nick
Member of DD Central
Posts: 1,055
Likes: 825
|
Post by nick on Nov 25, 2016 8:33:39 GMT
In respect of APF's credit, the only security listed in the draft loan contract is assignment of the second charge and a cross guarantee from another group company. Assignment of the second charge only has value if the underlying borrower defaults. If the underlying borrower continues to perform but APF defaults (eg one their other loan defaults, blows-up, fraud, etc etc) nothing I have read in any of the loan documentation suggests that we would have any preferential creditor claim on APF or any direct recourse to the loan repayments that the underlying borrower will continue to pay APF. Any contractual claim for the assignment of the loan repayment wouldn't rank any higher than other creditor claim. Maybe I'm missing something (which is why I raised the query), but the structuring of this loan via APF would appear to expose lenders fully to APF's credit without mitigation. Not a show stopper, but does mean that you have to get comfortable with APF's credit which is difficult given the companies were only recently incorporated and have no publicly filed financials. Loan is to APF and APF is in turn making a loan to underlying borrower. Its up to APF to claim on security if underlying borrower defaults, but APF will still be expected to continue payments of the loan to AB. If APF defaults, then AB claim on the assigned security, independent of whether or not the underlying borrower defaults, otherwise there is no point assigning security if you can't use it when needed If AB don't have step in rights to continue the loan (I am not sure in this case), then AB may come to an agreement in some way for the underlying borrower to pay off APF loan to AB and chase up APF themselves. But the risk lies with the underlying borrower as they have agreed to the assignment of the security when taking out the loan with APF. Surely the assignment of security to AB is only effective if AB have step in rights in the event of APF defaulting. Otherwise if the underlying borrower continues to honour its repayment obligations to APF the second charge cannot be exercised/crystallised irrespective of who has the security interest and AB is left with the problem of extracting repayment from APF who might be liquidation/administration. Maybe the assignment of security interest explicitly implies step in rights otherwise it would appear to have limited value (as you have pointed out). It is this securing of payments from the underlying borrower via APF in the event of a APF default which I'm still struggling to get comfort with. Perhaps ablrate can provide some clarity.
|
|
|
Post by ablrate on Nov 25, 2016 9:09:42 GMT
Hi All
If anything happens to APF we have step in rights to go straight for the security.
Regards Ablrate
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Nov 25, 2016 11:57:25 GMT
That is good, but what does it mean for the loan repayments that were being made to A*F if A*F is would up, please? Would A*F's assets in the various continuing loans it has made be assigned to Ablrate for the benefit of its lenders. Or would the Ablrate loans to A*F be repayable as recoveries on A*F's default?
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Nov 25, 2016 12:17:31 GMT
And more broadly, if two loans involving APF defaulted and eight didn't, would the payments an security in the eight be used to the benefit of those in the two? That is, is there a cross-subsidy potential between all loans involving APF such that all lenders to any APF loan are exposed to the worst of the APF loans? Different answers before and after APF failure are possible.
|
|
|
Post by ablrate on Nov 25, 2016 12:51:31 GMT
Blender: Should anything happen to APF, we 'step into the shoes' of APF and therefore receive payments directly from Borrower.
James: No, each is stand alone. If loan A defaults, the default processes would begin on that loan which would not affect any other loan.
|
|
nick
Member of DD Central
Posts: 1,055
Likes: 825
|
Post by nick on Nov 25, 2016 13:03:39 GMT
Blender: Should anything happen to APF, we 'step into the shoes' of APF and therefore receive payments directly from Borrower. James: No, each is stand alone. If loan A defaults, the default processes would begin on that loan which would not affect any other loan. Thanks ablrate , that provides a lot more clarity. One final question: presumably the step in rights are documented in the loan agreement between APF and the underlying borrower and can be triggered by AB by a declaration of a default without further reference to APF, ie were APF to go into administration/insolvency we would not be reliant on the administrator/liquidator consenting to the step in and would have rights to secure repayments directly from the underlying borrower under their loan agreement with APF?
|
|
shimself
Member of DD Central
Posts: 2,560
Likes: 1,169
|
Post by shimself on Nov 26, 2016 10:57:11 GMT
This is perhaps the most informative discussion I've seen on this site; thanks to the contributors.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Nov 27, 2016 9:30:15 GMT
Yes, good responses from Ablrate. I am in and am including A*F in our daily family prayers. Good to see Ablrate engaging lenders in developing loan opportunities and responding to concerns. It creates confidence. Let's hope this continues when Ablrate gets bigger, unlike some platforms which are now, Frankly, Condescending at best.
|
|
james
Posts: 2,205
Likes: 955
|
Post by james on Nov 27, 2016 13:19:45 GMT
Yes, good responses from Ablrate. I am in and am including A*F in our daily family prayers. Good to see Ablrate engaging lenders in developing loan opportunities and responding to concerns. It creates confidence. Indeed, a fine example of doing a double-take and responding to concerns and other questions. I've gone in with five digits worth.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Dec 13, 2016 15:25:47 GMT
Is everybody aboard? This loan is about to sail.
|
|
treeman
Member of DD Central
Posts: 1,026
Likes: 557
|
Post by treeman on Dec 13, 2016 18:47:31 GMT
wanted to get today's interest/repayment on it, but they didn't press the button early enough for me to get a bit more in. Using your metaphor I should say "Bless this ship and all who sail in her". The button was indeed pressed in time (just!!!) - but you needed to be quick
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Dec 16, 2016 22:51:22 GMT
Pending borrower approval. Will they take the cash before Xmas?
|
|
greatmarko
Member of DD Central
Posts: 343
Likes: 373
|
Post by greatmarko on Dec 17, 2016 0:26:06 GMT
Pending borrower approval. Will they take the cash before Xmas? According to Ablrate's FAQ: " The Borrower has 5 days to accept a loan offer when a transaction is fully funded" Whilst it's a little ambiguous, I assume that means 5 working days - and there are technically 5 working days left before Christmas. Therefore, if the borrower is going to accept, they'll have to do so before Christmas!
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Dec 17, 2016 12:16:33 GMT
It was filled on 13th, though not awaiting borrower approval. I am not sure I would want to take on £700k at 22% (including Ablrates 0.5 pm) just before the holiday. But then I am keen that Ablrate retains some of its fee after instant returns. We shall see. The other one is also closing, though personally I would extend it over the holiday to gather more.
|
|
blender
Member of DD Central
Posts: 5,719
Likes: 4,272
|
Post by blender on Dec 20, 2016 14:05:17 GMT
Wow! Both new loans taken, instant returns paid, front page updated (note - communications) for next prospective loan. Great stuff, Ablrate.
|
|