Creditors have backed proposals by Wellesley to enter a company voluntary arrangement (CVA).
The alternative property lending platform announced in September that it had suspended all payments to investors while it asked its creditors to back a CVA, after revealing 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.
Creditors now have six weeks to choose whether they want to take cash or preference shares under the terms of the CVA.
The majority of creditors, 94.7 per cent or 3,900 voters, backed the CVA while 5.3 per cent, or 395 voters, were against it.
Andrew Turnbull (pictured), director of Wellesley Finance, told Peer2Peer Finance News that it has been a “stressful and difficult period” but he is pleased the CVA has been approved.
“The outcome would have been much worse for investors if it hadn’t been approved,” he said.
“That has been reflected in the level of the majority, this was not a borderline approval.
“More than 76 per cent of creditors voted and every class of creditor also voted at a high level.
“It indicates that while clearly this has been a difficult circumstance, people understood that they had no choice.
“Administrations tend to deliver worst outcomes as we have seen in the P2P sector.”
Turnbull said he recognised there was a “vocal minority” opposed to the CVA and reiterated an apology that founder Graham Wellesley has already provided, adding that the CVA is the best outcome for everyone.
He said Wellesley will now focus on making payments to creditors under the CVA.
It is also planning to reduce costs, which will include job losses and finding a smaller office.
Turnbull said last month that Wellesley will move to unregulated syndicated property lending with institutions if the CVA passed.