e7
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Post by e7 on Dec 16, 2016 10:04:14 GMT
Looking at the Bradford loan it has a personal guarantee attached to it I'm assuming this a guarantee by the director of the company to liquidate his personal wealth should his company be unable to pay the loan, which leads me to ask how do do we know how much personal wealth he has(how can we check this ) and how much of it has he agreed to pay should a situation arise ?
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Dec 16, 2016 10:14:07 GMT
Looking at the Bradford loan it has a personal guarantee attached to it I'm assuming this a guarantee by the director of the company to liquidate his personal wealth should his company be unable to pay the loan, which leads me to ask how do do we know how much personal wealth he has(how can we check this ) and how much of it has he agreed to pay should a situation arise ? SS don't disclose the personal wealth of the individual behind the PG (although they do sometimes refer to them as "wealthy" in the overviews), but you can carry out your own DD to come to your own conclusion. For example, the Bradford loan is connected to all the other student accommodation loans, and the football club at MT. We can guess that this person has a healthy personal bank balance and a very nice big house. However, in this case, the net wealth of this individual is not going to cover multiple losses. A PG can be capped, but that will be via negotiation from the borrower; it will be likely that the platform will insist that it be open-ended It should be noted that there are no first charges on PGs - if it gets to the point that a platform is having to chase the individual, it is likely there are other creditors doing the same. In this event, it is the bailiff that gets to the doorstep first (after all the court dates, necessary letters & time). At the end of the day, as others will also say (from experience on the other platforms), PG are not worth much and rarely amount to anything; as such, little weight should be applied to it when carrying out DD.
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cooling_dude
Bye Bye's for the PPI
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Post by cooling_dude on Dec 16, 2016 10:44:51 GMT
Is it correct that directors assets can simply be transferred into the married partners name just before things go belly up and thus out of reach? This is correct and happens all too often. This is why (JMHO) PG carry no weight; it relies on the individual being completely blind to the fact that there could be beliefs on his doorstep. Up to that point, as required by law, he would have received numerous letters, first from the solicitors then from the court finally from the bailiffs. During this time, all assets are in full possession of the individual, and they can do what he wants with them - with all these warning signs they would be daft not to transfer all assets into their partner's name.
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e7
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Post by e7 on Dec 16, 2016 10:52:07 GMT
Ive read that a spouse can be asked to sign the guarantee but without any further information on the ins and outs of the guarantee and as you've already said its pointless adding any weight to it, thanks for your input
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Post by Deleted on Dec 16, 2016 11:20:54 GMT
Wealth is a very flexible thing.
Personally I think a person has to be "net" £200 million before he is wealthy, however other people seem to think wealthy is a lower figure.
Net is important too, because, some people live a life beyond their means. In fact, most of the people we lend to are just that, they are borrowing at rate A because they want to earn money at rate B where B>A, hence they are inherently living beyond their means in the hope/plan that B>A.
I generally don't believe that anyone described as Wealthy, if borrowing from P2P, is net >£1
Access to people's personal guarantee require the person to cough-up.
Given that many of the people we loan to are often called "entrepreneurs", that can mean they "dodge-and-dive" for a living. When the chips are down they may feel that failing to cough-up is to their best interest.
Hence PGs are worthless.
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am
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Post by am on Dec 16, 2016 12:14:33 GMT
In the case of the student housing loans, if one project goes bad (e.g. contractor goes out of business), the guarantor may well be able to afford to pay up; and might be better off doing so, in order to retain his access to debt finance. If the sector goes bad, then his net worth evaporates as the projects fail.
