Investors protected from £14m damages claim following Lendy collapse

16th February 2022

Our dispute resolution team, led by Adam Finch, acted on behalf of a group of almost 200 investors, who invested via an online peer-to-peer lending platform, Lendy. The investors invested varying amounts of money, from a few thousands to hundreds of thousands.

Borrowers approached Lendy for investment in finance development projects and property developments. They entered into a loan agreement and a development loan agreement with Lendy (as agent for approximately 4,800 investors) in relation to two development properties worth approximately £8m.

Lendy provided the borrowers with the loan funds upon completion but subsequently declined to authorise the drawdown of the development funds on the basis of alleged breaches by the borrowers. When the borrowers defaulted on the loan agreements, Lendy appointed LPA receivers in relation to the properties. It is one of the largest peer-to-peer defaults to date.

The borrowers alleged that Lendy withheld the development funds without good cause and, accordingly, issued court proceedings for breach of contract and for damages worth £14m, effectively against the investors because they provided the loan funds. Adam Finch’s team defended the investors and succeeded in ensuring that their clients did not have to meet all or part of this sizeable claim.

Unsurprisingly, given that this involved the collapse of the largest peer-to-peer lender, the action attracted substantial media interest, especially in relation to its potential impact on the long-term viability of the peer to peer lending sector.

One investor said of the team’s work: “I would also like to thank you [Adam Finch] and your team [Adam Barrett, Daniel Perry and Phillipa Shepherd plus others] for the very professional way in which you have kept us informed and dealt with everything.”

Another said: “Thank you for working so hard and skilfully to get the positive outcome that you did in these recent hearings. I wanted to personally to thank you and to say that your work is appreciated. Please also convey my thanks to your team.”

A third said: “Adam [Finch] – thanks for bringing this case to its logical conclusion.”