Latvia-based peer to peer (P2P) lender Grupeer noted on February 19, 2021 that last year, they had informed everyone that they were planning to “aggressively” pursue claims against the Loan Originators that were in default.
Grupeer confirmed that they had prepared “most of the necessary paperwork” to begin legal enforcement of the loans and “to return the money to investors.”
The recent update from Grupeer also mentions that they have put their plans “on hold” because of “the insolvency applications made by several investors.” While the possibility of the firms involved to be declared insolvent was “small,” for legal reasons we “could not proceed with filing claims against the Loan Originators,” the Grupeer team claims.
“We also understood that if the investors’ attempts to have the companies declared insolvent had failed, other forms of legal attacks on the companies would still be imminent. In case of such attacks both sides would invest their resources in mutual disputes and the only parties to benefit from these disputes would be the Loan Originators who could successfully argue that these disputes preclude them from repaying money to anyone.”
They further noted:
“Therefore, we approached the investors’ Latvian lawyers with an offer to go against the Loan Originators together.”
While Grupeer claims that it is still in the process of negotiating a “formal ceasefire” with the investors’ Latvian lawyers (Ellex), the discussions they’ve had have given them “confidence” that a solution “acceptable to all parties” is quite possible.
The Grupeer team also noted that they’re grateful to the investors and their Latvian legal representatives for “agreeing to start a dialogue and we intend to make the most out of this unique opportunity.”
Grupeer’s management acknowledged:
“As we all know, the list of issues to be addressed is not a short one. Our ability to address all these issues at once is restricted by our limited capacity (mostly, in terms of personnel and funding). Although it is our intention to meet all investors’ demands, at this point we are moving forward based on the priority of outstanding matters. The matter of the utmost urgency, as everybody will agree, is to return as much money as possible to the investors.”
“Therefore, at this time we are primarily focusing on lodging legal claims against the Loan Originators in default. There is a lot of paperwork involved and we need to anticipate every move and argument from the defendants’ side in advance. It requires a lot of work. However, we are succeeding and have now filed the first claims with the arbitration court. The debt collection process has officially started.”
The Grupeer team added that they would provide complete information on the progress of legal proceedings to the investors’ legal representatives and will also be looking forward to their input.
If funds are recovered, then Grupeer will be negotiating with the investors’ lawyers an “acceptable and secure process of delivering the recovered funds to the investors.” Grupeer said they “hope this will help to gradually build mutual trust.”
Grupeer’s management confirmed that they’re currently in the process of “negotiating out-of-court settlements with those Loan Originators who are cooperative.” They added that as they’ve informed investors before, the primary concern of these Loan Originators is “the position of investors and possible adverse consequences if the investors object to repayment of funds to us.” With the assistance of Ellex, they’ll finally be “able to address these concerns and agree on repayment methods acceptable to all parties involved,” Grupeer claims.
The Grupeer team also noted that they’ll be reporting on their progress on all above issues.
As covered in November 2020, Grupeer’s management had claimed that they were still working with debt collection partners to ensure repayments.
The Grupeer team pointed out that “refusal to repay the debts via Recollecta has no legal grounds and is considered as an attempt to avoid payments under the contract with all legal consequences that occur in case of the contract violation.”
As previously reported, the State Revenue Service of Latvian Republic has suspended the economic activity of SIA “Grupeer.” The P2P lender claims that it has now managed to “partly repay the labor force related taxes, the information about the accepted payment will be updated within the next few weeks.” The lender also mentioned that after making these payments, Grupeer will “resume full operation as a company and legal entity.”
The Grupeer team further noted:
“We can now confirm that in cooperation with our debt collection partners we have started legal actions against several Loan Originators. The amount we are seeking to recover for the benefit of investors at this moment totals to approximately 10 million euros.”
The Grupeer team claims:
“A significant number of the Loan Originators have been deliberately evasive, have either openly refused to pay the funds loaned to them or failed to [communicate] … with us. … we have even detected attempts to hide assets. Therefore, we will be seeking preliminary injunctions against these Loan Originators and attachment of assets. Since many of the legal steps are taken on ex parte basis (i.e. without participation and knowledge of the respective defendant), at this point we will not share details of the proceedings. We will make the information public as soon as it will not present potential harm to the relevant case(s).”
The Grupeer team further noted that they’re expecting the ongoing proceedings to be “over relatively soon, because most of the loan agreements are subject to the jurisdiction of our local arbitration, which in comparison to litigation in state courts (in many instances, overseas) is a much faster process.”
Latvian law firm “Ellex Klavins” reportedly informed Grupeer that “on behalf of certain investors, [they will be] seeking a declaration of insolvency” against the P2P lender.
Grupeer claims that there’s no legal or factual basis for these actions. But the lender notes that it’s their duty to “inform the investors of such a threat.” Grupeer also mentioned that “in case of insolvency, all collection proceedings both extra judicial and in an arbitration commenced by us will stop by operation of law.” The lender also confirmed that it would keep its investors informed about the ongoing developments.
As reported in late April 2020, a Telegram group, with over 3000 members, had been launched by impacted Grupeer investors. Some participating individuals appear to be interested in pursuing legal action in regards to the pause in payments.
Around the world, some SME lenders have struggled due to the COVID-19 pandemic. All platforms have had to revisit credit risk as concern has risen regarding a heightened default rate