pay grade.
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rs
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Post by rs on Jul 25, 2018 12:23:46 GMT
Having read various peoples opinions on this forum I'm still of the view that option 2 is best at this stage. Option 1 seems to be giving the borrower all the profit whereas lenders have had to take a haircut. Maybe Lendy can share approximately how much profit borrower will make in option 1 at this stage or when development finishes. I'm sure if this information was shared with lenders a majority of lenders would vote option 2.
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empirica
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Post by empirica on Jul 25, 2018 12:35:06 GMT
I do not understand why Lendy are not taking a very different stance here and one that I think any rational lending business would take; which is to appoint an LPA receiver, give them authority to take on senior ranking debt at ~ 3% and get the job finished (this could even be with current borrower completing work if LPA considers them suitable). Keep the borrower on the hook for any shortfall so their interests remain aligned towards successful completion. Lendy seem to be waiving the white flag via option 1 and that being the case option 1 is probably optimal as they are clearly implying they haven’t the know-how to do any better. Option 2 would seemingly be taking them out their pay grade. An interesting proposal on the face of it, but I'm unclear on to the bolded bit above. Could you expand on that, please?
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locutus
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Post by locutus on Jul 25, 2018 12:50:04 GMT
I do not understand why Lendy are not taking a very different stance here and one that I think any rational lending business would take; which is to appoint an LPA receiver, give them authority to take on senior ranking debt at ~ 3% and get the job finished (this could even be with current borrower completing work if LPA considers them suitable). Keep the borrower on the hook for any shortfall so their interests remain aligned towards successful completion. Lendy seem to be waiving the white flag via option 1 and that being the case option 1 is probably optimal as they are clearly implying they haven’t the know-how to do any better. Option 2 would seemingly be taking them out their pay grade. An interesting proposal on the face of it, but I'm unclear on to the bolded bit above. Could you expand on that, please? He just means get some finance to finish the build but allow it be a 1st charge to rank ahead of Lendy's current charge. As the LTV would be so miniscule, the rate could be very competitive. I'm not sure about 3% though.
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empirica
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Post by empirica on Jul 25, 2018 13:47:20 GMT
Yes, get the seniority but like yourself, it's the '~ 3%' that eludes me. Unless monthly (jk)
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dandy
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Post by dandy on Jul 25, 2018 13:52:24 GMT
Yes, get the seniority but like yourself, it's the '~ 3%' that eludes me. Unless monthly (jk) How much would you expect a risk free loan to yield?
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empirica
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Post by empirica on Jul 25, 2018 14:02:20 GMT
Yes, get the seniority but like yourself, it's the '~ 3%' that eludes me. Unless monthly (jk) How much would you expect a risk free loan to yield? lol - whatever a strapped for cash, LPA led, stalled development project is capable of yielding (Actually, having caught up with news elsewhere, seems Lendy has a new recruit with _ according to LI _ an interest in Distressed Debt Investing)
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empirica
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Post by empirica on Jul 25, 2018 18:15:06 GMT
Results on the loan page.
Think I'll log off for a bit until the air clears
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mary
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Post by mary on Jul 25, 2018 18:59:03 GMT
Nearly 3:1 in favour of Option 1 - take the money now!
Staggered, just shows how far Lendy has fallen that most (I assume) just want out asap. Expect other Borrowers to attempt the same trick! Borrower on DFL01/02 must be having a right laugh, and lowering his offer.
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