How quickly put house out of reach?

18/3/15 - We have downgraded this loan because we have received notice that this borrower has convened a meeting of its creditors with a view to proceeding into insolvent liquidation. We are making urgent enquiries with the borrower to establish the current position and will update investors with further information in due course.

16/4/15 - We are in contact with the borrower's advisors to ascertain how the loan will continue to be repaid, although it is not certain if a material recovery will be made. On this basis, on a RAG (Red, Amber, Green) rating system we would give this loan a Red status. It is likely that the loan will be defaulted in the coming weeks to secure the position of the investors.

1/5/15 - We are in contact with the guarantors and engaged in negotiations with them in order to agree a repayment plan. Once we have reached an agreement, we will ensure lenders are advised on the terms.

7/5/15 - The company entered insolvent liquidation on 23 March 2015. We are defaulting this loan so that we can set up a repayment plan and have been in discussions with the guarantors and their financial advisors. We will review this repayment plan every 4-6 months with a view to increasing them. The repayment plan will run until the investors are paid in full with contractual interest. On a RAG (Red, Amber, Green) rating we would still give this loan an Amber status as we anticipate a material recovery within 5 years. An email has been sent to all affected investors.

15/5/15 - Negotiations are progressing positively, although since the guarantors have a third party representative managing their debts it is progressing slower than when we negotiate directly with the guarantor(s). We would anticipate that the payment plan will be agreed in the next fortnight and that payments (of a material level) will commence early next month.

27/5/15 - Negotiations are continuing. Taking security is always usually the sticking point. However, we understand that we should reach a landing on this by the beginning of next week. If we do not then we will require a payment to keep the negotiations open.

10/6/15 - Negotiations are ongoing, however the guarantors adviser has now decided to contest our position and are challenging our claim. Accordingly we anticipate that negotiations will continue for another week or two at least. On a R.A.G. rating we still maintain an Amber rating on this loan as we anticipate a material recovery within 5 years.

23/6/15 - Our negotiations with the guarantors adviser continue. They maintain their clients position which we dispute. It is hoped however that a satisfactory agreement to all parties can be reached without the need to go to court. We will continue to negotiate with the view to obtaining the best outcome for the investors and will provide an update once negotiations have been finalised.

10/7/15 - Given the amount involved and the importance of the matter we have asked our client to complete a questionnaire surrounding the circumstances of when the personal guarantee was signed so we have absolute clarity in that regard

28/7/15 - We continue to negotiate with the guarantors adviser, which is taking longer than expected, and hope negotiations will be concluded within the next 2 - 3 weeks.

21/8/15 - As advised above, negotiations are taking longer than expected. Our external legal team remain in negotiations with the guarantors advisers. We are advised that negotiations have been slow as a number of parties to the negotiations have been on annual leave. We are advised the guarantors adviser returns next week and we hope the negotiations will be concluded within 3-4 weeks thereafter. We will continue to progress the matter as quickly as possible and will provide investors with further information in due course.

7/10/15 - After a lengthy period of time negotiating with the guarantors and their advisers, we can advise investors that an agreement could not be reached. The dispute has arisen as the guarantors, who are a married couple, offered a minimal repayment sum which we advised we would accept on the basis they provided a Voluntary Fixed Charge over their personal property, in line with our policies, which they refused. Furthermore, they have taken the position that the wife, who is a director and 49% shareholder, is a non-involved director and therefore the Personal Guarantee she has provided is invalid. We dispute the position entirely. As an agreement could not be reached we will now be issuing proceedings against both guarantors. Our lawyers have been instructed and are currently preparing the necessary paperwork to issue proceedings. Once we have received a hearing date from the Court, which we anticipate will be within the next 2 - 4 weeks, we will advise investors with further information.

30/11/15 - We can confirm our lawyers have now sent the claim to the Court and we are currently awaiting the Court to process and issue the claim against the guarantors. We are advised this should take place within the next 2 - 4 weeks, subject to any Court backlog. As soon as the Court has issued the claim we will revert to investors immediately thereafter to update you on the position.

