A drop in property valuations could result in lower-value distributions being paid out to investors of defunct peer-to-peer lender Collateral.
Collateral’s administrator BDO will publish its latest liquidation report at the end of June. However, investors have expressed concern that the Covid-19 pandemic could drive down the value of any outstanding property sales.
According to BDO’s last liquidation report – which was released on 23 December 2019 – enforcement action has been taken on 14 property loans with a combined value of more than £5m. Four of these loans relate to development projects worth more than £4.4m.
These include a development loan for an eco-village in South Lanarkshire, which does not appear to have been completed; as well as a loan on a development site in Burnley, Lancashire; a loan on a property development in Great Harwood; and a £1.4m loan against an incomplete property development in Darwen, Blackburn, which has been described as an “eyesore” by local councillors.
At the time of writing, BDO was unable to provide an update on the recovery status of these loans, but told Peer2Peer Finance News that “the liquidators’ report remains on track to be published by the end of June and will be posted to Companies House.”
The Covid-19 pandemic and the subsequent lockdown has meant that many construction sites have been forced to down tools, while most property sales have been paused.
There have been fears that this may slow down any recoveries process or result in lower valuations on properties and sites. Collateral went into administration in January 2018, and investors have yet to receive any distributions from the administration process, two-and-a-half years on.
Earlier this year, the administrators for another collapsed P2P lender, Lendy, told investors that the administration process had been extended by three years due to the impact of the pandemic.
BDO declined to give a timescale for the completion of Collateral’s administration process.