We have finalized a new bankruptcy-remote legal structure that is suitable for EU and non-EU investors, both natural and legal entities (incl. non-financial legal entities). The new structure will reduce compliance and operational risks for investors on the platform. The new structure will be rolled out by end of August and a separate notification sent prior to the final roll-out.
Under the new legal structure the loan originator shall be Bondora (isePankur AS), meaning that Bondora shall conclude loan agreements with borrowers and then assign the loan claims deriving from loan agreements to the investor. The claims deriving from the loan agreements are assigned to the investor through a broker entity immediately after the loan agreements have been concluded.
According to the claim assignment agreement, Bondora will continue to service the loans in its own name as it is currently. In case of default of the customer the ownership of the claim is assigned back to Bondora as it is currently. The claim will be secured in favour of the investor until the claim has been assigned back to the investor. If Bondora receives any payment as a fulfilment of claims it forwards payments (minus fees payable to Bondora or third party collection companies) to the investor.
After the launch of new structure we do not have right to charge customer a penalty rate in case of late payment but instead the interest will accrue even after the loan goes to default. Consumer credit regulations in force across our markets allow a consumer lender to either charge a penalty (typically approx. 8% per annum) or continue to charge the original interest rate. Penalty rate will not be charged as in most cases the interest rate is higher than the maximum statutory penalty rate.
Other changes are related to the improvements made in our debt recovery process. We have started using collection companies since companies we have now shortlisted have been able to prove their ability to recover debt faster than through courts.