8/12/15 - We can confirm that we recently received an offer from the guarantors of 58% of the outstanding debt in full and final settlement. This offer was rejected outright. We can now confirm the Court has issued our claim against the guarantors and our solicitors have now received acknowledgements of service from the guarantors stating that they intend to defend the whole claim. Our solicitors haven't yet had a notice of issue from the Court in this case (so we don't know exactly when the claim was served by the Court), but we expect that the guarantors now have approximately 14 days to file a defence. Our solicitors have also received an email from the guarantors advisor asking for an 8 week stay of proceedings at this stage, as the guarantors are currently seeking remortgage quotations with a view to concluding this matter and they claim any judgment we may obtain will almost certainly adversely affect their clients ability to raise finance. Our position is that this is no different from the statements made by the guarantors prior to the issue of the claim and does not necessarily represent an improvement on the offer of 58% we recently received. Our solicitors have advised us that if we do not agree to a stay, the guarantors will be under pressure to actually provide a defence to these claims. That may assist us, both because receiving a defence would let us know their approach to the claim and because it will force them to consider the merits of fighting the claim in depth, which will perhaps lead to a more sensible settlement negotiation. Our solicitors advise us they do not think it detrimental to our case by refusing the stay until after receipt of a defence, at which point we can take a view whether a stay is worthwhile. In addition, we could potentially go back and offer to agree to a stay if they admit that they are liable to pay the whole amount and that any negotiations are simply about time to pay. We have taken our solicitors' advice and have refused the stay of proceedings. We anticipate receiving the defence within 2 - 3 weeks at which point we will revert to investors to advise you of the position.

14/12/15 - Our lawyers have confirmed we have now received the Notice of Issue from the Court and the guarantors have until the 21 December to file their Defence (which we understand is their proposed course of action, as set out in the acknowledgment of service). We will revert to investors immediately thereafter to advise you of the position once the guarantors have filed their defence.

26/1/16 - We can confirm that we have now obtained Judgement against both guarantors on 16 January. Furthermore, we are pleased to advise investors that we have now also received a satisfactory offer direct from the guarantors. Additionally, the guarantors have advised that they have disinstructed their advisers due to what they claim is as a result of the poor quality of advice they have received in this matter. The repayment offer will see the guarantors make a small lump sum payment, ongoing monthly repayments and a Voluntary Legal Charge over the legal title of their property. We have therefore sent the guarantors the necessary paperwork, and our lawyers have been instructed to prepare the necessary charge documents. Once the signed paperwork and first payment are received, we will revert to investors immediately thereafter to advise you this matter has been finalised.

16/3/16 - We can confirm that the guarantors' payment plan is fully up to date. Our lawyers continue to negotiate with the guarantors lawyers in respect of the Voluntary Fixed Charge over their property and we are advised this matter should be concluded very shortly, and hopefully within the next 2 - 3 weeks. As soon as progress has been made in this regard we will revert to investors immediately thereafter to provide you with a full update.

8/4/16 - We are advised that negotiations between our solicitor and the guarantor in respect of the Voluntary Fixed Charge are nearly concluded. We are advised matters should be finalised within the next 2 weeks following which we will revert to investors immediately thereafter to advise you of the position.

19/4/16 - We are advised by our lawyers that negotiations are almost finalised and should be completed later this week, following which we will revert to investors immediately thereafter to advise you of the outcome.

22/4/16 - We can confirm negotiations have now been finalised and our lawyers are in the process of registering the Voluntary Fixed Charge over the guarantors property. Furthermore, the guarantors are in a payment plan which is fully up to date with the next payment due in May 2016. On a R.A.G. Rating we would assign this loan an Amber Rating as we anticipate a partial material recovery within the next 5 years. However we expect this to eventually move to a Green Rating over the life of the payment plan.

