Growth Street investors are awaiting the outcome of the peer-to-peer lender’s “liquidity event”as the platform prepares to set out its future strategy next week.
Options are believed to include the platform returning to normal if all issues are resolved or it could shift to a strategy that focuses on repaying all money owed to investors rather than funding new loans.
The P2P business lender initiated a 90-day liquidity event on 16 March, stopping peer-to-peer investors from accessing invested funds.
This was blamed on a larger-than-usual volume of money not being reinvested amid coronavirus uncertainty, making it harder to fund withdrawal requests.
The stoppage meant investor money was automatically reinvested, outstanding lend orders could not be cancelled and users could only withdraw funds from their holding account.
Growth Street said this was not due to any issues with its loanbook but said it has been monitoring its portfolio.
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The 90-day period ends on Monday (15 June).
The platform has been silent so far on the next steps but its terms and conditions provide a useful indication of what could happen for investors.
It states that if the liquidity event is remedied, “normal operation of the platform” will resume.
However, if it has been unable to remedy the liquidity event within the 90 days, a resolution event will be declared that shifts the platform’s focus to getting its loanbook and investors repaid.
“If a resolution event is declared we will notify you, along with all other Growth Street investors as soon as possible but at the latest, within five working days,” the terms and conditions state.
“All funds held in unmatched lend orders will be returned to your holding account.
“Any funds in your holding account will be available to withdraw at any time.
“No new deposits or lend orders will be accepted.”
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In order to spread the risk of borrower default equally between all investors, if a resolution event is declared, the benefit of all loans outstanding will be assigned to Growth Street and held on trusts for investors.
The funds will also be used for recovery expenses, the document said.
Distributions of available funds will be made to investors on a quarterly basis in proportion to their outstanding investments.