MoneyThing administrator awaits court date while fees increase
MoneyThing’s administrator said it is unable to provide a clear estimate about loan realisations until the outcome of its court case, while its time costs have risen to £588,966.
Moorfields Advisory issued an application to court on the direction of payments on 16 September 2021 and the hearing is scheduled for 17 February this year.
Its latest progress report, filed with Companies House, showed that funds held on trust totalled £3.08m from six borrowers as of 20 December 2021.
This was made up of £2.86m in recovery proceeds, £204,581 from default interest held on trust as a contingency and £20,307 was the balance of funds held on trust as at the date of administration.
Moorfields Advisory, which has been overseeing the wind-down of the peer-to-peer lending platform since 2020, said there is a “degree of uncertainty” over repayments.
It said these funds are held on trust primarily pending the outcome of the court application for directions, and in some cases to allow for costs to fund further recovery action.
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“As previously advised, the joint administrators had initially understood that in the event of a shortfall in repayment of a particular loan, often following default, MoneyThing Capital Limited (MCL) is able to recover certain costs in priority to repayment to lenders,” the administrator said in the progress report.
“It has subsequently been indented that there is a degree of uncertainty over this position due to the nature of the various borrower loan agreements and lender terms and conditions to which MCL and or MoneyThing Security Trustee Limited (MTSL) are parties, as well as the arrangements that exist directly between MCL and MSTL.
“As the appointed agent for dealing with loan portfolio, which is largely in default, MCL requires certainty on its ability to obtain reasonable compensation for dealing with defaulted loans after taking account of it being in administration.
“Until the outcome of this application is known, the joint administrators are unable to provide a clear estimate of future realisations in respect of the costs of managing defaulted loans. The joint administrators hope to provide clarity to creditors in the next progress report.”
In the six months from 21 June to 20 December, five performing loans from one borrower were redeemed in full and £99,000 in capital alongside full interest was retuned to lenders.
MCL also received interest totalling £13.11m from performing loans and after 20 December, two borrowers with 11 loans outstanding remained classified as performing.
Time costs for the administration totalled £588,966, representing 1,363.10 hours at an average cost of £432.10 per hour.
Last October, MoneyThing’s administration was extended until 20 December 2022 and Moorfields Advisory has now said that a further extension is likely.
MoneyThing was pushed into administration in December 2020 as it could not afford to defend itself against future litigation from a borrower.
The platform had previously planned to enter into a solvent wind-down rather than an administration, which it said was because of lower investor confidence and strong competition in the lower-risk business loans market.