Trust demanding repayment of loan

[webberg]

This is all way above my head really.

The bit I can't quite understand is how the loans managed by a trust can go from a trust in Switzerland to a company in The British Virgin Islands to a debt collector in Birmingham......sad and very scary times

It's really not that difficult.

A loan is just an asset for the lender and a liability for the borrower.

The lender in this instance was said to be either K2 - an offshore company - or Hyrax Resourcing Ltd, a UK company.

Those companies contributed, i.e. gave, gifted or otherwise passed along all the rights and obligations of those loans to a professional trust company called Pinotage.

Pinotage has a presence in Switzerland (Geneva). I suspect that it also has offices in other places, certainly BVI. May even have subsidiaries there.

At some point and for reasons unknown, the Swiss Pinotage entity moved the loans to the BVI entity.

So we then have the loans appearing as assets of the BVI outfit.

The BVI outfit as assigned (i.e. sold for a consideration) the loans to FS Capital. This means that the loans are now controlled by FS.

It may be that the BVI trust remains "interested" in the loans in that they may have an agreement to share in any repayments made. I have no idea if this is the case or not.

This not very different from say a credit card company selling bad debts to a collection agency. The banks do not like to be in Court depriving the starving widow and her 5 kids of their last 50p for gas meter. Bad publicity. However, they are willing to sell the debt to firms who would not think twice about taking that 50p and asking the Court to sell a couple of kids for the balance.

[surfgeo]

It's really not that difficult.

A loan is just an asset for the lender and a liability for the borrower.

The lender in this instance was said to be either K2 - an offshore company - or Hyrax Resourcing Ltd, a UK company.

Those companies contributed, i.e. gave, gifted or otherwise passed along all the rights and obligations of those loans to a professional trust company called Pinotage.

Pinotage has a presence in Switzerland (Geneva). I suspect that it also has offices in other places, certainly BVI. May even have subsidiaries there.

At some point and for reasons unknown, the Swiss Pinotage entity moved the loans to the BVI entity.

So we then have the loans appearing as assets of the BVI outfit.

The BVI outfit as assigned (i.e. sold for a consideration) the loans to FS Capital. This means that the loans are now controlled by FS.

It may be that the BVI trust remains "interested" in the loans in that they may have an agreement to share in any repayments made. I have no idea if this is the case or not.

This not very different from say a credit card company selling bad debts to a collection agency. The banks do not like to be in Court depriving the starving widow and her 5 kids of their last 50p for gas meter. Bad publicity. However, they are willing to sell the debt to firms who would not think twice about taking that 50p and asking the Court to sell a couple of kids for the balance.

Ok, I understand that, thank you.

I don't think I like it and am going to become considerably poorer as a result......what a sad state of affairs, if I only knew then what I know now!!!!!! You know it's all going wrong and then it gets considerably worse

[Forsythia]

Hi Webberg, are you saying then that though the trust was set up as an EFBRS, a loan agreement with a clause stipulating the loan can be transferred to a third party would trump any trust law that would have perhaps given some protection to the employee as a beneficiary of said EFBRS??

[cojak]

Be aware that I am watching this thread and will remove posts that are unhelpful. This forum is moderated more heavily than the other Professional forums.

[Whysoserious]

Aren't the Trustees of the loan legally obliged to work in the sole interest of the beneficiaries?

I can't see how the Trustee (Pinotage in this case) can claim to have operated with the beneficiary's best interest by selling the loans to a financial asset company.

[DavidD]

Aren't the Trustees of the loan legally obliged to work in the sole interest of the beneficiaries?

I can't see how the Trustee (Pinotage in this case) can claim to have operated with the beneficiary's best interest by selling the loans to a financial asset company.

I agree completely- it would be hard to see how this sale is acting in the best interests of the beneficiaries. Personally I think this is a desperate extortion attempt. 99% of the people with these loans will not be able to pay anything back so I’m struggling to see why FS Capital think it’s a good business model - I genuinely believe they will not have resources to go to court and facilitate collections. I think it’s a quick shakedown - as stated earlier I will never pay a single penny - no matter what. Hold the line.


PS - I also agree with the earlier poster - you could drive a ‘bus’ through my ‘loan’ contract.

[DealorNoDeal]

I agree completely- it would be hard to see how this sale is acting in the best interests of the beneficiaries. Personally I think this is a desperate extortion attempt. 99% of the people with these loans will not be able to pay anything back so I’m struggling to see why FS Capital think it’s a good business model - I genuinely believe they will not have resources to go to court and facilitate collections. I think it’s a quick shakedown - as stated earlier I will never pay a single penny - no matter what. Hold the line.

My guess is the "opportunity" for them is collecting fees for writing off the loans.

[hudson]

How can the scheme provider take out a DOTAS number at the outset and later on still claim these are bona fide loans, especially when the scheme users ended up settling with HMRC and paying INCOME tax on these loans?

[webberg]

Hi Webberg, are you saying then that though the trust was set up as an EFBRS, a loan agreement with a clause stipulating the loan can be transferred to a third party would trump any trust law that would have perhaps given some protection to the employee as a beneficiary of said EFBRS??

No.

An EFRBS is just a trust. A trust holds assets that in due course are to be used for the beneficiaries. In the case of a highly regulated environment such as the UK, there are rules about how a trust to be used to provide pensions will make use of its assets.

In lesser regulated countries there may be more scope for flexibility and perhaps the trust deed deals with how the trust might convert assets (loans) into cash for the purpose of providing pensions.

I would however guess that the trust deed is silent on all of these issues.

Instead the trustee has decided to convert assets to an as yet undisclosed sum of money (perhaps used to meet fees). In doing that, they may claim that they were acting in the interests of beneficiaries or they may not have had that obligation.

Either way the loan terms look to be that the lender can assign them at their own discretion and if the decision is taken that cash is better than a loan agreement, then arguing that this may have transgressed a different obligation will have to be done.

[webberg]

Aren't the Trustees of the loan legally obliged to work in the sole interest of the beneficiaries?

I can't see how the Trustee (Pinotage in this case) can claim to have operated with the beneficiary's best interest by selling the loans to a financial asset company.

The trustees may have decided that cash in hand is more useful to beneficiaries than the uncertain prospect of collecting on the loan?

The only way you'll know is to ask them.