BLN/TC is now in Administration

More of a question (for everybody), than a comment.

Say you, or somebody else, submits a claim along the lines you outline, and it's successful.  Under "treating customers fairly" wouldn't everybody else in the same loan / circumstances have to be treated equally?  If so this would have the added benefit of reducing costs, because they'd only deal with one claim rather than, potentially, hundreds.

I just started typing "Business Loa"..... as the username and it popped up as an option to select from a drop down list. I didn't copy and paste from the email they sent.

I hope this works for you?

Hi, you will all have to excuse my ignorance with this, but from reading the forum am I right in thinking that the administrators will not longer continue to make regular interest or capital payments to us if they do manage to recoup the loans?

paul123 The picture is not as black as you paint it.  Loans will continue to be administered by ESF (to whom BLN/TC staff have been transferred), so collections will continue as before.  However there will come a time when it is decided that it is no longer cost-effective to service the loan book and any remaining balances will be written off.  This decision will be made in consultation with the creditors' committee (7th bullet on page 16 of the administrators' report).  It is probably 4-5 years down the line.

The most significant change from our perspective is that the administrators will be retaining 25% of all recoveries to cover costs. For the avoidance of doubt this is to cover all costs, including the loan servicing fees being paid to ESF. We have an absolute right to those recoveries, net of costs. Creditors have no right to them whatsoever. If the 25% retention turns out to be more than was needed, we will get what's left over. On the downside, if the 25% retention turns out to be insufficient (which is all too likely IMO) they will need to go back to court to ask for a variation to increase the retention.

They have said that they will treat lenders as contingent creditors.  That means we are at worst creditors if and to the extent that we are determined to have suffered loss due to BLN's negligence. It also means that lenders can be represented on the creditor's committee.   Whether a valid claim for negligence turns out to be worth anything will depend on whether BLN has/had PII and on its terms. 

I say "at worst creditors" because, if we were merely creditors, any insurance payout might go into the general pot to be shared with other creditors.  This would not happen if any insurance payout was either (i) paid into some kind of trust for lenders or (ii) (which would have the same effect) considered to be part of client assets.

As to how long we have to wait to get our money, once their AML/KYC checks have been done I'm expecting to be able to withdraw funds on a reasonably timely basis, net of the 25% deduction.  That is certainly the administrators' stated intention - see the fifth bullet on page 16 of their report.

Would it be a good idea to create a list of loans that have been mishandled by BLN and what went wrong, as a common resource for lenders rather than each individual doing their own thing? I know some lenders seemed to have researched some loans, I remember various discussions on the private forum that are now lost I assume. I'm sure there were also details on how the NG loan securities were 'shared' and mis-valued which would be a nightmare to rediscover now. I wish I had taken notes at the time, but TC were promising to sort it all out by chasing the introducers, valuers, etc and it looked sensible to just leave them to it.

The NG loans just became a totally tangled web of every sort of bungling, maybe I'll just say something like that to the administrators and suggest they try and figure it out, I think it's over my pay grade! I'm sure they must be aware of how disastrous it became.

In retrospect I think the whole idea of introducers who dressed up borrowing proposals in pretty documents on the behalf of borrowers to make them as appealing as possible, while hiding behind a disclaimer of, 'we are just saying what the borrower told us', was deeply flawed. The flaws finally becoming extremely obvious with the NG debacle.

With regards to the whopping admin charges of 25% Can this be challenged?

Does anyone know exactly what this means:-

Liberty to apply to Vary the Order

The Order provides that lenders have liberty to apply to the Court to vary (but not discharge) paragraph 5 of the Order. Any such application has to be issued no later than 4.30pm on 19 May 2021.

It can probably be challenged but to do so will involve paying for lawyers etc. I’d imagine another key point would be that it would need to be shown that the costs of the administration/wind down of the loan book, would cost less than 25% from start to finish. That’s a calculation that I’d imagine has already been done by the administrators. It’s possible it’ll be less, it’s possible it’ll be more.

Personally I think it’s helpful to know up front what they think they might set aside for themselves and it also means that we are more likely to get interim payments. Further, since it’d be practically impossible to change their cut from 25% to, say, 35% later, (because lenders aren’t going to send their payments back!) when they find out administration is dragging out longer and become more expensive than they thought, I think the final percentage will be lower than 25%. In other words, I think 25% must be at the top end of their range of estimates.
Just IMHO.