How P2P lending administrations are progressing
Millions of pounds are still owed to investors affected by collapsed peer-to-peer lending platforms.
Collateral, Lendy and FundingSecure have all entered administration over the past two years and have been hit by issues with valuations and delays in asset sales due to the pandemic.
So how have the administrations progressed so far?
Collateral
Peer-to-peer pawnbroker and property lender Collateral collapsed into administration in February 2018 and entered liquidation in April 2019 with several issues still under investigation such as discrepancies in the valuation of assets and bank account balances.
The latest update from liquidator BDO on 8 July was that it has reconciled individual investor loan exposure but the realisation of the loanbook was “particularly challenging.”
The report said BDO has taken enforcement action on the majority of the platform’s property loans and work needs to be done to make the underlying security marketable for sale, while the pandemic has made it harder to sell.
BDO has recovered £2.2m from the property loanbook of £14.8m, according to the latest update.
There have been no public updates since July and it is unclear when the next report will be released.
Lendy
Lendy entered administration in May 2019.
Its administrator RSM secured approval earlier this year for the process to be extended to 23 May 2023, citing delays caused by the pandemic and the need to redo anti-money laundering checks on investors.
Lendy co-founder Liam Brooke was accused in high court documents in July of using misappropriated funds through an offshore company to purchase the collapsed P2P lender’s headquarters.
High court documents approving a freezing order against Lendy founders Brooke and Tim Gordon have also disputed the rightful ownership of the platform’s former base at Branksmere House in Portsmouth as well as other properties.
The document suggests around £770,000 was channelled from the misappropriated funds to Brooke via a loan to Argo Private Finance Limited, one of the companies involved in an offshore structure to purchase Branksmere House.
RSM has recovered £16.8m of the £152m loanbook so far.
It has been providing regular updates on interim distributions of investor money this year and has promised an update on the progress of the administration by 19 December.
FundingSecure
FundingSecure closed in October 2019 and CG&Co was appointed as administrator of the P2P pawnbroking platform.
The administration period was extended to 22 October 2023 earlier this year after the administrator CG&CO said more time was needed to realise assets and noted the impact of the coronavirus pandemic on the property market.
It warned in its latest update earlier this month that the administration process could take several years.
The update said £23.5m has been recovered so far out of investments of £56.6m.
CG&CO is also involved in a court case assessing whether an investor fee should still be paid to the defunct platform.
The administrator has also sold two legal disputes to litigation funders, one of which involves action relating to inappropriate allocation of investor money.
In this case, CG&CO has accused Richard Luxmore, a former director of FundingSecure, of wrongfully arranging for more than £8m to be channelled to property developer Mark Clarkson, who denies the claims.
This issue has been sold to and is now being pursued by litigation funder Asertis, according to The Times, which reports that a settlement was already reached with Luxmore.
A former director of a peer-to-peer platform funnelled millions of pounds of investors’ money to an associate by creating “fake” loans, it has been alleged in a High Court dispute.
Richard Luxmore, 56, co-founder of Funding Secure wrongfully arranged for more than £8 million to be channelled to Mark Clarkson, 60, a property developer, it has been claimed.
The next administrator update is expected in June 2021 but its legal cases will continue in the meantime.
