Investors must accept that peer-to-peer lending platform administrations could take several years, an insolvency expert warns.
Frank Wessely, managing director at business advisory firm Quantuma, says investors must be patient but they should also be given regular updates from administrators.
Furthermore, FundingSecure’s administrator has told investors that there are some loans that it will not be possible to get any money back from.
Wesseley said that this isn’t uncommon but there should be an explanation as to why the money cannot be recouped.
“Clearly the administration of P2P lending platforms is a different scenario from other types of businesses that are placed into administration,” he told Peer2Peer Finance News.
“There will often be situations where there are outstanding loans to collect.
“Clearly a borrower needs the ability to repay and if they are unable to then the insolvency practitioner has to take a view.
“Do they keep the case open and incur costs or call it a day if there is no prospect of recovery.”
Wesseley said that the extension to the administration will give more time for recoveries.
“We are starting to see the effective winding up of a P2P lending platform will take several years and investors are going to have to wait until that is concluded before they find out how much will be recovered,” he added.
“It shows how complex these types of administrations can be, particularly where they are property related.”