Peer-to-peer lender Crowdstacker is among creditors set to consider a restructuring plan for one of its defaulted loans, which would be one of the first uses of new insolvency rules introduced last year.
Administrators can now pursue restructuring plans for a company to bring it out of administration under the Corporate Insolvency and Governance Bill.
Amicus Finance, which raised a total of £15,368,280 from Crowdstacker investors between 2015 and 2017, fell into administration in 2019 and its administrators are now looking to make use of these new laws.
The changes allow a restructuring plan to be passed even if there isn’t majority approval as long as those owed money aren’t worse-off than the original plan.
Amicus administrator Begbies Traynor has proposed a new restructuring plan that would rescue the company as “a going concern” rather than letting it go into liquidation or be dissolved, as was previously agreed.
Under the new plan, Crowdstacker would receive £75,000 plus a share of £2.2m as a secured creditor.
The current plan that Begbies Traynor is looking to amend would have meant creditors waiting for the administration to complete to see how much they can get back.
Under the new plan, Begbies Traynor would still be in charge of distributing money but the company would no longer be in administration.
It also involves a minority shareholder of Amicus, Omni Partners, injecting £3.1m into the company, with Twentyfour Assets Management investing £640,000.
James Davison, a partner for law firm DLA Piper, said this could set a precedent for other administrations but added it was unclear if the plan would proceed.
“It remains to be seen whether this particular plan will obtain sanction – Andrew Mace QC for Crowdstacker raised a number of concerns around the connected nature of some of the parties involved in this plan, and, assuming the requisite majorities are obtained, there may well be further issues brought up at the sanction hearing,” he said.
“To the extent that sanction is forthcoming, the Amicus case could forge a new path for the restructuring plan, offering substantial benefits to the corporate rescue regime.”
Companies House documents show that £4.1m was owed to Crowdstacker investors when Amicus fell into administration in February 2019.
Crowdstacker’s chief executive Karteek Patel (pictured) said at the time that that the investors who loaned money to Amicus would have their capital and interest back by the end of the year.
The platform has been asked for comment.