Investors in collapsed peer-to-peer lending platforms have been left in the dark about the timeline for recovering their funds amid the coronavirus outbreak.
The pandemic has caused the effective closure of the property market, as surveyors cannot value properties and repossession proceedings are on hold. This is making it harder to recover funds from secured assets on collapsed platforms such as Collateral, Lendy and FundingSecure.
P2P pawnbroker and property lender Collateral entered the liquidation phase, managed by BDO, in April 2019. There has been little information disclosed, aside from a December update that said loan exposure was still being reconciled.
Sources close to creditors said there have not been any updates about delays caused by the coronavirus outbreak but it is expected to be a factor. The next update has been promised in June 2020.
Meanwhile, it emerged last month that P2P property lender Lendy’s administration process has been extended by three years. Administrator RSM cited delays linked to the coronavirus pandemic as one factor.
P2P pawnbroking platform FundingSecure went into administration in October 2019 and was due to provide an update last month. Insolvency experts have warned that investors and creditors will face a longer wait for recoveries.
“Each administration is unique,” Geoff Bouchier, managing director, restructuring advisory at consultancy Duff & Phelps, said.
“Property loanbooks already take time to realise in a stable market as you have to wait for loans to reach maturity and if they default you have to take legal action.
“We are seeing increased delays and the process of getting legal agreements signed is slowing down.
“There will have to be acceptance that it will take longer in the current environment.”
Frank Wessely, partner at business advisory firm Quantuma, added that administrators will not want to take the risk of selling properties below market value just to generate cash quickly, as it “would leave them open to criticism or even legal action by investors.”
“Coronavirus will delay if not freeze recoveries completely,” Wessely said.
“Investors will have to wait longer for repayment until the markets return to a level of normality and sales are achieved. “Of course, no-one knows when that may be.”