FundingSecure investors withdraw over £6m as payments restart
Payments to FundingSecure investors have finally been allowed to restart, according to the latest report from the administrators.
Due to an ongoing legal claim relating to “a quistclose trust”, payments to investors in the collapsed peer-to-peer lender were suspended in May 2021.
Read more: FundingSecure administrator suspends investor payments amid legal claim
A ‘quistclose trust’ means that a creditor can lend money to a debtor, such as FundingSecure, for a particular purpose. The money cannot be spent for any other purpose and will have to be returned if it is misused.
Administrator CG&Co had received a claim from a creditor relating to monies paid into the company’s client account prior to the administration, including an assertion that the monies were subject to a ‘quistclose trust’.
They have now been able to allow investors to restart the withdrawal of funds from their individual account, although some of the funds remain frozen. The joint administrators are now in the process of drafting the defence of the company in the lawsuit.
Over the six month period to 22 October 2023, investors withdrew £6.27m. This brings the total amount of withdrawals to £30.67m.
Meanwhile, the administrators have able to achieve loan realisations of £2.17m over the period, taking the total realisations to date to £48.75m. This is lower than the number indicated in the previous update from administrators, published in May, which had stated that almost £50m had been recovered. The administrators did not respond to a request for comment regarding the decline in total realisations.
Read more: FundingSecure realisations near £50m
There are now 30 remaining defaulted loans, with total capital outstanding amounting to £19.12m.
The administrators said they cannot provide timescales for when the remaining loans will be realised, but will continue to provide quarterly updates.
Previously, the administration was extended for another year to October 2024 because the loan book has not yet been realised and there is potential for further recoveries.
During the six month period, the administrators charged additional fees of £54,759 plus VAT, taking the total administration fees to £938,204.
Read more: FundingSecure administration delayed again