Lendy’s legal and administration costs for a cohort of six defaulted loans have hit £288,320, as it emerged that investors may receive less than 10 per cent of the recovered funds.
An update from administrators RSM focused on six properties in Gloucestershire that had gone into receivership in 2016.
RSM said that the sale process had been “challenging” due to a number of issues such as litigation from crowdfunders who had advanced funds to the borrower on an unsecured basis; securing vacant possession from the original borrower and his spouse; title issues; and multiple security and insurance problems.
As a result, it said that third-party costs relating to that cohort of loans amounted to £672,421. This included £125,000 in fees to RSM and £156,000 in fees to law firm Shoosmiths, as well as £7,320 to various legal advisers including Stone King.
The update also revealed that around £1.4m is being recovered from the six loans, despite previously fielding higher offers for the properties.
RSM said that it had received a range of offers in excess of £3m after it was appointed receiver in 2016, but these were rejected by Lendy who said that only offers in excess of £4m would be accepted.
The update showed that lenders are contractually entitled to £104,720 out of the total gross asset realisation of £1,407,742.
However, the update also noted that these are interim distributions and said there may be further distributions in respect of these loans.
The remainder of the gross assets realised comprise Lendy’s contractual entitlement of £253,049, Lendy’s service fee, equating to £140,775, the cost paid by Lendy directly, amounting to £236,777 and third-party costs of £672,421.
Read more: Lendy administration costs pass the £3m mark
RSM said the receivers and their agents visited the site in excess of 200 times during the period the properties were held in receivership from 2016 to 2020.