The Lendy Action Group (LAG) is optimistic that the judge will rule in its favour and allow model 2 investors to be given priority in distribution payments.
During a court hearing this week, the LAG argued against Lendy’s distribution waterfall structure that splits investors and creditors into two groups and is used to repay investors.
Model 1 investors are defined as creditors, meaning their eventual payouts will be pooled with other creditors, including the Lendy directors, whereas 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.
LAG argued in favour of funds being distributed first to model 2 lenders.
Spokesperson Lisa Taylor said the group claimed the model 2 investors should have been protected by Lendy under fiduciary responsibility and the platform had a duty of care towards them but instead acted in its own best interests.
Taylor said she was optimistic the judge will rule in LAG’s favour when giving the decision in six to 12 weeks’ time.
She said she estimates model 2 investors would receive about £50m or a little less and if they are successful in this case that would increase by an additional £20m to £30m.
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“I think we made a good case and were able to convey to the judge just how poorly Lendy was run,” said Taylor.
“Why I feel in general that the case was good and why I’m optimistic is I think were able to effectively make the point we should have been protected by Lendy under fiduciary responsibility, not just as an agent, they constantly made decisions that put us at risk, and I think we showed that.
“I think we were actually able to show during a very complicated messy situation that Lendy did in fact owe us a duty of care as an agent of ours and fiduciary.
“That was a very important part and I believe we showed a good job of showing Lendy was not acting as just a profit-making business, while we all knew they were supposed to make money, they had a duty of care to investors and I believe they failed in that respect and that was the primary argument was most critical of all the issues that was brought up.
“The Queen’s counsel from our side did phenomenal job. Preparation and information raised from witness statements from Norm and Mike Powell were extraordinary and the amount of detail we collected from all parties part of LAG put us in a position where we were able to put forward a very solid case and that’s why I feel optimistic.”