Lendy administration heads into third year
Lendy’s administration has entered its third year, with many investors still waiting to recoup their funds amid scandals and inconsistencies with the loanbook.
The peer-to-peer property lending platform entered into administration in May 2019, leaving more than £160m outstanding on the loanbook, with at least £90m of those funds in default.
The Financial Conduct Authority (FCA) said at the time that there was “an ongoing FCA investigation into the circumstances that have led to this action.”
The administration process has been mired with difficulties and last year, administrators RSM received court approval to extend the administration process by three years to 23 May 2023.
Then, last December, RSM warned that the process could even overshoot the 2023 deadline. Its latest progress report said that the administrators “continue to spend significant time overseeing the collection of the loanbook” after there was found to be huge issues in the platform’s underwriting and administration processes.
A recent review of anti-money laundering checks has put further repayments on hold and the recovery of assets is now taking longer due to the coronavirus outbreak.
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There is also a legal debate over the distribution structure used to repay investors. On 28 June, a 10-day trial will commence to clarify the legal position of the ‘distribution waterfall’ employed by RSM.
The proposed ‘distribution waterfall’ sees former Lendy investors split into two groups: model 1 and model 2, which impacts how they receive funds.
Scandals surrounding Lendy’s directors have also beset the process.
In June last year, Lendy’s directors Liam Brooke and Tim Gordon had their assets frozen while administrators investigated suspicious payments to an offshore account.
A report from RSM showed that £6.8m was paid to entities registered in the Marshall Islands, with RSM stating that “that these payments were ultimately for the benefit of Liam Brooke and Tim Gordon.” Lendy investors then called for Brooke and Gordon to be arrested.
The City regulator itself has also come under fire for its supervision of the platform prior to its collapse. Members of the Lendy Action Group – which represents some Lendy investors – have expressed their anger to Peer2Peer Finance News after they became aware the regulator was aware of alleged self-dealing and mis-selling at the platform.
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With no end in sight, it appears that Lendy investors will continue to have their patience tested before they can hope to recoup at least some of their funds.