Lendy administrator RSM has warned that further court direction may be needed relating to the distribution of funds from the collapsed peer-to-peer lending platform.
After losing its legal case against an investor action group regarding the ‘distribution waterfall’, RSM said that it will follow the Judge’s instructions regarding investor payments.
However, it also said that it has made an application to the court to confirm the correct application of Lendy’s terms and conditions, because of inconsistencies in the company’s legal documentation.
“The application was made on the basis of a consensual and intentionally non-adversarial basis with the Lendy Action Group being joined as respondents,” Damian Webb, lead administrator at RSM, told Peer2Peer Finance News via email.
“The court, based on the administrators’ directions application, has clearly articulated how the funds derived from the Lendy administration should be distributed. Consequently, the administrators will look to fulfil their duties respectively.
“The court also acknowledged the appropriate nature of the directions application, and it is worth noting that unfortunately, again due to the terms of the Lendy documents, further direction of the court may still be required in further aspects of this case.”
Last week, the Lendy Action Group (LAG) won its case against RSM, relating to the distribution structure for recovered funds.
Lendy investors were split into two groups, due to a change in the platform’s structure during its years in operation. Model 1 investors are defined as creditors, meaning their eventual payouts will be pooled with other creditors, including the Lendy directors, while model 2 (M2) are defined as investors, which means that they may be able to recover funds directly from the loans that they helped to fund.
The Judge ruled in LAG’s favour that M2 investors should be given priority in distribution payments.