FCA confirms FundingSecure enters administration
Today, P2P lending firm FundingSecure Ltd was placed into administration and has appointed CG Recovery Ltd as administrators.
The UK Financial Conduct Authority (FCA) has just confirmed that peer to peer (P2P) firm FundingSecure Ltd has been placed into administration and has appointed CG Recovery Ltd as administrators.
The administrators’ function is generally to act in the interest of the company’s creditors as a whole, and this must be done as quickly and efficiently as is reasonably practicable. The administrators will contact all affected parties in due course. For more information about the administration you can check out the dedicated webpage.
FundingSecure Ltd (FSL) is a peer to peer lending platform which creates high yield loans between investors and third party borrowers secured on UK properties and other miscellaneous high value assets and chattels including jewellery, motor cars and boats. The company facilitated substantial loans from retail investors to third party borrowers and the loan book currently stands at £80 million approximately, the administrators explain. The accumulated loan book represents approximately 486 investor loans from circa 3,500 investors.
The directors of FSL passed a resolution to appoint the Administrators because the company had become insolvent and the Notice of Appointment of the Administrators was filed in court on October 23, 2019 following the approval from the FCA.
The company’s difficulties have been documented online and investors are aware that certain loans have not performed in line with expectations in addition to the issues caused by the fraud related litigation in which the company has becomes embroiled. In addition, the business has not been able to demonstrate to the FCA that it can continue to meet the “Threshold Conditions” necessary to continue conducting regulated activities.
The rationale for the appointment of the Administrators is that there is a real risk that liquidation would fundamentally damage the value of FSL’s assets and undermine the potential return to investors and creditors. The management believes that liquidation would lead to the cessation of key operational IT systems (essential to the operation of the online account system for client funds operated by the company) and the loss of key staff which would may be detrimental to the asset realisation process and increase the costs of recovery activity.
Given these issues, the directors decided to place the company into administration and the FCA provided their consent to CG Recovery’s appointment as Administrators.
The Administrators will be writing to all creditors of the company as soon as practicable in accordance with the Insolvency Act and Rules. Within 8 weeks of appointment, the Administrators will be contacting creditors with details of the Administrators’ Proposals. This document will outline the Administrators’ plans for managing the Administration. The Administrators’ Proposals will contain essential updates for the creditors.
Unfortunately, the activities of P2P firms are not covered by the Financial Services Compensation Scheme.