Administrators of peer-to-peer lender Lendy have revealed the process has exceeded its original cost estimates after it emerged it is “more complex” than first envisaged.
Between its appointment on May 24 and November 23, administrators from RSM, led by Damian Webb, Phillip Sykes and Mark Wilson, incurred time costs of £1.7m. When RSM’s administrators were appointed, a fee cap of £1.025m plus VAT was proposed for the first 12 months of the investigation.
The administrators have logged £926,377.94 of expenses, including more than £50,000 on legal fees and £239,000 on contractors.
“The loanbook has proved to be in a significantly worse state than was immediately ascertainable on our appointment,” the administrator’s progress report said. “Based on the initial reviews it appears there was an absence of consistency in the underlying loan documentation. In the period, significant time costs have been incurred in taking on, understanding and implementing the wind down of the loan book.”
The administrators also highlighted difficulties with Lendy’s ‘Model 2’ loans and compliance with anti-money laundering regulations.
The Model 2 loans were a different structure to traditional loans and saw investors deemed to have lent money to the borrowers via Lendy acting as agent. Under Model 1, investors are deemed to have lent their cash to Lendy, which then in turn then lent it to borrowers.
Lendy, which was the main sponsor of the Cowes Week regatta, organised crowdfunded loans through its website which were used to fund property development. Its loanbook was valued at £152m when it entered administration.