AN INFLUX of institutional capital paved the way for Trustbuddy’s demise, a former executive from the collapsed platform has claimed.
The Swedish peer-to-peer lender became one of the sector’s first high-profile failures when it went into administration four years ago, amid allegations of mismanagement.
Read more: P2P administrations: A timeline
“There is way more to the Trustbuddy story than was ever told in Swedish media,” said the former Trustbuddy executive, speaking to Peer2Peer Finance News on the condition of anonymity. “The fact is that Swedish media were never that interested in the small fintech start-up to begin with, but were quite happy to relay the accusations made by the president of the board towards the founder and his management group without exactly going out of their way to check facts or pose critical questions.
“The real truth about what happened in Trustbuddy took place during the years 2013-2015, when fund managers in London and New York were desperate to get into Prosper and Lending Club but had to settle for Trustbuddy. The effect that this had on the company is actually quite extraordinary.”
Trustbuddy was the first European P2P lender to obtain a public listing. This allowed global investors to gain exposure to the then-nascent P2P lending space.
Following the platform’s closure, a state investigation found no indications of financial misconduct. Contrary to some media reports, the platform’s portfolio was not sold at a discount from the bankruptcy estate.
Instead, said the source, a group of former Trustbuddy employees decided to transfer their loans into a new legal entity from which debt collection was reinstated in collaboration with the Swedish debt collector Alektum.
“By power of attorney from other lenders they later transferred over 90 per cent of all outstanding loans to the same entity,” the source added.
“Representatives from Alektum have stated that the loans are in good shape as credit controls were made correctly and that they have good hopes of collecting most of the funds.”
This story first appeared in the print issue of Peer2Peer Finance News, which can be read in full here.