Platform Update: New legal structure comes into force tonight

Bondora News

We are happy to announce that today at midnight we will roll-out the new bankruptcy-remote legal structure. As mentioned in our previous blog post, the new structure is suitable for EU and non-EU investors, both natural and legal entities (incl. non-financial legal entities).

After the roll-out, the loan agreements shall be concluded between the borrower and Bondora, and Bondora will immediately assign the claim deriving from the loan agreement to the investors through a broker entity. Thus, instead of a loan offer, Investors will sign the brokerage, servicing and assignment agreements. The change to the legal structure does not affect the process for the investors, meaning that investments/bid shall be still made in the same order and manner, and Bondora will continue servicing the loans.

We are also adopting the Terms of Use to the new legal structure and changes to the debt recovery process (please read “Legal structure: What are we changing?” blog post for the details on the changes to the debt recovery process).

19 responses to “Platform Update: New legal structure comes into force tonight”

    • Hello!

      You are correct, the bankruptcy-remote structure affects new loans only.

  1. Can you please explain in detail what will happen if a loan defaults under the new legal structure? Will Bondora buy back the loan at 0 value and will forward everything to the investor in case there is a recovery that exceeds your costs?

    • Hello!

      In case a loan defaults, loan claim will be assigned back to Bondora and we will transfer all proceeds (the amount collected from the borrower less the fees of the collection agency) to the investors.

    • Hmmm. Let’s make an example. A loan with a remaining principal of 5 Euro is defaulted. Will the 5 Euro stay with me but the loan claim will be handed over to Bondora?

    • Hello!

      Under the new legal structure, an investment into a loan represents a claim to proceeds, which will be assigned to Bondora in case of default.

  2. From B statistic page
    60+ Days Overdue Loans Value (€) 7’538’991
    Interest paid out (€) 8’405’431

    How big are the fees? Will there be extra column “fees paid to collection agencies” or it will be hided. Do you expect recovery rates to grow in ESP and FIN?
    If the recovery rate will be same as now, then investors just lose more money on not?

    What is your expectation on loans taken to court by collection agencys. I fear they are goint to take 10% loans to court or less (as it costs money), and take money from usual recovery (when loan taker voluntarily starts paying back).

    • Hello, Mart!

      The fee levels differ by country, agency and even particular case, but we do not expect the average to exceed 20% of the recovered amount. We expect our co-operation with the collection agencies to increase the net amount recovered to the investors (net payout after fees) and we will provide the breakdown of the occurred fees.

    • So in short, basically we have shared 0% of recovered amount with agencies before the change and now its 20%. Will it have impact on higher recovered amounts?

      Sorry but I fail to understand past announcements. I don’t know if my english is the problem, but for me its more questions than answers… It lacks understandable info.

    • Hello!

      We expect the gross recovered amount to increase; thus, making the net payout to investors higher than currently despite the deduction of the fees.

  3. In fact
    – there are no more penalies for defaulted or even late paid loans?
    – from principal/interessest collected about 20% are going to the collection agencies?
    – the borrowers don’t have to pay for this?
    Can’t see the improvement. sorry.

    • Hello!

      The defaulted borrowers will continue paying the interest until the full recovery. We expect the improvement through increase in the gross recovered amounts, which will make the net payout to investors higher despite the deduction of the fees.

    • “The defaulted borrowers will continue paying the interest until the full recovery”
      So they did before. I do understand that the borrowers don’t have to pay penalties AND the costs of recovery but none of this? Doesn’t seem fair for the investors.

    • I fail to understand why the borrower should not pay anything extra if they default. As far as I know, being a lawyer for a big financial company focused of consumer credit in EU, I have not come into contact with any EU country that do not provide the lender with a right to charge some collection fees and/or charge late interest rate. Therefore I don’t understand why only the lender should pay for the collection. Or does the collection company take the legal collection fees+late interest+20% from the lenders?

    • For me it seems that bondora have given out loans to lenders who never intended to pay back the loan. To take a loan to court you have to pay court fees, but if the lender is broke, or is hidding in some other country then the collection company can’t charge any collection fees. But you have to pay court fees first, so to compensate it (bad background check from B) investors have to pay extra to compensate the trouble of collection company

    • Bondora also expected that Spain, Finland and Slovakia would be prosperous for investors as well as Bondora. How did this turn out?

  4. Previously in your own terms was said that Bondora “will file a claim against a customer in a local court 60+ days after the due payment date.” Bondora was promising to file the claim in court against all customers who were 60+ day late. I want to receive the answer if you actually did that? What is the % of defaulted loans under old terms that have an outstanding legal claims against them? If you were actually following your own terms, then the claim that somehow loan collecting agencies will be able to recover more funds than local courts in the future is ridiculous. Loan collecting agencies are much less powerful than legal system and they are ultimately more expensive, as they work for profit, while legal fees will in many cases be recoverable from debtors.

    I expect an honest answer on Bondora’s compliance with its own previous term concerning the procedures of loan recovery. I also expect that Bondora will adjust its fee structure to eliminate the overhead portion of the fees that is no longer carried by Bondora (in loan recovery).