Wellesley has suspended all payments to investors as it looks to get its creditors to back a company voluntary arrangement (CVA) to support a restructure of the property investment platform.
Graham Wellesley (pictured), founder and chief executive of the company, said it was facing liquidity issues due to the pandemic and the changing regulatory environment that made it harder to raise funding through the issue of listed bonds on Euronext Dublin.
It is working with restructuring advisers Duff & Phelps and said a CVA offers an alternative “to an otherwise disorderly wind-down,” warning insolvency would “result in an inferior outcome” for all investors.
Wellesley said he was sorry to have to take these measures but added that the pandemic and regulatory environment have put the company under increasing and unforeseen pressure.
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“Firstly, Covid-19 has changed the economic outlook by bringing delays and stress to the property development market,” he said.
“Secondly, recently proposed changes to the regulatory environment have meant that Wellesley would no longer be able to raise funds via its listed bond investment programme which meant that the business model is no longer viable in the new climate.
“Although, the combination of the above factors has had a huge impact on the future liquidity position of the business.
“Without the ability to raise further funds, there is a funding gap between the completion of loans with borrowers returning funds and the continued drawdown on more recent loans by developers to finish building development projects.”
Wellesley added that the platform’s loanbook has been transferred within the group of companies to ensure it can still be serviced.
The platform started life as a peer-to-peer lender in 2013 and later moved into mini-bonds.
It stopped accepting new money into its P2P product in May 2017 and in 2019 said it was shifting its whole focus to ISA-eligible listed bonds that would support property developments.
Since launch, the platform said it has funded 200 loans on £1.2bn of property that covers 3,600 homes with an average value per unit of £350,000.