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am
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Post by am on Dec 16, 2016 12:25:16 GMT
Wealth is a very flexible thing. Personally I think a person has to be "net" £200 million before he is wealthy, however other people seem to think wealthy is a lower figure. Net is important too, because, some people live a life beyond their means. In fact, most of the people we lend to are just that, they are borrowing at rate A because they want to earn money at rate B where B>A, hence they are inherently living beyond their means in the hope/plan that B>A. I generally don't believe that anyone described as Wealthy, if borrowing from P2P, is net >£1 Access to people's personal guarantee require the person to cough-up. Given that many of the people we loan to are often called "entrepreneurs", that can mean they "dodge-and-dive" for a living. When the chips are down they may feel that failing to cough-up is to their best interest. Hence PGs are worthless. The government definition of HNW is £250,000 of investable, non-pension, assets. That doesn't strike me as wealthy in terms of current currency values. But £200m strikes me as erring in the other direction. If you gave me £5m I think I might consider myself wealthy. Borrowers can be asset-rich and cash-poor. They might prefer to borrow than to raid their ISAs and loose the future CGT shelter, or to raid their brokerage accounts and crystallise CGT liabilities, particularly if higher rate tax payers. Borrowers can also borrow for purposes of leverage - rather than run one project at a 20% profit, they can borrow enough to run two projects, and maybe make 30% on capital after paying the interest on the loan. Hence I doubt that many borrowers have negligible net worth. Negligible cash assets is quite possible.
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seeingred
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Post by seeingred on Dec 16, 2016 12:27:49 GMT
"Personally I think a person has to be "net" £200 million before he is wealthy, however other people seem to think wealthy is a lower figure."
The concept of 'being a millionaire' was maybe popularised in the (swinging) 1960s when many people in the public eye did become 'millionaires' - so a mere £1 million and an E-type Jag would do (first manufactured 1961). You need about £18 million these days in equivalent money. The average rate of inflation has been 5.8% since 1965. Go back to 1930 and £1 million then would be £59 million today - average inflation rate 4.8%. How little do you need to be considered "as poor as a church mouse" ? Apparently has its origins as "hungry as a church mouse" because European churches didn't store grain or have kitchens, hence any mouse in a church would likely starve. www.bankofengland.co.uk/education/Pages/resources/inflationtools/calculator/index1.aspx
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Post by Deleted on Dec 16, 2016 12:43:43 GMT
am I understand your reasoning and in a logical world I would agree with you completely. However, I have met far too many people of the dodge and dive mentality, this is especially true in the property market. So to save time and emotion I assume they are all "dodgy" so at least occasionally my heart can swell when I meet an honest one.  PGs are worthless. |
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Post by trentenders on Dec 16, 2016 13:02:51 GMT
Thanks everyone for your PG tips
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Liz
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Post by Liz on Dec 16, 2016 17:15:21 GMT
"What exactly is a personall guarantee"
The same as what you use to wipe your backside.
Had an update on a loan in arrears today, funny how the review of the PG of 2 directors shows both have no assets! I bet their wives have assets!
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Post by mrclondon on Dec 16, 2016 17:41:32 GMT
There is a whole legal industry associated with ensuring directors pay out the smallest possible sums under PG's; good legal representation will limit your liability to a few pence in the pound, and ensure the creditor (i.e. us lenders) get virtually nothing after legal costs have been deducted.
This is an update detailing the legal process a platform is currently undertaking to chase a guarantor:
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agent69
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Post by agent69 on Dec 16, 2016 18:09:45 GMT
This sounds ominously familiar. TC borrower, 4 separate loans, second charge, first charge holder will consume all assets, TC reliant on PG for any recovery? PG's are a bit like stock offered as security. The numbers might stack up on day one, but things can go down hill rapidly without anyone noticing. I think the only full recovery I have seen from a PG was the Belfast furniture store on AC where the PG was supported by a share portfolio. When a PG gets called upon the normal scenario is: - the guarantor becomes ill and cannot correspond with anyone
- the guarantor develops an uncontrollable urge to live in Australia
- the guarantor seeks an IVA and offers 5p in the £ as settlement
- the guarantor declares bankruptcy
- the guarantor is so broke he cant afford to file for bankruptcy
PG's - not worth the paper they are written on.
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Post by brummiefred on Dec 16, 2016 18:34:07 GMT
PG's - not worth the paper they are written on.
As per the solicitor (supposed takeover of local firm) on FC and the printer on FK!!
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ablender
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Post by ablender on Dec 16, 2016 18:34:24 GMT
I think wealthy depends on what you own. Cuba has just offered Rum to pay a debt of $276m to Czech Republic. www.bbc.co.uk/news/world-us-canada-38336922So, I suppose if one owns a lot of tea, a large well-of-tea will make you wealthy. |
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