Lendy director took out £1m in personal expenses
Before Lendy collapsed, director Liam Brooke is said to have taken £1m in personal expenses from the peer-to-peer lending platform.
As first reported by the Mouse in the Court blog, Brooke’s personal expenses included £9,000 towards luxury hotels and £5,000 for a French ski trip. The erroneous charges were discovered via an audit which took place six weeks before the business collapsed.
Lendy entered into administration in May 2019, leaving more than £160m outstanding on the loanbook, with at least £90m of those funds in default.
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The current court case, which commenced yesterday (28 June 2021) and is set to last five days, revolves around a legal debate over the distribution structure used to repay investors. Lendy Action Group raised money to appoint a solicitor and take the case to court.
The proposed ‘distribution waterfall’ splits Lendy investors into two groups: model 1, where investors lent to Lendy itself which gave the borrowers the money, and model 2, which was set up from 2015 and ensured lenders began funding the P2P loans directly.
This impacts how lenders receive funds recovered from the collapsed platform.
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Model 1 investors are defined as creditors, meaning their eventual payouts will be pooled with other creditors, including the Lendy directors.
Meanwhile, model 2 are defined as investors, which means that they may be able to recover funds directly from the loans that they helped to fund.
In a recent progress report on the administration process, it was revealed that a Lendy administrator has been earning £575 per hour to oversee recoveries. The costs of managing the wind down of collapsed platform are expected to surpass £3m.