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Peer2Peer Finance News | June 26, 2019

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Collateral investors still waiting on returns six months into administration

Collateral investors still waiting on returns six months into administration
Marc Shoffman

THE administrator of collapsed peer-to-peer lender Collateral is still unable to estimate the likely returns for investors and creditors six months into the administration.

A progress report from BDO, which is working on the administration of Collateral, revealed it was still working on accessing “user-friendly” data on investor holdings and on chasing payments from borrowers.

“It is not possible to estimate the likely returns either to investors and creditors,” BDO said.

“This will depend, to a very significant extent, on the quality of the loanbooks and the amount of effort required to obtain settlement including potentially taking legal action against borrowers in default, together with the extent to which the companies’ records can be recreated to provide the necessary analysis of each investor’s exposure to specific loans to determine the nature and quantum of any trust claims.”

BDO has previously said the estimated aggregated claims of investors and creditors exceed the book value of the assets held by the companies.

The latest update showed BDO – which took over the administration of Collateral in April 2018 – has obtained “numerous spreadsheets, databases and other documents” showing investor holdings but it isn’t in a format that would allow “efficient or effective recovery and manipulation.”

BDO said it had considered restoring the original database, but it was felt this would be too costly.
Instead, the administrators are focusing on working with Collateral’s former IT consultant and its own experts to extract information from the data they have obtained.

The report said recovery of the loanbook remains a “major work stream,” with two property loans settled in full but other borrowers are refinancing or are working on settlement offers.

Some property loan borrowers have not engaged with the administrators and may face possession proceedings.

BDO is also working on claiming assets from those who haven’t repaid loans on the P2P pawnbroking side of the Collateral business.

Manchester-based Collateral closed down at the end of February after it emerged that it had been operating without the correct regulatory permissions.

Its administration was initially managed by Refresh Recovery before the Financial Conduct Authority installed its own auditor with the appointment of BDO.