23/9/15 - We have downgraded this loan as we have received formal notice that the company is convening a meeting of its creditors in order to enter insolvent liquidation. We anticipate that one of our agents will attend the meeting on our behalf. We are currently in the process of negotiating with the guarantor directly to ascertain how the loan will be repaid. On a RAG (Red, Amber, Green) rating system we would give this loan a Red status, as we are currently unable to estimate the result of these negotiations. We will provide an update to investors once we have more information.

19/10/15 - Following the Borrower's liquidation, we are in discussions with the loan guarantor has regards repayment of the loan. The Borrower has indicated that he will not be in a position to meet the contractual loan repayments in full as he is curently unemployed. We are in negotiations with the guarantor, via his financial advisor, as regards a potential repayment plan. We will update investors on the position in due course.

29/10/15 - This is a standard comment relating to the default of this loan. The reason for this default is set out in our next comment. Defaults are an expected part of lending to a portfolio of businesses, and defaulting a loan enables our highly experienced Collections & Recoveries team to take steps to minimise your potential losses. The process starts with a legal step called novation where we transfer the relevant loan parts to a subsidiary company of Funding Circle. This enables us to enter into fair and affordable payment plans with the borrower/guarantor, or commence legal or formal insolvency proceedings. We will transfer into your Funding Circle account all recoveries that are allocated to you in accordance with our Terms & Conditions. You don’t need to do anything, as we’ll manage this for you. However, please be patient as the recoveries process varies from case to case and may take several months before payments start. You can be assured that we work hard to get a sustainable arrangement in place and payments in as quickly as possible. We will keep you up to date with our progress in this comments section. To discuss this default, or query our recoveries process, please email us at contactus@fundingcircle.com.

29/10/15 - In April 2015 one of the borrower’s main suppliers went into administration and £150,000 was taken off the borrower’s credit line overnight. Previously supportive paper merchants also decided to reduce the borrower’s credit line, with one supplier reducing a £180,000 credit limit down to £60,000. With the company’s credit line halved and with the business growing exponentially, supporting the growth of the company became impossible. Cash flow became tight, and investment in the borrower in previous months had left the company vulnerable. Producing less work was not an option due to asset based lending that had been undertaken, and steps were taken by the directors to place the company into creditors’ voluntary liquidation. We are contact with an advisor acting on behalf of the guarantor, and our negotiations regarding how the loan will be repaid are ongoing. We are therefore defaulting this loan in order to protect your position by crystallising the liability of the guarantor. Defaulting will also enable us to commence legal proceedings against the guarantor, should the guarantor become uncooperative. On a RAG (Red, Amber, Green) rating system, we would give this loan a Red status, as the prospect of recovery is uncertain at this point, however we are hopeful that this rating will improve once we have a better understanding of what the guarantors can afford to repay. For your reference, the original risk band for this loan was an A rating.

16/3/16 - We have formally entered into a Guarantor Settlement Agreement with the loan guarantor for monthly repayments of 50% of the contractual monthly amount to be paid towards the loan subject to quarterly reviews. The Borrower has been making 50% payments towards the loan for three months but it has taken some time for him to agree the terms of the settlement agreement and return signed documentation to this effect. The current repayment plan will be reviewed in June 2016.

24/8/16 - We have been pursuing the loan guarantor for the repayments that fell due in July and August. The loan guarantor has advised that he is in the process of proposing an Individual Voluntary Arrangement ("IVA") and we have since been contacted by the IVA Nominee to confirm the outstanding loan balance and discuss the IVA prospects. It is likely that the IVA proposal will exceed 30p/£ and we have advised that we would not accept a proposal at this level but would likely abstain from voting should the proposed dividend exceed 30p/£ in accordance with our internal policies. However, we reserve final judgement on our voting position until the IVA proposal has been received and reviewed. We are aware that the loan guarantor owns property however these are in negative or marginal The loan guarantor has advised that it is likely he will declare bankrutcy if he is unable to agree an IVA with his creditors. equity and, as such, a charge over property would not be beneficial. We will update investors on receipt of the IVA proposal.