The administrator of collapsed peer-to-peer lender FundingSecure has halted payments to investors, following a new legal claim.
The peer-to-peer pawnbroking platform, closed in October 2019 and CG&Co was appointed as administrator.
The administration is ongoing and has been extended by three years but investors were receiving interim payments.
However, these have now been stopped due to a claim from an unnamed creditor.
CG&Co said the creditor has made a claim relating to money in the client account under a legal term called a ‘quistclose trust’.
Under this term, a creditor can lend money to a debtor, which was FundingSecure in this case, for a particular purpose.
The money cannot be spent for any other purpose and will have to be returned if it is misused.
“The administrators have received a claim from a creditor relating to monies paid into the company’s client account prior to the administration, including an assertion that the said monies are subject to what is termed a ‘quistclose trust’,” CG&Co said.
“The administrators are currently investigating this claim and also taking legal advice on the same.
“However, pending proper investigation of the claim and its resolution, the administrators have no alternative but to suspend further payments to the investors by way of distribution from the client account/platform until further notice.”
It comes after investors won a legal battle in March over the status of a five per cent redemption fee that was usually paid to FundingSecure.
The platform had argued that the fee should be paid on the entire value of the loan, before payment to investors.
However, a representative group of investors were able to provide proof that FundingSecure had indicated – both in its terms and conditions and in investor correspondence – that investor capital would be prioritised.