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Post by brightspark on Dec 19, 2019 19:58:34 GMT
Unenforceable by whom?
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KoR_Wraith
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Post by KoR_Wraith on Dec 19, 2019 20:01:01 GMT
The people divvying up the proceeds, I presume, which would be RSM.
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iRobot
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Post by iRobot on Dec 19, 2019 21:08:54 GMT
The Lendy contractual entitlement in this waterfall structure has surely ultimately got to be viewed as unenforceable ? It put Lendy's own interests in direct conflict with the investor's they were acting as an agent for. No wonder we were getting complete and utter garbage from them in the form of loan updates. Now would seem a perfect opportunity for a journalist from the mainstream press to do a write-up on the absurdity of this situation; the lack of controls that allowed it to exist and the apparent lack of willingness by those involved in the process to see the right thing - dare I call it 'justice'? - for consumers put front and foremost, instead of being consigned to the status of a footnote in a fee-earners report. I'm somewhat confident these unconscionable terms will eventually be overturned. I'm wholly confident they could be done so with more urgency than is currently being pursued, and greater expediency than is currently being achieved.
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KoR_Wraith
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Post by KoR_Wraith on Dec 19, 2019 21:48:15 GMT
The Lendy contractual entitlement in this waterfall structure has surely ultimately got to be viewed as unenforceable ? It put Lendy's own interests in direct conflict with the investor's they were acting as an agent for. No wonder we were getting complete and utter garbage from them in the form of loan updates. If Lendy's Contractual Entitlement is found to be unenforceable (illegal?), would that allow lenders of previously settled defaults to apply for creditor status as an avenue to recoup their rightful share of historic settlements? Was there any way for investors to have insight into this distribution model before the administration? I incorrectly assumed that Lendy would continue to accrue the same margin regardless of loan status, with only legal/administrator fees being deducted from the settlement. Additional default interest would logically be split 50:50 between Lendy and investors as to avoid the current predicament...
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jaswells
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Post by jaswells on Dec 19, 2019 21:56:32 GMT
If Lendy are taking a cut in administration, doesnt this not become become part of Lendy ltd assets, and ultimately still distributable to creditors, or am I way off the mark here?
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KoR_Wraith
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Post by KoR_Wraith on Dec 19, 2019 22:07:20 GMT
If Lendy are taking a cut in administration, doesnt this not become become part of Lendy ltd assets, and ultimately still distributable to creditors, or am I way off the mark here? You are correct. The problem is that there are many creditors beyond us investors, including former management. Ethically, it seems bizarre for asset realisations arranged under a P2P model to be unreasonably and unjustifiably siphoned off, no work or service can be attached to those funds, to pay the debts of the middle-man company
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jaswells
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Post by jaswells on Dec 19, 2019 22:09:32 GMT
Ah, i understand. Thanks
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ilmoro
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Post by ilmoro on Dec 19, 2019 22:48:12 GMT
If Lendy are taking a cut in administration, doesnt this not become become part of Lendy ltd assets, and ultimately still distributable to creditors, or am I way off the mark here? Correct. It will go into the general pot to be distributed pro-rata to creditors. Note the section in the update on investors being ultimately able to file claims against Lendy for the shortfall in payments on the individual loans.
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ilmoro
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Post by ilmoro on Dec 19, 2019 22:56:07 GMT
The Lendy contractual entitlement in this waterfall structure has surely ultimately got to be viewed as unenforceable ? It put Lendy's own interests in direct conflict with the investor's they were acting as an agent for. No wonder we were getting complete and utter garbage from them in the form of loan updates. If Lendy's Contractual Entitlement is found to be unenforceable (illegal?), would that allow lenders of previously settled defaults to apply for creditor status as an avenue to recoup their rightful share of historic settlements? Was there any way for investors to have insight into this distribution model before the administration? I incorrectly assumed that Lendy would continue to accrue the same margin regardless of loan status, with only legal/administrator fees being deducted from the settlement. Additional default interest would logically be split 50:50 between Lendy and investors as to avoid the current predicament... If the entitlement is found to be unenforceable then the funds current held for the benefit of Lendy would presumably be distributed to the investors in each loan from whence it came.
The distribution is based on the security documents it seems, viewable at CH if you knew who the borrower was, but why would anybody read them when there was no indication you needed to as until the change in t&cs it ranked behind capital. The default interest is the main issue as it forms the main component of the Contractural Entitlement. The fact that it was being charged and payable to Lendy was hidden from lenders unless specifically asked about it seems (was posted on this forum years ago).
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michaelc
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Post by michaelc on Dec 19, 2019 23:19:18 GMT
Looks bad and I personally have money to lose here.
However, and I do hope I've got this wrong which is more than likely, but didn't we always expect that Lendy would take a large commission/interest ? I thought it was virtually normal for (for example) a platform to lend at say 24%, give 12% to the investors and cream off 10% for themselves?
I hope someone can put me right.
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jaswells
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Post by jaswells on Dec 19, 2019 23:31:00 GMT
tbh honest I knew this was close to the arrangement (although I thought lendy creamed closer to 6 than 10%) when I first invested and it had been discussed a few times on here.
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iRobot
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Post by iRobot on Dec 20, 2019 0:07:35 GMT
tbh honest I knew this was close to the arrangement (although I thought lendy creamed closer to 6 than 10%) when I first invested and it had been discussed a few times on here. Apologies if I have misunderstood your post, but this is no longer a case of whether Lendy get 6 or 10% above and beyond lenders expected returns; it is now a question of whether Lendy get anything up to 100% of recoveries before lenders receive any returns. I wouldn't have lent on that basis. In fact, I didn't - Lendy changed the repayment structure to massively favour them well after my last investment.
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ilmoro
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Post by ilmoro on Dec 20, 2019 0:11:03 GMT
Looks bad and I personally have money to lose here. However, and I do hope I've got this wrong which is more than likely, but didn't we always expect that Lendy would take a large commission/interest ? I thought it was virtually normal for (for example) a platform to lend at say 24%, give 12% to the investors and cream off 10% for themselves? I hope someone can put me right. About 18% was the norm, with Lendy taking 6% but then there is the default interest at 36% which was not disclosed to lenders. Compare to AC which has a default rate of +3% and payable to lenders (and has the same waterfall as Lendy) or Ablrate maybe +7% (and both charge much lower monitoring fees).
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ilmoro
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Post by ilmoro on Dec 20, 2019 0:22:41 GMT
tbh honest I knew this was close to the arrangement (although I thought lendy creamed closer to 6 than 10%) when I first invested and it had been discussed a few times on here. Apologies if I have misunderstood your post, but this is no longer a case of whether Lendy get 6 or 10% above and beyond lenders expected returns; it is now a question of whether Lendy get anything up to 100% of recoveries before lenders receive any returns. I wouldn't have lent on that basis. In fact, I didn't - Lendy changed the repayment structure to massively favour them well after my last investment. Thats not correct. The waterfall treats all sums owed as pari passu. So Lendy get a proportion of the net recovered sum based on the ration between total sums owed to lenders against total sums owed to Lendy. (Obviously after initial 3% charged to SSSH for managing the recovery) The key point is that while investors will accrue at 12%, Lendy will accrue at c42%, so the longer the loan is in default the more the ratio favours Lendy but it will never result in Lendy getting 100%
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jaswells
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Post by jaswells on Dec 20, 2019 0:50:12 GMT
Sly buggers weren't they
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