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Peer2Peer Finance News | September 16, 2019

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Collateral administrator seeks investor permission for borrower legal action

Collateral administrator seeks investor permission for borrower legal action
Marc Shoffman

COLLATERAL investors are being asked to give the failed peer-to-peer lending platform’s administrator permission to take enforcement action against borrowers who are unable or unwilling to repay their loans.

The P2P property and pawnbroking platform collapsed last year and its administrator, BDO, has said there is no guarantee investors will receive all money that was lent.

It is now asking investors to back a resolution to let it take enforcement action, warning that it would need to pursue permissions from the courts without this support from a majority of lenders, which would take longer and impact the amount returned to investors.

“If the administrators do not receive a positive response from a sufficient majority of investors, it will be necessary for them to make a court application as a prelude to enforcement action,” BDO said.

“Any court application will add additional cost and delay to the enforcement process, most likely resulting in a slower and reduced return of funds to investors.”

Investors must respond by 11 January.

Manchester-based Collateral closed down at the end of February 2018 after it emerged that it had been operating without the correct regulatory permissions.

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