It is believed to be the first successful action taken against a valuer by the administrators to help recover short falls in loan recoveries, and was revealed in the latest half-year update.
Administrators have been taking action in many ways, including on personal and corporate guarantees or making claims for negligence against third-party professional advisers.
In this case, following a mediation meeting in October, the administrators agreed a settlement with the valuer and insurer for £625,000.
According to details on the Lendy website, the property in Leatherhead, Surrey was valued at £4.25m in February 2016 with a loan of £2.975m granted to refinance the original loan help complete works on it.
However, the developer initially completed the works without planning permission which required further funds from Lendy to bring it back into line with regulations.
Eventually, a valuation from a third party of £2.25m was given in early 2018 as the top sale price in that area and a buyer purchased the property for £2.1m – leaving investors £1m short.
Lendy loans overvalued
Speaking at the NARA property receivers conference last month, RSM Restructuring Advisory partner Damian Webb who is overseeing the recovery of as much capital as possible for investors, said one of the biggest issues at Lendy was the accuracy of valuations.
He confirmed that only around 30 per cent of the original values are being collected on average against outstanding loans.
Speaking about wider issues with valuations within the peer-to-peer sector, and not specifically those at Lendy, Webb noted a lack of processes where borrowers were allowed to appoint their own valuer.
“The borrower would then say the value needs to be ‘X’ and the valuer would sign off on it and you would consistently see valuers working on a range of projects for the same lender,” Webb said.
“The P2P lenders would also lean on the valuers as they wanted to deploy the capital, so it wasn’t just the borrowers.
“So they would encourage the valuation level and would ignore things such as connected party leases, they wouldn’t read the title documentation properly, they wouldn’t engage properly.”
In the bi-annual update, Webb also revealed the administrators had taken possession of the company Stingher Rib boat and sold it for £50,000.
In June a worldwide freezing injunction over the assets of the former directors, Liam Brooke and Tim Gordon was obtained, as well as proprietary injunctions on properties owned by companies linked to the directors.
Proceedings were commenced against Liam Brooke, Tim Gordon, RFP Holdings Limited and LP Alhambra Limited and during the period these claims have been progressed, the administrators added.
Overall the Lendy loan book has 29 development and bridging finance loans outstanding worth £117m, with 24 of these in formal insolvency proceedings.
The administrators have so far reclaimed 18 loans worth £16.8m.
The administration has been extended by 36 months to midnight on 23 May 2023 but RSM said it was not possible to ascertain at present when it would actually end.