DFL005 - Arboretum, Land with PP - SUSPENDED

Have you taken legal advice then? It is quite clear in the T&Cs (previous version) that we have given Lendy the authority to restructure loans if they deem that to be necessary (I presume you regard this a legally suspect even though it is similar in most platforms). This is exactly what they have done here. The loan had been extended by agreement & interest paid so was not in default. A receiver had not been appointed so that is an irrelevant comparison.

All of our money has been used to pay suppliers, contractors etc given we were paying for the building to be built. In this case, there appears to be an overspend and Lendy have agreed that part of the realisations could be used to settle the debts. The quid pro quo was a strengthened security package. The potential alternative was that the suppliers demanded their money and the borrower was tipped into administration to protect it from creditors which ISTM would be less desirable than the current situation. I suspect that would be to the detriment of lenders. Yes, its not ideal, I would have preferred to have a larger repayment or even full repayment but as Ive said above Im not convinced that the alternatives were better.

Are you, perhaps, a friend of @hor1997?

Personally, I would find it acceptable that funds from the sale of the Leasehold were used to pay overdue development creditors and protect the borrower company from any potential enforcement action, which would have jeopardised the whole scheme, and put investor funds at increased risk. (Plus any knock on impact to investors in the other DFL)

Would have been interesting to see the results of a vote on that, but given the latitude Lendy has (as with most (if not all?) platforms) to structure loans as it sees fit, a vote wasn't necessary.

Lendy dont have the ability to sell the security. The security can be a) sold by the borrower providing Lendy agree on lenders behalf to release the security b) by a fixed charge receiver/administrator appointed by Lendy under the security should they decide to seek legal recovery of the loan.

Yes, creditors are unlikely to have recourse to lenders estate but they do have recourse to the borrowers estate (even if they are unlikely to get it) which would potentially mean forcing the borrower into administration which doesnt seem like the best outcome for lenders. Personally Id rather have a loan that is paying a return and with the opportunity to be redeemed normally (and to sell out, albeit unlikely) without all the potential pitfalls of a recovery situation, especially with a potentially enhanced security package. I would suggest that potentially is a good reason for Lendy to agree to allow the borrower to retain some of the proceeds.

Lendy arent the only platform that have agreed to borrowers retaining funds from the realisation of security ... AC do it (though under their terms they either hold a vote or request objections - lenders general agree as the business case makes sense)

edit seem to be crossing with empirica

Love the new name ILL!

I don't think that is correct. Happy to be corrected though. 

AFAIK Ly can be mortgagee in possession (as opposed to appointing LPA receiver) and handle any sale themselves.  I think the reason many lenders opt to appoint LPA instead is a) because recovery is time consuming and needs some selling expertise in that market b) more chance of borrower claiming unreasonable sale value and then trying to sue the mortgagee for undervalue sale - whereas using LPA avoids that issue.