FundingSecure investor payments remain suspended
FundingSecure administrators have sought advice regarding the return of investor funds, with payments currently suspended while a legal claim to a creditor is still ongoing.
The peer-to-peer pawnbroking platform closed in October 2019 and CG&Co was appointed as administrator. In May, the administrators halted interim payments to investors after receiving a claim from a creditor relating to money in the client account under a legal term called a ‘quistclose trust’.
In the latest progress update, CG&Co said it has provided a significant amount of information at the creditor’s solicitor’s request and the suspension of payments to investors remains in place whilst the creditor’s solicitors continue to assert their client’s claim to the funds.
The joint administrators said they have sought advice regarding the return of investor funds.
The administrators said there remains three loans that have completed, whereby funds cannot be released to investors with the relevant funds presently held in separate suspended accounts.
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“These matters are ongoing, and the administrators have now taken significant steps to release the funds to creditors and in respect of two of the loans are in a position to do so, pending the unfreezing of the investors’ e-wallet account,” CG&Co said in the progress report.
“An update in respect of the remaining account will be provided in my next report to creditors.”
During the reporting period of 23 April to 22 October, investor withdrawals amounted to £122,053, which relate to withdrawals prior to the suspension. To date, total investor withdrawals have reached £24.3m.
During the period, gross loan realisations amounted to just under £2.9m to reach around £26.3m in total to date.
As of 22 October, there were 82 remaining defaulted loans with the total capital invested in respect of these loans amounting to £40.1m.
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“It is not possible to provide an estimate on timing for dealing with the remaining assets, in particular the property assets, given the continued impact of Covid-19 on the property market and the ability of the administrators to take certain action,” CG&Co said in the report.
£83,869 has been drawn in administration fees in the six months between 23 April and 22 October, in respect of the agreed fee with creditors as a percentage of asset realisations on defaulted and in term loans. Total fees amount to £677,445.
At a creditors’ meeting in December, it was resolved that an additional £25,000 per annum could be charged by the administrators in respect of statutory formalities. This is because of the required extension of the administration to 22 October 2023.
To date, £50,000 has been drawn for statutory duties for the first and second year of the administration.
The administrators said they are working with the creditors committee to agree on the allocation of the ongoing expenses of the administration. They said a further update will be provided in due course.
This followed a hearing in July in which the Judge concluded that the joint administrators had acted in the proper fashion by bringing this matter to the court and that all costs in relation to the direction’s applications to be paid as an expense of the administration.